China’s SWIFT alternative may undercut US sanctions and accelerate de-dollarization

[beijingwalker]

China’s SWIFT alternative may undercut US sanctions and accelerate de-dollarization​

China’s Cross-Border International Payments System could give Russia a lifeline and accelerate de-dollarization
By DAVID P GOLDMAN
FEBRUARY 25, 2022

China's currency is developing into a safe haven. But there is more work to do. Photo: Facebook

Washington’s new sanctions against Russia were no match for President Biden’s rhetoric, leaving out the most obvious measure that the United States might take to hurt Moscow, namely exclusion from the SWIFT international payments system.

Banks conduct virtually all hard-currency transactions via SWIFT, or the Society for Worldwide Interbank Financial Telecommunication. But a new Chinese alternative might allow Russia to conduct most of its trade in yuan rather than dollars.

China’s Cross-Border International Payments System (CIPS), founded in 2015, is still under development and includes only 80 foreign banks. But there is no reason in principle that CIPS can’t substitute for SWIFT. And if Russia successfully shifts its trade payments out of the dollar system, the blow to American prestige and power would be enormous.

The US still imports massive amounts of Russian oil.

De-dollarization of trade is under debate in Western Europe. Germany’s Manager Magazine wrote on February 14, “Exclusion from the international payment system SWIFT is considered the sharpest sword that the West could wield as an economic sanction against Russia.

“However, it is a double-edged sword: the economic consequences would not only be serious in Russia, but also in Western Europe. In addition, the decoupling of Russia and China from the US dollar would be accelerated. Both countries are already working on competing payment systems.”

Russia also has developed an interbank messaging system, which now covers about 20% of domestic financial payments.

China’s yuan has advantages and disadvantages as a dollar substitute. It has gained about 8% against the US dollar since the Covid recession began in early 2020.

China’s consumer inflation rate stands around 1% year-on-year vs. 7.5% in the US, and the yuan to some extent has acted as a hedge against dollar inflation, as I wrote on February 17.

China's SWIFT alternative may undercut US sanctions - Asia Times

Washington’s new sanctions against Russia were no match for President Biden’s rhetoric, leaving out the most obvious measure that the United States might

asiatimes.com

A God sent opportunity for China to dethrone dollar.

 

[Hamartia Antidote]

Russia joined SWIFT in 1995.

They are a latecomer..and before that the Soviet Union was not even allowed in...another reason why they probably fell apart.

China let in in 1983.

 

[Last starfighter]

Please let this happen

 

[Han Patriot]

Russia joined SWIFT in 1995.

They are a latecomer..and before that the Soviet Union was not even allowed in...another reason why they probably fell apart.

China let in in 1983.

Numb nuts USSR collapsed in 1990. Nothing to do with swift but economic mismanagement, swift is only useful is you need to import alot of shit but in Russia case, they don't and if they need to China is there. You think Putin didn't calculate before hand? Welcome to the new Rmb world Jose.

Now go print more paper and use it to wipe your arse. Or use it in the 'finance' industry.

 

[Hamartia Antidote]

wift is only useful is you need to import alot of shit but in Russia case, they don't and if they need to China is there.

That's why having Russia leave SWIFT is not a big deal. They were a latecomer anyway.

 

[Han Patriot]

That's why having Russia leave SWIFT is not a big deal.

Wow first time seeing you understanding stuff. Congrats

 

[XVIV]

The reality is that Putin did his homework many years ago when things took a real turn in relations with the West. The Russian economy has some insulation against Western sanctions - if I remember correctly, it has around $668 billion in reserves and significant gold holdings too.

Remain to be seen if European countries will cut Russia off from SWIFT, but the longer the Ukrainian crisis goes on the more likely it becomes - Germany has already folded its opposition to doing so. Russia will largely be able to get around it though with CIPS though.

In the longer-run, however, Russia is going to grow increasingly dependent on China which isn't good for it either. It won't be able to tap into Western markets and the gap between Russia and China/America militarily will only grow. Essentially, you will have a reversal of the power relations between the two before the Sino-Soviet split.

