India, Russia and China are investigating the possibility of creating an alternative to the SWIFT (Society for Worldwide Interbank Financial Telecommunication) payment mechanism which is prevalent in the US, in an attempt to make it easier to trade with countries under US sanctions, The Economic Times reports, citing informed sources.
According to the news outlet, Russia’s System for Transfer of Financial Messages (SPFS) might be connected to China’s Cross-Border Interbank Payment System (CIPS). India does not yet have its own internal financial communication system, but New Delhi plans to link its own mechanism, which is currently being developed, to the Bank of Russia’s platform.
The new system is expected to function as a “gateway” model: payment messages will be encoded according to each country’s financial system. According to the sources, the proposal regarding this alternative to SWIFT may have been on the agenda of the BRICS summit in Brazil.
According to The Economic Times, the BRICS member states (Brazil, Russia, India, China and South Africa) are also looking into the possibility of trading directly with each other in national currencies. In July, the Economic Times wrote with reference to its own sources that India will probably pay for Russian arms, including the S-400 anti-air missile system, in euros, which will allow India to bypass possible sanctions from Washington.
The Bank of Russia’s SPFS system was launched at the end of 2014 in order to reduce external risks and ensure that the transmission of Russia’s internal financial messages is not interrupted. The first transaction on the SPFS network was completed in December 2017.
In October, Russian Minister of Economic Development Maxim Oreshkin told The Financial Times in an interview that Moscow wants to minimize its dependence on the US by attracting new investors with ruble accounts. “We have a very good currency, it is stable. Why not use the ruble for global transactions?” he said, noting that “at some point” Russia plans to start selling oil and gas in its national currency.