Central Bank Of Russia: Electronic Money Could Render SWIFT Obsolete

Digital currencies could render the SWIFT global payments network unnecessary, RT.com reported, citing the Central Bank of Russia (CBR).

Olga Skorobogatova, first deputy governor of the CBR, said 30 countries are working on their own national digital currencies, some of which could launch in five to seven years. According to the Bank for International Settlements (BIS), as of July, some 36 central banks published studies on the concept of a central bank digital currency (CBDC) also known as a digital fiat currency, the report stated.

“In this case SWIFT it may not be necessary, because it will be a different kind of technological interaction,” Skorobogatova said during a virtual meeting, per RT.com.

She added, however, that SWIFT could end up being the platform used by different countries for their national digital currencies, the report stated.

SWIFT currently expedites cross-border payments for 11,000 banks across more than 200 countries.

Russia’s future relationship with the SWIFT system could be in jeopardy as part of broader sanctions being considered by some politicians in the West, according to the report. Russia, in turn, has been working on its own financial messaging network, SPFS.

The digital ruble currently being developed by Russia is intended to complement cash and non-cash rubles. It is expected to be released as a trial in Crimea sometime in 2021, the report stated. China, Russia’s central trade partner, has been testing its digital yuan in some cities, as well as on digital platform JD.com. Further, the European Union is working on the digital euro, and Sweden is testing its CBDC.

The CBR said in October that the digital ruble could help reduce the country’s reliance on the U.S. dollar and could make digital payments more affordable. The central bank also said the digital ruble would facilitate international payments and reduce the pressure on current payment systems.

In a PYMNTS interview, Frank Dux, managing director of CoCoNet, said many legacy financial institutions have had to prioritize upgrading aging computer infrastructure in order to collaborate with FinTechs.