Just to add - Pakistan should be a dual adopter of SWIFT and CIPS, mainstreaming both. It's good for sustainability and insulates Pakistan from Western sanctions etc.

 

[Last starfighter]

the Society for Worldwide Interbank Financial Telecommunication

Swift stands for the Society for Worldwide Interbank Financial Telecommunication. Set up in 1973, it is a crucial part of the plumbing that facilitates flows of money around the world. It is a secure messaging system that allows around 11,000 financial institutions to talk to each other and authorise payments.

It just basically means the Russians won't be able to trade in dollars but they planned for that so now
China Russia and Iran are going to use a Chinese version of it called
CIPS
The Cross-Border Interbank Payment System (CIPS) is a payment system which offers clearing and settlement services for its participants in cross-border RMB payments and trade. It is a significant financial market infrastructure in china. As planned, CIPS will be developed in two phases. On 8 October 2015, CIPS (Phase I)

CIPS could include Russia, China, Iran

 

[beijingwalker]

Western sanctions could isolate Russia into trading with China, BRICs only: Economist​

 

[CAPRICORN-88]

the Society for Worldwide Interbank Financial Telecommunication

Swift stands for the Society for Worldwide Interbank Financial Telecommunication. Set up in 1973, it is a crucial part of the plumbing that facilitates flows of money around the world. It is a secure messaging system that allows around 11,000 financial institutions to talk to each other and authorise payments.

It just basically means the Russians won't be able to trade in dollars but they planned for that so now
China Russia and Iran are going to use a Chinese version of it called
CIPS
The Cross-Border Interbank Payment System (CIPS) is a payment system which offers clearing and settlement services for its participants in cross-border RMB payments and trade. It is a significant financial market infrastructure in china. As planned, CIPS will be developed in two phases. On 8 October 2015, CIPS (Phase I)

CIPS could include Russia, China, Iran

CIPS is gaining popular as China is the world 2nd largest nominal economy and the largest trading nation.

So is its digital eYuan. It will soon be launching a gold backed cryptocurrencies together with Russia.

Recently SWIFT sought to cooperate with BoC as they are fully aware of the road ahead that will be very bumpy.

Many US and Western politicians especially those in office are muddleheads and are oblivious to the danger ahead.

 

[War Thunder]

Russia joined SWIFT in 1995.

They are a latecomer..and before that the Soviet Union was not even allowed in...another reason why they probably fell apart.

China let in in 1983.

Russia or any other country doesn't import too many things from Europe nowadays. Europe and the entire world on the other hand depend entirely on China.
Imagine if China was to leave Swift tomorrow as a precaution that it could be sanctioned any time, citing Russian example, and starts trading only in Yuan.
Both the US dollar and America as a country will be done with. Europe will also suffer a major economic crash, and they won't be fighting or supporting anyone in a war for decades.

 

[Hamartia Antidote]

Western sanctions could isolate Russia into trading with China, BRICs only: Economist​

Are they not now because they think China is substandard or they just like paying higher prices?

Russia or any other country doesn't import too many things from Europe nowadays.

Which completely useless source are you getting your info from?

Russia-EU – international trade in goods statistics - Statistics Explained

EU statistics provide an analysis of the international trade in goods between the EU and Russia, by member state and by type of goods exchanged.

ec.europa.eu

 

[Nan Yang]

LOL. SWIFT is not ban from all Russian bank.

 

[Nan Yang]

So Many Holes in SWIFT Sanctions on Russia, those Sanctions are Useless​

I did not think the EU would play the SWIFT card on Russia. It turns out I was correct

MISH
MAR 3, 2022

SWIFT is the international payment system. Cutting off a top country from SWIFT access is a very big deal.

When the US and EU trotted out the SWIFT sanction card, I thought I got that one wrong. Closer inspection by Eurointelligence and others shows it's Not So Swift After All.

