Russia is reportedly intending to exploit the SWIFT sanctions to launch digital ruble which in the most extreme case will see its bank branches and accounts across countries blocked.
In a recent analysis by Nandini Tandon on Twitter, she said that the Calls to exclude Russia from SWIFT are not new and have been there since 2014 (Crimea annexation).
He explained that in 2014, Moscow has been vigilant all along. Russia developed its payment system, System for the Transfer of Financial Messages (SPFS) against SWIFT.
But then China has created a more international friendly payment system against Russia’s own which had some constraints. In that case, the Chinese developed CIPS (Chinese Cross-Border Interbank Payment System) to serve as an alternative, most popular in Eurasia
The most dangerous scenario or sanctions from SWIFT will be that foreign banks block all foreign currency accounts for all Russian Banks, as in the case of Iran. In this case, the most immediate alternative for Russia will be its CBDC ( Central Bank Digital Currency) the digital ruble.
Read Also: Russia To Change Law To Accommodate Digital Ruble
“Here, Central Banks will be able to move currency among themselves directly without any network of correspondent banking or messaging system.”
This will also reduce the dollar’s hegemony against the Russian ruble. The first prototype was released in 2021 and will have it’s pilot launch at Crimea in 2022. Once Russian CBDC kicks in, SWIFT will be unnecessary.
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