Western banks refuse to connect to Russia’s SWIFT alternative

Major western banks have shown absolutely no interest in Russia’s alternative to the SWIFT payment system, which Russia created in 2016 after a sharp deterioration in its relations with the West, reports finanz.ru news outlet.

In the three years that the Bank of Russia’s System for Transfer of Financial Messages (SPFS) has existed, only eight foreign entities have connected to it, said Alla Bakina, director of the Bank of Russia’s national payment system, on Wednesday.

Of these, only three are actually in the user directory and functioning. The other five credit organizations have signed a contract, and are currently undergoing the “technical procedures for connecting, testing, etc.,” noted Bakina.

She noted that these are primarily banks from the Eurasian Economic Union.

According to Bakina, the traffic through the system has been growing, and currently amounts to around 15% of the internal traffic through SWIFT, as opposed to 10-11% last year.

The Bank of Russia is currently working on a way for new participants to connect to the SPFS not directly, but through organizations that are already connected – so-called service bureaus.

“It’s not connecting through external organizations, it’s a service bureau, one of the organizations that is a participant acts as a hub. We are developing it, because there is demand for it in the market, and the service is in demand among users,” RIA Novosti cites Bakina as saying.

The list of foreign participants in the Russian SWIFT alternative could include Iranian banks, which have been cut off from the global financial system by US sanctions. On September 18, Iranian President Hassan Rouhani announced his country’s plans to increase trade and payments with Russia without using SWIFT.

In July, Turkish companies and banks discussed the possibility of connecting to the Bank of Russia’s financial messages system.

“We discussed the feasibility of signing a memorandum during these talks, and decided that we need to work on it, and now we are working on it,” Russian Deputy Finance Minister Alexey Moiseev told Bloomberg previously. “Now we need to sign a memorandum, and later, depending on what is in the memorandum, we will be guided by it.”

He noted that a memorandum to connect Chinese banks to the SFPS has already been signed, and that expert technical consultations are currently underway.

  SWIFT, Russia