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(MENAFN) The System for Transfer of Financial Messages (SPFS), Russia's replacement for SWIFT, is open to banks from the BRICS nations, according to Russian President Vladimir Putin, who announced this on Wednesday.
Putin claimed at a BRICS economic event that Moscow is creating dependable substitutes for international payments with its allies Brazil, India, China, and South Africa.
“The Russian system for transmitting financial messages is open to connecting banks from the five countries,” he declared, noting: “The geography of the use of the Russian payment system Mir is expanding.”
As the Western world still obsesses with how Russia's expulsion from SWIFT will impact the Russian economy, commodity prices and the global funding markets, a quick note on how forward looking markets are reacting.
While we wait for US cash markets to open (as futures reverse a modest bounce and trade at session lows), China's micromanaged "market" is already up and running in what so far appears a boring session where the SHCOMP is flat, but where shares tied to China’s Cross-Border Inter-Bank Payments System (CIPS) are surging after Saturday's decision by Western nations to exclude some Russian lenders from the SWIFT messaging system. Why? Because of what Bloomberg notes is growing speculation that China's CIPS could become an alternative for those banks.
WNU Editor: China and Russia together represent almost 20% of the world's GDP. Russia joining China's SWIFT banking platform will be a huge boost for China, and will only accelerate its global rise.
* The West pledged to isolate Russia from world markets by removing banks from the SWIFT network
* The US, European Commission, France, Germany, Italy, the UK, and Canada made the move on Saturday
* 'We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin,' they said
* They will also set up a transatlantic taskforce to hunt down assets of sanctioned companies and oligarchs
* A senior administration official said it would go after 'their yachts, luxury apartments, their money and their ability to send their kids to fancy colleges in the West'
* Ukraine has been demanding the move for days as it battles about 75,000 invading Russian troops
* Ursula von der Leyen, president of the European Commission, said it would stop Putin using his 'war chest.'
* Earlier a Pentagon official said the US was sending more Javelin anti-tank missiles to Ukraine
The US and its Western allies announced on Saturday a new raft of crippling sanctions on Moscow, as they promised to ban key Russian banks from the international SWIFT banking network and impose restrictions on the Russian Central Bank.
They will also set up a transatlantic taskforce to go after sanctioned oligarchs, 'their yachts, luxury apartments, their money and their ability to send their kids to fancy colleges in the West,' said a senior Biden administration official.
WNU Editor: The Russian Central Bank will still be permitted to use SWIFT (for now). But if the Russian Central Bank is expelled it would be unprecedented, especially for an economy the size of Russia.
As I had mentioned in a previous post, Russia's complete expulsion from SWIFT would have an enormous impact on the US being able to maintain its currency as a reserve currency. We will probably end up with is a basket of currencies that would replace the US dollar, as we saw only two weeks ago when Russia and China signed an $80 billion dollar natural gas contract that will be paid in Euros.
One more point.
Russian President Putin did say a few years ago that if Russia is expelled from SWIFT, it would be seen as a declaration of war by the Kremlin.
Am I the only one who is nervous now?
The United States has threatened to cut Russia off from the SWIFT banking system, to prevent it from invading Ukraine. This would wreck Russia’s economy, driving the country closer to China.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT), established in 1973, is a communication platform that is used by banks, brokerages, and financial institutions to process payments across countries. Each year, SWIFT transmits roughly 10 billion messages between 11,000 financial institutions in more than 200 countries and dependencies, processing trillions of dollars in payments.
The SWIFT system is governed by Belgian and European law, and is overseen by the G10 central banks. Therefore, SWIFT would not be obligated to meet U.S. demands. But Washington could pressure the platform to comply, as it did in 2012, when the United States wanted Iranian banks removed due to economic sanctions.
WNU Editor: The Kremlin would regard such a ban as an act of war. The consequences will be enormous, starting with the cutting of energy supplies to Europe from Russia.
Days after President Putin warned the West of a "harsh" and "asymmetrical" response if it crosses Russia's 'red line' concerning NATO troop positioning and the recently renewed Ukraine standoff, the European Parliament in Brussels has proposed a new resolution to disconnect Russia from the SWIFT payment system.
Dated Wednesday, April 28, it's entitled, "European Parliament resolution on Russia, the case of Alexei Navalny, the military build-up on Ukraine’s border and Russian attacks in the Czech Republic."
The over 50 European Parliament lawmakers cited "aggression and continued destabilization of Ukraine, hostile behavior towards and outright attacks on EU member states and societies."
Restricting Russia’s access to the SWIFT international banking payment system would virtually mean a declaration of war, Prime Minister Dmitry Medvedev has warned.
Speaking to reporters on Thursday, Medvedev recalled the West once seriously considered the option, and Moscow is aware of it.
“This would in fact be a declaration of war, but nevertheless it was discussed,” the Russian prime minister said, adding that this is one of the reasons why the government is looking into ways to protect the Russian part of the internet.
Treasury Secretary Steven Mnuchin said that unlike Obama's 2013 Iran blockade, it would be harder for countries to get waivers on Iran oil sanctions as the US is already working on disconnecting Iran from the SWIFT network and dismissed concerns that oil prices could rise, saying the market had already factored in the output losses.
Speaking in an interview with Reuters in Jerusalem on Sunday at the start of a Middle East trip, Mnuchin said countries would have to reduce their purchases of Iranian oil by more than the roughly 20% level they did from 2013 to 2015 to get waivers. "I would expect that if we do give waivers it will be significantly larger reductions," said the US Treasury Secretary.
WNU Editor: The Trump administration's decision to push for the disconnection of Iran from SWIFT is big news. It will cripple Iran's banking networks from doing international business .... nothing less and nothing more. This move also confirms fears that the Trump administration has made the decision to weaponize the dollar, and will now use the reserve currency as a global bargaining chip in getting its way on issues like Iran. Here is an easy prediction. There is going to be blow-back from every major country in the world on this U.S. decision.
EU Lawmakers Urge block On US Access To SWIFT Bank Data -- Deutsche Welle
European lawmakers have approved a resolution that calls for US anti-terrorism investigators to be denied access to the global banking database, SWIFT. The decision followed revelations about American spying activities.
Lawmakers in the Brussels parliament voted by 280 to 254 in favor of the resolution on Wednesday to suspend US access to the global database because of concerns that the powers were being abused. There were 30 abstentions.
The vote followed leaks by former US intelligence operative Edward Snowden, which suggested that the US National Security Agency (NSA) used the Belgium-based system of international bank transfers, SWIFT, to snoop on the EU.
The resolution is non-binding, but the parliament stressed it would "take account of the European Commission's response to this demand when considering whether to give its consent to future international agreements."
I have been involved in numerous computer science projects since the 1980s, as well as developing numerous web projects since 1996.
These blogs are a summation of all the information that I read and catalog pertaining to the subjects that interest me.
