Russia’s SWIFT Alternative Approved for International Use

The Russian State Duma (lower house of parliament) has backed the international use of a Russian alternative system for the global financial messaging network SWIFT, Reuters reported. The system was designed by Moscow to eliminate the risk of Western sanctions against its banks.

The lower house of parliament, or Duma, gave the green light to a bill proposed by Anatoly Aksakov, who heads the Russian Banking Association and a financial committee with the lower house of parliament, in the first reading. The bill needs to pass two more readings with the Duma and obtain support from President Vladimir Putin to become law.

“As the system has proved to be viable and efficient, it draws interest from both Russian and foreign players, it is proposed to give any legal entities, Russian and foreign, the possibility to use it,” Aksakov said.

SWIFT, which stands for Society for Worldwide Interbank Financial Telecommunication, was founded in 1973 and connects more than 11,000 institutions in over 200 countries and territories.

Amid escalating geopolitical tensions, Russia feared being cut from the global financial system as happened with Iran in 2012, so the country started developing an alternative to the Belgium-based financial messaging service in 2014 after a shock caused by the first round of Western sanctions against Moscow.

Russia has held talks with China, India, Iran and Turkey about joint use of Russia’s financial messaging system, Aksakov said.

SWIFT disconnected some Iranian banks again in November last year, saying the step was taken “in the interest of the stability and integrity of the wider global financial system.”

Bank of Russia Governor Elvira Nabiullina said last year that Russia had created a system that could replace SWIFT and “nullify” risks of Russia being cut from the global network.

Aksakov told the Duma on Tuesday that more than 400 companies, most of which are Russian, have become members of the SWIFT substitute system.