Russia Plans To Introduce Blockchain Based Alternative For SWIFT
Russia is looking at alternatives for SWIFT network, which enables international payment transfers. In this regard, the Central Bank of Russia is studying the possible use of Masterchain’s ethereum blockchain technology, which was developed by FinTech Association together with the regulator and Russian banks. Olga Skorobogatova, the Central Bank’s First Deputy Chairman, has also suggested the creation of a single payment network for the Eurasian Economic Union (EEU).
The souring relationship with the West, and the UK in particular, has encouraged Russia to look for an alternative to SWIFT payment network. London has already threatened to remove the Russian banking system from SWIFT. Therefore, the bank now wants to develop a payment system for specific use in the European Union. Russia prefers to adopt a system, which can send/receive messages and transfer money, with smooth integration to SWIFT.
“We are now discussing the possibility of creating new technologies for transmitting messages processing payments within the EEU area as a supranational infrastructure. This would give us the opportunity to use the distributed ledger technology at the level of the EEU area, to make settlements and transfer financial information without disrupting existing payment systems.”
The Bank of Russia already uses a national payment system named SPFS for the past two years. The system is being used by 402 participants as of March 1. The system is basically designed to support the internal banking system in case of emergency and has very limited functionalities. SPFS cannot be used for cross-border transactions. Additionally, it mainly serves financial institutions in the CIS countries. The new blockchain based system is expected to provide a link between the Russian financial institutions with the outside world.
Regarding the use of Masterchain, Olga said
“An active discussion is underway, and we are looking into several quality technologies, including Masterchain. I think that we will discuss options regarding this project as early as this year.”
Russian banks will be able to access the new system initially. Later on, banks in the Eurasian Economic Union will be able to access the new system, which has backing with the rest of the world. Recently, at an international digital forum in February, Dmitry Medvedev, a top Russian official gave a hint of a blockchain based payment platform which can be accessed by both EEU and potential partner countries outside the region. The union includes countries such as Belarus, Kazakhstan, Kyrgyzstan, and Armenia.
In mid-February, Skorobogatova said that Russia’s Central Bank intended to focus on legal regulation for using cutting-edge technologies and their implementation across the EAEU.