Russia’s SWIFT alternative is expanding rapidly this year, says central bank

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(This content was produced in Russia, where the law limits coverage of Russian military operations in Ukraine)

By Alexander Marrow

KAZAN, Russia: The reach of Russia’s alternative to the international SWIFT messaging system has grown at a record pace this year, the central bank said Friday, as Moscow ramps up its efforts to resolve financial shortfalls caused by sanctions.

Far-reaching Western sanctions against many of Russia’s top banks in the wake of sending tens of thousands of troops to Ukraine have severely curtailed access to the global financial system by lenders. SWIFT supports financial transactions worldwide.

Alla Bakina, director of the central bank’s national payment systems division, said 50 new entities have joined Russia’s alternative system this year, bringing the total number to 440, more than 100 of which are non-residents.

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“The financial message transfer system has been expanded this year as more foreign participants have joined,” Bakina told a banking forum in Kazan.

“In the first half of the year, more participants joined the SPFS than in any previous year of the system’s existence,” she said.

The central bank is not releasing the list of countries whose institutions have joined the SPFS, Bakina said.

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Some banks in Russia, including units of some foreign financial institutions banned from exiting by the Kremlin’s recent laws, still have access to SWIFT and can process payments abroad.

More than 11,000 financial institutions in more than 200 countries and territories use SWIFT.

Sanctions have increased the use of the SPFS and the issuance of Mir bank cards, the Russian alternative to Visa and Mastercard, companies that have ceased operations in Russia and their cards issued in Russia no longer work abroad.

Bakina said a third of all bank cards in Russia are now Mir cards.

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But Mir – meaning “world” or “peace” in Russian – is facing headwinds abroad. Banks in so-called “friendly” countries – Turkey, Kazakhstan, Vietnam and Uzbekistan – have halted Mir transactions after the latest round of US sanctions.

Washington put Vladimir Komlev, head of the National Card Payments System (NSPK), on its sanctions list, causing some foreign banks to withdraw their support.

Cuba, South Korea and a handful of former Soviet republics have allowed the use of Mir cards, but Komlev said Thursday that the NSPK had stopped releasing the list of countries where the cards are accepted.

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