China’s SWIFT alternative may undercut US sanctions

[onebyone]

China’s SWIFT alternative may undercut US sanctions​

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

 

[Beidou2020]

Russia can demand all payments for Russian goods must be paid through the SPFS. That’s Russia’s SWIFT alternative.

Cutting off Russia from SWIFT won’t do the damage it did to Iran. Russia and China saw how SWIFT was being used as a sanctions weapon and developed its own SWIFT alternatives SPFS (Russia) and CIPS (China).

If SWIFT is cut off, the world won’t stop trading with Russia, companies will switch to alternative systems.

People severely overestimate the power of Western sanctions.

 

[Indos]

US and NATO so far dont give huge economic sanction to Russia due to high energy and commodities prices at the moment. It include the fact that Russia supple 1/3 needs of gas supply to European countries using pipe gas.

The plan to exlude Russia from SWIFT is not yet done

 

[Viet]

Russia can demand all payments for Russian goods must be paid through the SPFS. That’s Russia’s SWIFT alternative.

Cutting off Russia from SWIFT won’t do the damage it did to Iran. Russia and China saw how SWIFT was being used as a sanctions weapon and developed its own SWIFT alternatives SPFS (Russia) and CIPS (China).

If SWIFT is cut off, the world won’t stop trading with Russia, companies will switch to alternative systems.

People severely overestimate the power of Western sanctions.

That’s too little. Swift has a transaction volumes of $5 trillion per day or $1,800 trillion per year. Russia economy is about of Spain after this war Russia will be the level of Belgium. The reason why Swift is not cut off yet is Germany is still finding a way how to pay Russia gas bills.

 

[Beidou2020]

That’s too little. Swift has a transaction volumes of $5 trillion per day or $1,800 trillion per year. Russia economy is about of Spain after this war Russia will be the level of Belgium. The reason why Swift is not cut off yet is Germany is still finding a way how to pay Russia gas bills.

Irrelevant how much volume SWIFT is doing. Russia just needs SPFS to clear all their payments with foreign companies.

As long as all Russian payments are getting cleared, the volume of the payment system is irrelevant.

If foreign companies are forced to use SPFS and CIPS, it will blow up the entire monopoly of SWIFT and the financial sanctions become toothless.

This is why the West is scared to sanction SWIFT. You could get an exodus from SWIFT to CIPS and SPFS. The leverage is gone.

 

[Viet]

Irrelevant how much volume SWIFT is doing. Russia just needs SPFS to clear all their payments with foreign companies.

As long as all Russian payments are getting cleared, the volume of the payment system is irrelevant.

If foreign companies are forced to use SPFS and CIPS, it will blow up the entire monopoly of SWIFT and the financial sanctions become toothless.

This is why the West is scared to sanction SWIFT. You could get an exodus from SWIFT to CIPS and SPFS. The leverage is gone.

Russia is poor if compared to the west. Putin makes his country poorer. To put in perspective Russia trades with China is less than Vietnam trades with China.

It’s justified to strangulate Putin economically he must feel the pains.

 

[That Guy]

Xi is probably laughing at this entire situation, while sipping wine.

The Europeans and NATO are once again distracted, while the Russians have to bow their head to China to save their economy.

Heck, this situation amuses even me.

 

[UKBengali]

Xi is probably laughing at this entire situation, while sipping wine.

The Europeans and NATO are once again distracted, while the Russians have to bow their head to China to save their economy.

Heck, this situation amuses even me.

China is loving this as you say.

It now has the cornered Russians exactly where it wants them and the West and Russia squabbling.

This gives China even more breathing space over this decade to develop it's comprehensive power.

 

[retaxis]

China is loving this as you say.

It now has the cornered Russians exactly where it wants them and the West and Russia squabbling.

This gives China even more breathing space over this decade to develop it's comprehensive power.

Perfect time for Iran to expand its power. China will sit and develop another decade without interuptions

 

[emotionless_teenage]

Just use XRP

 

[Beidou2020]

Russia is poor if compared to the west. Putin makes his country poorer. To put in perspective Russia trades with China is less than Vietnam trades with China.

It’s justified to strangulate Putin economically he must feel the pains.

I forgot that I was replying to an idiot.

 

[HttpError]

Just use XRP

Bitcoin and Ethereum.

 

[beijingwalker]

Wonder after this crisis who's going to be the Number one enemy of the west, is China going to lose this hard won title?

 

[Trango Towers]

Russia can demand all payments for Russian goods must be paid through the SPFS. That’s Russia’s SWIFT alternative.

Cutting off Russia from SWIFT won’t do the damage it did to Iran. Russia and China saw how SWIFT was being used as a sanctions weapon and developed its own SWIFT alternatives SPFS (Russia) and CIPS (China).

If SWIFT is cut off, the world won’t stop trading with Russia, companies will switch to alternative systems.

People severely overestimate the power of Western sanctions.

They work on poor and small countries

 

[S.Y.A]

Xi is probably laughing at this entire situation, while sipping wine.

The Europeans and NATO are once again distracted, while the Russians have to bow their head to China to save their economy.

Heck, this situation amuses even me.

USA and the west have overused their sanctions and embargo playbook, it used to work well against small countries, but not for countries who sell massive amounts of stuff to the West. they will have to realize that there is no alternative to hard power. you want to stop dictators and autocrats? use military force. sanctions are not going to cut it.