Analysts called the disconnection of Russia from SWIFT not scary for the country
Analysts interviewed by Lenta.ru called it safe for Russia to disconnect the country from the global system of bank payments SWIFT. According to them, such a measure could be included in the next package of anti-Russian sanctions in the event of Moscow's military invasion of Ukraine. Meanwhile, Moscow itself is unable to adequately respond to the new restrictions, experts say.
The SWIFT system, created in 1973, allows banks around the world to conduct transactions, exchanging messages about the details of each transaction, and until recently had no analogues. The chief economist of the consulting company PF Capital, Evgeny Nadorshin, in a conversation with Lenta.ru, noted that the use of SWIFT is not a necessary condition for the functioning of the domestic banking system.
“By and large, this will certainly be a problem, albeit not a catastrophic one. This will create quite serious obstacles for ordinary financial activities, significantly limiting the opportunities for ordinary economic agents (individuals and legal entities) to use the payment system outside Russia, and for external agents – the ability to transfer to Russia. The channels, of course, will remain, they will simply become much smaller, ”the financier noted.
“Technologically, the situation can be compared to the Internet. SWIFT is a kind of routing through which an IP packet would go from one user to another on the Internet. And on the same Internet there are many different routing options, in the financial world there are even more of them. By and large, the very ability to send money transfers from Russia to abroad and back will not disappear with disconnection from SWIFT, ”says Nadorshin. Even with cross-border settlements, he said, it is possible to do without using SWIFT if Russian banks open correspondent accounts directly with foreign credit institutions.
If a Russian bank has a direct open correspondent account in a bank of the country in whose currency the transactions are carried out, SWIFT is simply not needed
Evgeny Nadorshing, chief economist of the PF Capital consulting company
“But there may not be such an account for a specific country and currency. For example, a Russian bank making transactions in dollars may have a correspondent account with a European or Asian bank, and that one with an American one. The same applies to settlements in euros or any other currency. In fact, an American bank will hold certain amounts in dollars for a European or Asian bank, and carry out operations in favor of the Russian one ”. For many banks, one or two correspondent accounts abroad are enough for daily work with a limited number of currencies, but the largest have an extensive network of correspondent relations with credit institutions around the world.
“The developed system of correspondent accounts can easily replace SWIFT. There are several modes of working with correspondent accounts. Some provide for credit transactions, others – only prepayment transactions, – explains Nadorshin. – Credit operations do not imply a preliminary transfer of money from the counterparty: this is done on credit, and then payment is made. The prepaid mode assumes that the counterparty has transferred a certain amount through some channels to such an account. If such a channel was not established before SWIFT was disabled, you will have to find intermediaries to do this. ”
At the same time, the threat of disconnection from SWIFT has been relevant for Russia for several years. It was first announced in 2014, but was never implemented. Since then, banks have organized an extensive correspondent network, and even the sanctioned credit institutions have partners who provide access to correspondent accounts abroad. Even earlier, under the influence of the consequences of the global crisis of 2008-2009, the Central Bank changed the mode of operation with correspondent accounts. He abandoned currency swaps with central banks of other countries in order to obtain liquidity in their currencies and himself conducted foreign exchange repo transactions and swaps with Russian banks, providing them with currency secured by securities and rubles.
“And for this, the Central Bank also used its correspondent accounts opened in foreign banks. Over time, this method of replenishing liquidity was no longer used as unnecessary, but the opportunity itself has not disappeared anywhere. In addition, the regulator also has correspondent accounts opened with foreign banks. Their presence makes it possible to quite calmly organize transactions on them, including with the participation and in the interests of commercial banks, ”states Nadorshin. It may take one business day to reconfigure and tune the system, he said.
We'll have to wait
In turn, the analyst of Raiffeisenbank Stanislav Murashov in an interview with “Lenta.ru” noted that at the moment there are no acceptable alternatives for settlements via SWIFT. When disconnected from the system, Russian banks will have to separately coordinate each transaction with foreign partners in which they have opened correspondent accounts. “All payments, even through a direct correspondent account in a foreign bank, go through SWIFT anyway. This is a convenient system for administering a large number of transactions, “says the economist.
Without it, each payment will need to be confirmed separately – via e-mail or telex or something else. SWIFT processes several transactions per second, but here you have to wait much longer
Stanislav Murashov, Raiffeisenbank analyst
There are already analogues in Russia, the main of which is the Financial Messaging System (FMS) developed by the Central Bank. However, a limited number of foreign banks are currently connected to it, mainly credit institutions of the CIS countries and subsidiaries of Russian banks in Europe. “It makes no sense or reason for JPMorgan to connect to the Russian system,” says Murashov.
According to him, even in settlements within the country, Russian banks, as a rule, use SWIFT, considering it a convenient system. “But there are Russian analogues for conducting operations within the country, and it will probably not be so difficult to switch to them. Although even this will require a long and costly transition period, commissions will increase significantly. The transition will be quite painful, “says the analyst.
At the same time, Moscow is limited in its options for retaliatory measures, since it does not have sufficient influence on the world economy: “In this case, a mirror measure on the part of the Russian authorities may be a forced refusal to service debt or pressure along the export line.”
However, the interlocutors of “Lenta.ru” agree that disconnecting Russia from SWIFT will be a last resort, to which the United States and its allies will be the last to go. “I think that right now a decent part of what is circulating in the media is rather an attempt to indicate the determination of the parties,” says Evgeny Nadorshin of PF Capital. According to Raiffeisenbank analyst Stanislav Murashov, Russia is a significant trading partner for Europe, in contrast to Iran, which was disconnected from SWIFT in 2018.
On December 6, it became known that the United States had prepared a new sanctions package against Russia, providing for including disconnection from SWIFT. It is planned to apply it in the event of a military invasion of Ukraine by Moscow. The authors of the document assess it as “damn aggressive”. In addition, it contains a ban on the use of American banks and payment systems for large Russian businessmen and representatives of the close circle of President Vladimir Putin.