Putin's options after exclusion from the SWIFT system

In recent days, different sanctions have been applied to Russia in various fields. However, one of the sanctions that will hit the country hardest has been the exclusion of some Russian banks from the SWIFT international payment system.

This restriction means that Russian banks will be unable to interact with the international financial system. That is, they will not be able to send or receive international transfers, which limits the transactions of the companies.

This move may have been a serious blow to Russia, however, only a few banks were excluded. In any case, it sent the ruble plummeting to its lowest in recent years. However, this can be a bridge for Russia to become less and less dependent on SWIFT.

Russia has options

Despite these strong financial sanctions, Russia has some alternatives that allow it to access the international market, at least in a more limited way. Next, we will briefly explain what are the three options that Russia has to evade these sanctions.

1. SPFS

SPFS is a system similar to SWIFT that Moscow has been promoting in recent years. Since the invasion of Crimea in 2014 and following international sanctions, Russia has been implementing this system.

However, the differences between this system and SWIFT are huge, for example, SWIFT has around 11,000 affiliated banking institutions. That is, it operates in around 190 countries around the world.

For its part, SPFS has around 400 affiliated banks, the majority being Russian banks, some Belarusian banks and a handful of banks in other countries. However, Russia could try to annex more banks, especially those belonging to allied countries.

The number of operations carried out through the SPFS network is around 2 million per month. Despite being an advance, this is nothing compared to the number of international transactions carried out by Russia.

2.CIPS

CIPS or China International Payment System is an interbank payment system developed by China, this is more recent, but as it is endorsed by China, it can be more successful. Many Russian banks are already within this system since 2019.

Let's remember that China is an ally of Russia, so Russian banks could have access to this network without restrictions. Of course, this system has a negative aspect and this is that the US dollar is not used. Transactions are made in a currency known as the digital yuan.

Although this system is an option, just like SPFS eta it is a fairly limited option, so it would not have a real scope, but it would serve to relieve some pressure on Russian banks.

3. Cryptocurrencies

Lastly, we have that Russia could resort to cryptocurrency transactions to evade SWIFT exclusion. While for many it may be a viable option, for Russia it is likely to be the last option.

Cryptocurrency transactions bypass traditional financial systems entirely. This makes it possible, however, the truth is that cryptocurrencies do not give the Russian government financial security in the short or long term.

Although it cannot be ruled out to make some payments or that some companies resort to them, it could not become a real solution.