The Central Bank of Russia launches SWIFT replacement with 399 users

Russia decided to counter SWIFT with its SPFS after its ban due to its invasion of Ukraine.

The Bank of Russia's Financial Message Transfer System (SPFS), which already has more than 399 users, will now become the international payment settlement network.

Russia against the rest of the world

As every great power in the world condemns Vladimir Putin and his recent actions against Ukraine, the tension is spilling over to Russia's economy. The myriad of sanctions that have been imposed on him already seem brutal.

As if that weren't enough, the worldwide payment service provider SWIFT also recently ruled out Russian banks.

Thus, to ensure that Russia's financial infrastructure does not collapse, the country has launched the SPFS. Although initially developed as an internal financial structure, the SPFS will also be extended to international payments.

The head of the Bank of Russia, Elvira Nabiullina, announced that the SPFS is open to participants from abroad. You also stated that international payment system cards will continue to function as usual.

The SPFS system

Although the SPFS has existed for more than six years, it was limited to users of national banks. However, in April, more than 20 Belarusian banks, the Armenian Arshidbank and the Kyrgyz Bank of Asia joined.

Currently, the network has 399 users. The SPFS also boasts of conducting more than 2 million messages per month in 2020, which would lead it to surpass SWIFT by 20,6%. The only problem is that not many country banks would like to join SPFS for multiple reasons. First, the possibility of being kicked out by SWIFT would hinder their reach.

Second, SPFS does not have many traditional international banks. Its supporter, China, is also yet to join SPFS. So this limitation would also limit their capabilities.

Furthermore, if the SPFS system fails, the Russian economy would collapse. As it stands, the USD / RUB pair skyrocketed to 104,60 rubles. And with more sanctions, bans on access to foreign reserves, blocking access to cryptocurrencies for Russians, the situation will only get worse.

Many major cryptocurrency exchanges such as Binance, Coinbase, Kraken, Bitcoin Pro and KuCoin previously openly rejected the appeal to ban the accounts. The White House and the US Treasury Department are now officially asking these exchanges to block access to cryptocurrencies.

The ongoing peace negotiations between Russia and Ukraine have yet to conclude. And if that doesn't happen, the Russian people will suffer.