It may have arrived with little fanfare, but Russia’s SWIFT alternative has, more or less, arrived.
Speaking in no uncertain terms at a meeting with Russian President Vladimir Putin late last month, Elvira Nabiullina, the Governor of Russia’s central bank, stated: “We have finished working on our own payment system, and if something happens, all operations in SWIFT format will work inside the country. We have created an alternative.”
Now maybe this story taken by itself is no big news. But let’s look at it the context of recent events:
Russia just created its first ever representative office of the Bank of Russia abroad…in Beijing. This move brings Russia one step closer to issuing its own sovereign yuan-denominated bonds.
Meanwhile the Industrial and Commercial Bank of China is now officially acting as a renminbi clearing bank in Russia, which expands local settlement business in direct yuan-ruble trade and follows Russia’s 2015 inclusion of the renminbi on its official reserve currency list.
Are you starting to see the bigger picture? Again, no one of these stories is a silver bullet, but they’re all related and they all point in the same direction: China and Russia are preparing for the inevitable(?) split with the US-dominated, dollar-denominated, SWIFT-networked global(ist) financial architecture.
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