While political and financial experts are weighing the chances of London carrying out its threat to remove Russia’s banking system from SWIFT, the Russian central bank is in search of alternative solutions.
The institution plans to create a blockchain-based single payment area within the Eurasian Economic Union (EEU), Bank of Russia deputy chair Olga Skorobogatova said at the Congress of the Association of Russian Banks.
"We are now discussing the possibility of creating new technologies for transmitting messages processing payments within the EEU area as a supranational infrastructure. This would give us the opportunity to use the distributed ledger technology at the level of the EEU area, to make settlements and transfer financial information without disrupting existing payment systems," Skorobogatova said.
The system for transmitting messages with financial information based on distributed ledger technology will be compatible with the SWIFT format. At the initial stage, the project will operate on the territory of the Russian Federation, but in the future, the Russian central bank plans to interact with EEU banks through the platform.
Blockchain is not the only option for escaping financial isolation. The Bank of Russia has already taken some preventive measures by creating a national payment system (SPFS). It has been live for more than two years, with 402 participants registered as of March 1, 2018.
While SPFS will support the internal banking system in case of emergency, it is still very limited in terms of functionality. It does not allow making international payment transfers. What's more, it is closed to financial companies from CIS countries. The new blockchain-based payment area will serve as a link between Russia and the outside world.
The message from the Bank of Russia followed a recent speech by Russian government head Dmitry Medvedev. Blockchain technology could lay the foundation for EEU integration, he noted in February at an international digital forum. Apart from Russia, EEU includes Armenia, Belarus, Kazakhstan, and Kyrgyzstan, as well as Moldova as an observer state.
A single platform architecture should be open to both EEU countries and any potential partners currently outside the union, according to Medvedev.
"I hope that we will be able to cope with the challenges that our countries have faced in the digital age," Medvedev said.