Sanctioned, isolated and cornered in the aftermath of the launch of the war in Ukraine, Russia continues to multiply the stratagems to stay the course. It has also just announced the creation of a system parallel to that of the Swift platform, from which many Russian banks have been excluded since March, to guarantee secure international payments.
The solution ? Blockchain. The Russian public defense conglomerate Rostec has indeed announced the creation, in collaboration with the Novosibirsk Institute of Software Systems (ISLN), of the CELLS blockchain. “Foreign countries will thus be able to continue to pay for imports from Russia in their respective currencies”with a capacity of “up to 100,000 transactions per second, with the potential for further increased throughput”says Rostec.
A completely credible solution
Is a blockchain really a viable solution to replace Swift? “It’s completely believable”, clarifies from the outset André Casterman, who worked for 24 years on behalf of Swift. For him, the biggest difference is mainly in the approach. “Swift is a centralized platform, whereas blockchain is the opposite of a decentralized system: the programs run at each participant. But regulators and central banks are increasingly understanding this technology and working on it. therefore not surprising to see the Central Bank of Russia turn to her.”
Very often associated with cryptocurrencies, the blockchain is however not exclusively reserved for this sector. “Blockchain is the third generation of the Internet. It makes it possible to exchange value, and not just information”, he adds. A maneuver that has something to smile about in the head of Russia, when the country was one of the most reluctant to cryptocurrencies and associated technologies before the outbreak of the war…
But while the approach and technology differ from Swift, the guarantees should still be the same. “Blockchain security is also very strong. Because of its decentralized nature, it is harder to hack. It is also less expensive to defend than Swift’s three centralized fortresses.”
Who will agree to use it?
CELLS would therefore 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 parallel international payments platform. “We are moving towards a model with several systems that will be used in parallel: Swift, that of Russia, that of China, etc.”
This multiplication of systems does not however represent a risk of weakening for Swift, believes our interlocutor. “Swift always stands out for its role as a trusted third party. In the event of a disagreement between two banks during a payment, the platform acts as a neutral mediator. In the Russian system, in the event of a disagreement, it will be more complicated for a small bank to make its voice heard against an organization the size of the Central Bank of Russia.”
Not to mention that Swift remains, despite everything, the most widely used platform. “It retains this ability to reach all the banks. The new systems that appear target niches or corridors: United States/Mexico, intra-European, etc. Swift does not have access to the entire market, but it remains at the summit. I don’t see it disappearing or being replaced.”
No turning back for Russia
Without disappearing, however, Swift sees additional solutions multiply around it. And the dynamics of fragmentation could continue in the future. “When it was created in the 1970s, Swift was the only solution for global banks. This is no longer the case today: it is becoming opaque, costly, and geopolitical tensions are forcing excluded countries to innovate”further notes André Casterman.
The proof is with Russia. Strongly affected by her exclusion at the beginning, she is falling back on her feet. “If you turn off the Wi-Fi at home, the children will be lost, until they discover 4G”he illustrates. “Crises drive innovation. Countries like Russia will now take care of their own business, with their own system. For them, I don’t see a return to Swift in the future.”