Russia explores innovative ways to address international payment issues due to sanctions

(MENAFN) The Russian government and business community are exploring innovative solutions to address banking and international payment issues caused by sanctions. Following its exclusion from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) due to the conflict in Ukraine, Russia has faced significant challenges in international trade, impacting its imports and exports. The sanctions, which restricted the use of dollars and euros, have particularly affected Russia's economy, given its heavy reliance on global trade.

To mitigate these problems, Russia developed the System for Transfer of Financial Messages (SPFS) as an alternative to SWIFT, which was launched in late 2017 and by 2023 was utilized by over 400 financial institutions. Additionally, Russia established its own Mir payment system to replace Visa and Mastercard, which also became a target for Western sanctions. President Vladimir Putin criticized existing international payment systems as costly and controlled by a small group of states and financial entities, prompting efforts to create alternative solutions.

Currently, Russia is concentrating on promoting trade in national currencies, enhancing its digital payment platform “BRICS Bridge,” and exploring cryptocurrency options. As trade with Western countries diminishes, Russia is compensating by deepening ties with Asian and Gulf nations. Recent agreements with these countries focus on using the Russian ruble, Chinese yuan, or Indian rupee, particularly in energy transactions with China and India.

In a bid to reduce dependency on the US dollar and the euro, Russia aims to increase the share of its trade conducted in national currencies. Putin has projected that by 2023, the use of the dollar and euro in Russia’s exports will be halved, with the ruble’s share rising to 40 percent. Russia aspires to raise the proportion of non-dollar and non-euro currencies in its international trade to 80 percent by 2030. However, despite these efforts, challenges persist, especially in trade with India, where sanction-related pressures on banks and the non-convertibility of the rupee complicate transactions.

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