The European Union should set up a system that would allow Brussels to be independent in its financial operations from Washington, according to German Foreign Minister Heiko Maas.
“It is indispensable that we strengthen European autonomy by creating payment channels that are independent of the United States, a European Monetary Fund and an independent SWIFT system,” Maas wrote in the Handelsblatt business daily.
SWIFT is a network that enables financial institutions worldwide to send and receive information about financial transactions based in Belgium. The system’s management claims SWIFT remains politically neutral and independent.
Russia’s money transfer system, developed as an alternative to SWIFT is now more popular than the global network, said Anatoly Aksakov, head of the Russian parliamentary committee on financial markets.
He explained that Moscow is already engaged in talks with Chinese, Turkish and Iranian financial regulators on integrating its System for Transfer of Financial Messages (SPFS) with financial messaging systems of those countries.
“The number of users of our internal financial messages’ transfer system is now greater than that of those using SWIFT. We’re already holding talks with China, Iran and Turkey, along with several other countries, on linking our system with their systems,” Aksakov said.
“They need to be properly integrated with each other in order to avoid any problems with using the countries’ internal financial messaging systems.”
Russia has already worked out a cooperation mechanism with Tehran and mentioned the possibility of direct transactions with Iranian companies, according to the MP.
The Central Bank of Russia, which has developed the SPFS, said earlier that 416 Russian companies and government organizations had joined the system as of September. They include the Russian Federal Treasury and large state corporations, including Gazprom Neft, Rosneft, and others.
The development of SPFS began in 2014 in response to Washington’s threats of disconnecting Russia from SWIFT. The first transaction on the SPFS network involving a non-bank enterprise was held in December 2017.
The Russians have an alternative money transfer system up and running, and according to a report in RT, it has now surpassed SWIFT in popularity in that country. This is part of a broader effort by countries like Russia and China to limit their dependence on the US dollar and set up alternative financial channels outside of the global dollar system.
According to the Central Bank of Russia, 416 Russian companies and government organizations had joined the System for Transfer of Financial Messages (SPFS) as of September. They include the Russian Federal Treasury and large state corporations, including Gazprom Neft, Rosneft and others. Russian parliamentary committee on financial markets head Anatoly Aksakov told RT the country is now in talks with other countries to expand the payment system beyond Russian borders.
The number of users of our internal financial messages’ transfer system is now greater than that of those using SWIFT. We’re already holding talks with China, Iran and Turkey, along with several other countries, on linking our system with their systems.”
It appears the Russians could be developing a viable alternative to SWIFT.
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. The system enables financial institutions to send and receive information about financial transactions in a secure, standardized environment. Since the dollar is the world reserve currency, SWIFT facilitates the international dollar system.
SWIFT give the US a great deal of leverage over other countries. The US has used the system as a stick before. In 2014 and 2015, it blocked several Russian banks from SWIFT as relations between the two countries deteriorated. Last fall, the US threatened to lock China out of the dollar system if it didn’t follow UN sanctions on North Korea.