Central bank says Russia’s SWIFT alternative is expanding rapidly this year

Central bank says Russia’s SWIFT alternative is expanding rapidly this year

(This content was produced in Russia where coverage of Russian military operations in Ukraine is restricted by law)

by Alexandre Maro

KAZAN, Russia (Reuters) – The reach of Russia’s alternative to the international messaging system Swift has grown at a record pace this year, the central bank said on Friday, as Moscow ramps up efforts to solve financial shortcomings created by sanctions.

Extensive Western sanctions on several major Russian banks in the wake of Russia sending tens of thousands of troops to Ukraine have drastically reduced lenders’ access to the global financial system. SWIFT supports financial transactions globally.

Alla Bakina, director of the Central Bank’s National Payment System Department, said 50 new entities joined the alternative Russian system this year, bringing the total number to 440, of whom more than 100 are non-residents.

“The system for transmitting financial messages has shown expansion this year due to the inclusion of more foreign participants,” Bakina said at a banking forum in Kazan.

“More participants joined the SPFS in the first half of the year than in all previous years of the system’s existence,” she said.

Pakena said the central bank did not disclose the list of countries whose institutions have joined the Special Program for Food Security.

Some banks in Russia, including units of some foreign financial institutions banned from exiting under recent Kremlin laws, still have access to SWIFT and can process payments going abroad.

More than 11,000 financial institutions in more than 200 countries and territories use SWIFT.

Sanctions have increased the use of SPFS and the issuance of Mir bank cards, the Russian alternative to Visa (NYSE:) and Mastercard (NYSE:), companies that have suspended operations in Russia and whose cards issued in Russia have stopped operating abroad.

READ ALSO :   The Bank of England raised interest rates to 2.25%, despite a possible recession

Bakina said that a third of all bank cards in Russia are now Mir cards.

But Mir – which means “world” or “peace” in Russian – is facing headwinds abroad. Banks in so-called “friendly” countries – Turkey, Kazakhstan, Vietnam and Uzbekistan – halted MIR’s transactions after the latest round of US sanctions.

Washington put the head of the National Card Payments System (NSPK) Vladimir Komlev on the sanctions list, prompting some foreign banks to withdraw support.

Cuba, South Korea and a handful of former Soviet republics have allowed the use of Mir cards, but Komlev said Thursday that the NSPK has stopped disclosing a list of countries where cards are accepted.

Newsletter Updates

Enter your email address below to subscribe to our newsletter