New payment fronts: Russia counters Western sanctions with alternative systems
Russia Develops Alternative Payment Systems in Response to Western Sanctions
The Russian economy has been struggling with sanctions imposed by Western countries for years, leading to the need to search for new solutions in the field of international payments. In response to the restrictions on trade imposed by Western countries, Russia is actively developing alternative payment systems to reduce its dependence on the dominance of the dollar and Western financial institutions.
Alternative Payment Systems Requiring Attention
Russian payment systems SPFS and Mir, the Chinese system CIPS, and the Indian system UPI are initiatives aimed at liberating themselves from the control of international payment systems such as SWIFT. They encompass a wide range of activities aimed at creating independent settlement mechanisms.
The Battle for Dominance in Payment Systems
Alternative payment systems pose a challenge to the dominance of SWIFT, controlled by the United States, in the global financial system. Russia, along with trading partners like China and India, aims to create their own payment solutions that will allow them to continue doing business despite the existing sanctions.
Russian SPFS and Mir, Chinese CIPS, and Indian UPI
The SPFS system was launched in Russia in 2014 and successfully serves an increasing number of organizations from different countries. The Chinese CIPS system has been operating since 2015, while the Indian UPI system since 2016. All these initiatives aim to eliminate barriers in international payments and facilitate trade for participants using these systems.
Development of Digital Payment Forms
In addition to alternative settlement systems, more countries are considering introducing central bank digital currencies and cryptocurrencies to facilitate payments. Russia is experimenting with trading in cryptocurrencies as a way to deal with difficulties in fiat payments, while China is also working on its own digital currency.
Planned Actions of Russia and China in Crisis Situations
In the event of escalating tensions on the international stage, Russia and China are considering reinstating barter trade to avoid financial blockades and ensure liquidity in trade. Through the development of alternative payment systems and experiments with new forms of currencies, both countries hope to streamline transaction processes and safeguard their commercial interests.
