Sanctioned, isolated and cornered after the start of the war in Ukraine, Russia continues to multiply stratagems to stay the course. In addition, it has just announced the creation of a system parallel to that of the Swift platform, from which many Russian banks have been excluded since Marchto ensure secure international payments.
The solution ? block chain. In fact, the Russian public defense conglomerate Rostec has announced the creation, in collaboration with the Novosibirsk Software Systems Institute (ISLN), of the CELLS blockchain. “Foreign countries will thus be able to continue paying for imports from Russia in their respective currencies”with a capacity of “up to 100,000 transactions per second, with the potential for higher performance”Rostec says.
A completely credible solution
Is a blockchain really a viable solution to replace Swift? “It’s completely believable”, explains André Casterman, who worked for 24 years on behalf of Swift, at the outset. For him, the biggest difference is mainly in the approach. “Swift is a centralized platform, while blockchain is the opposite of a decentralized system: programs run on each participant. But regulators and central banks are increasingly understanding and working on this technology. surprising that the Central Bank of Russia switches to it.”
Very often associated with cryptocurrencies, the blockchain, however, is not exclusively reserved for this sector. “Blockchain is the third generation of the Internet. It allows to exchange value, and not just information”, he adds. A maneuver that has reason to smile in Russia’s head, when the country was one of the most reluctant to cryptocurrencies and associated technologies before the outbreak of war…
But while the approach and technology differ from Swift’s, the guarantees should be the same. “Blockchain security is also very strong. Due to its decentralized nature, it is more difficult to hack. It is also less expensive to defend than Swift’s three centralized strengths.”
Who will agree to use it?
Therefore, CELLS would be a viable solution. But it remains to be seen whether Moscow’s partners will be ready to use it. “I think they will. If they want to do business with Russia, they will have no choice.”, analyzes André Casterman, who recalls that Russia is not the first country in this situation. China has also developed its own international parallel payment platform. “We are going towards a model with several systems that will be used in parallel: Swift, the one from Russia, the one from China, etc.”
This multiplication of systems does not, however, represent a risk of weakening Swift, believes our interlocutor. “Swift is still distinguished by its role as a trusted third party. In case of disagreement between two banks during a payment, the platform acts as a neutral mediator. In the Russian system, in case of disagreement, it will be more difficult for a small bank to do hear your voice against an organization the size of the Central Bank of Russia.
Not to mention that Swift remains, despite everything, the most used platform. “It retains that ability to reach all banks. The new systems that appear point to niches or corridors: United States/Mexico, intra-European, etc. Swift does not have access to the entire market, but remains at the top. I don’t see it disappearing or being replaced.”
No turning back for Russia
Without disappearing, however, Swift sees additional solutions multiply around her. And the fragmentation dynamic could continue in the future. “When it was created in the 1970s, Swift was the only solution for global banks. Today this is no longer the case: it is becoming opaque, expensive and geopolitical tensions are forcing excluded countries to innovate”André Casterman also points out.
The proof is in Russia. Strongly affected by her exclusion at first, she is getting back on her feet. “If you turn off the Wi-Fi at home, the children will be lost, until they discover 4G”illustrates. “Crises drive innovation. Countries like Russia will now mind their own business, with their own system. For them, I don’t see a return to Swift in the future.”