Russia’s lawmakers have backed the international use of a Russian alternative to the Swift network for global financial messaging services, to offset the threat of sanctions imposed by the West.

Russia has held talks with China, India, Iran and Turkey on the potential joint use of an alternative financial messaging system, said Anatoly Aksakov, head of the Russian Banking Association and a financial committee with the lower house of parliament, or Duma.

The Duma gave its assent to a bill proposed by Aksakov in the first reading. The bill needs to pass two more readings with the Duma and obtain support from president Vladimir Putin to become law.

“As the system has proved to be viable and efficient, it draws interest from both Russian and foreign players, it is proposed to give any legal entities, Russian and foreign, the possibility to use it,” Aksakov said.

Long-gestating plan

Russia’s efforts to develop an alternative to the Swift network date back at least five years, to 2014, when financial sanctions were imposed on Russia in the wake of its efforts to annex the Crimea.

This sparked fears that following Iran’s exclusion from the Swift network between 2012 and 2016 due to the country’s nuclear programme, Russia would be similarly penalised. The Central Bank of Russia’s governor, Elvira Nabiullina has admitted as much, as has Aksakov who said that the substitute system “obviously allows us to solve issues related to the sanctions pressure”.

Speaking last May at the St. Petersburg International Economic Forum, Nabiullina said that Russia had developed its own financial transfers system that would give protection should it be ejected from the Swift network due to harsher US sanctions. Similarly, China established the Cross-border Interbank Payment System which launched in October 2015 as an alternative to Swift, although a memorandum of between the two systems was signed the following May. 

Aksakov reports that around 400 companies, most of them Russian, have so far expressed an interest in using Russia’s alternative system while there is also a positive response from several Middle East countries.