It has been some time since the information that Turkey and China decided to access the Russian rouble-based alternative of the SWIFT communication system disseminated all around the world. At that time, the Russian equivalent was referred to as a potential new payment giant. Although since 2019, many agreements have been made on SPFS’s (Service for transfer of financial messages) connection with other countries, e.g. the payment systems used in China, Iran, India, and The Eurasian Economic Union countries planning to use SPFS directly, it still has a long way to go to build a significant position.
The system introduced under the acronym SPFS was developed by the Russian Central Bank in 2014 after the US government had threatened to disconnect Russia from the internationally operated system SWIFT that currently associates more than 11 thousand bank institutions all over the world. Work on SWIFT alternatives became more intensive when cyber-attacks at the network had caused information leakage and theft of 101 million dollars from the Brazilian Central Bank in 2015 and 2016.
The public awareness of SPFS increased the most in 2018 thanks to its prospective connection to Blockchain. According to the information disclosed directly on the Russian Central Bank’s site, the network now includes about 400 institutions. Compared to its more famous competitors, SPFS has to face higher operating expenses.
The connection of the network with the Chinese cross-border inter-bank system has been in the planning phase so far. Information from late 2019 indicates that China keeps planning to connect its financial system called CIPS (Cross-border Inter-bank Payment System) to SPFS.
After repeated warnings in recent years, Turkey has signed an agreement on the increased use of the rouble and lira in cross-border payments and on the accession to the Russian alternative to SWIFT. This agreement assumes connection of Turkish banks and companies to the Russian version of the SWIFT payment system and strengthening the infrastructure in Turkey so that Russian cards MIR designed in Moscow could work as an alternative to MasterCard and VISA.
As Vladimir Putin warned in the past, American sanctions against Russia are a “colossal strategic mistake” that may ultimately endanger the dollar-based hegemony of the global financial system.