By
Chimamanda U. Martha
November 23rd, 2023
After heavy sanctions on the Russian central bank, it is preparing itself with its SWIFT alternative dubbed SPFS to facilitate digital transactions domestically. It has also asked foreign players to join.
Amid the ongoing invasion of Ukraine by Russia last week, the Western countries especially NATO allies have decided to cut-off Russia from the global financial system SWIFT. The SWIFT sanctions can probably have far-reaching consequences for Russia. However, on Monday, February 28, the Russian Central Bank governor Elvira Nabiullina said that it is ready with its SWIFT alternative.
Will SWIFT Alternative Help?
Russia is now relying on the Financial Message Transfer System of the Bank of Russia (SPFS), its own analog to SWIFT. Speaking about this matter, Bank of Russia Governor Elvira Nabiullina said:
“We have a financial messaging system – SPFS, which can replace SWIFT domestically. Participants from abroad can join it”.
The governor further added that the national system of payment cards processes all domestic traffic. Additionally, Nabiullina said that cards of international payment systems issued by the banks continue to work as normal within the country. The Russian central bank governor added:
“We have developed the internal financial infrastructure, so it will work smoothly. So, we have a financial messaging system (FSFS) that can replace SWIFT within the country”.
Protecting Russia’s Financial Stability
Following the sanctions announced by the West, the Russian Rouble has been on a free fall. Over the last week, Rouble has lost 40% of its price against the US Dollar. Also, there has been a heavy queue at the ATMs with people withdrawing huge sums of money from their bank accounts.
To prevent the outflow of funds, the Bank of Russia raised interest rates to 20% from 9.5% earlier on Monday. Bank of Russia governor Nabiullina said that they will initiate all measures to protect the financial and price stability.
Further, it will take measures to protect Russia’s financial sector and the economy as a whole. Furthermore, the Bank of Russia is also in contact with Russian banks to take any prompt and necessary measures for supporting them. The Bank of Russia governor clarified that the measures initiated are equivalent to an increase in the capital by the banks by 900 billion rubles.
“The Board of Directors of the Central Bank decided to raise the key rate from 9.5% to 20% per annum from February 28. According to the regulator, this should support financial and price stability and protect citizens’ savings from depreciation. The decision of the regulator on the rate was also supplemented by the introduction of restrictions on the sale of securities by foreign residents and the mandatory sale of 80% of foreign exchange earnings,” local new publication Tass reports.