FAZ informs us that the Swift sanctions are essentially dead in the water. Only seven banks, representing a quarter of the Russian banking sector, are subject to the sanctions. What happened is that once this sanctions list went through the mill of talks with member states, only this pared-down lists survives. The EU originally promised to hit 70% of the Russian banking system. One reason for the exclusion of Sberbank is the deposits held by savers in the bank’s EU subsidiaries. It would have triggered massive deposit insurance claims.
The reduced ambitions embed an important piece of hard information. It is telling us that EU member states will not be ready to impose transactional sanctions on Russia in areas deemed vital to the EU economy, especially the import of Russian gas, oil and coal. What this will also tell us is that we have no means to crush the Russian economy, as Bruno Le Maire suggested. Vladimir Putin has run into big problems with his military campaign. But he will be able to finance the war.
Putin did not anticipate the central bank sanctions. That has turned out to be a real problem for the Russian economy. But he anticipated correctly that the west would continue to buy Russian gas and oil. We think the Russian leadership is also right in their assumption that the main effect of the Nord Stream 2 closure is not so much to make us less dependent on Russian gas, but to increase the price of gas.


The seven banks affected by the Swift exclusion are VTB, Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank und VEB. Notably, the two Russian banking giants, Sberbank und Gazprom Bank, are excluded. The ban will only come into effect in ten days, which will allow the Russians to reorganise their banking system, and we presume, re-route payments through banks that are not affected by the sanctions. What this means is that the Swift ban falls into the SINO category: sanctions in name only. The EU is cheering on the Ukrainian side from a safe distance, watching from warm living rooms, heated by Russian gas.

 

[American College Student]

China’s SWIFT alternative may undercut US sanctions and accelerate de-dollarization​

China’s Cross-Border International Payments System could give Russia a lifeline and accelerate de-dollarization
By DAVID P GOLDMAN
FEBRUARY 25, 2022

China's currency is developing into a safe haven. But there is more work to do. Photo: Facebook

Washington’s new sanctions against Russia were no match for President Biden’s rhetoric, leaving out the most obvious measure that the United States might take to hurt Moscow, namely exclusion from the SWIFT international payments system.

Banks conduct virtually all hard-currency transactions via SWIFT, or the Society for Worldwide Interbank Financial Telecommunication. But a new Chinese alternative might allow Russia to conduct most of its trade in yuan rather than dollars.

China’s Cross-Border International Payments System (CIPS), founded in 2015, is still under development and includes only 80 foreign banks. But there is no reason in principle that CIPS can’t substitute for SWIFT. And if Russia successfully shifts its trade payments out of the dollar system, the blow to American prestige and power would be enormous.

View attachment 818497
The US still imports massive amounts of Russian oil.

De-dollarization of trade is under debate in Western Europe. Germany’s Manager Magazine wrote on February 14, “Exclusion from the international payment system SWIFT is considered the sharpest sword that the West could wield as an economic sanction against Russia.

“However, it is a double-edged sword: the economic consequences would not only be serious in Russia, but also in Western Europe. In addition, the decoupling of Russia and China from the US dollar would be accelerated. Both countries are already working on competing payment systems.”

Russia also has developed an interbank messaging system, which now covers about 20% of domestic financial payments.

China’s yuan has advantages and disadvantages as a dollar substitute. It has gained about 8% against the US dollar since the Covid recession began in early 2020.

China’s consumer inflation rate stands around 1% year-on-year vs. 7.5% in the US, and the yuan to some extent has acted as a hedge against dollar inflation, as I wrote on February 17.

China's SWIFT alternative may undercut US sanctions - Asia Times

Washington’s new sanctions against Russia were no match for President Biden’s rhetoric, leaving out the most obvious measure that the United States might

asiatimes.com

A God sent opportunity for China to dethrone dollar.

Only if America continues to follow globalist political/economic strategy; however that is highly unlikely. There are legistlative elections coming up in november, and those midterms are almost certain to be a GOP landslide. Only the elites want a western free-trade zone and suppressed US economic regarding the resource-based sectors.