The 4th Media » Russia Creates Its Own Payment System

This is important:

Almost 91 domestic credit institutions have been incorporated into the new Russian financial system, the analogous of SWIFT, an international banking network.

The new service, will allow Russian banks to communicate seamlessly through the Central Bank of Russia. It should be noted that Russia’s Central Bank initiated the development of the country’s own messaging system in response to repeated threats voiced by Moscow’s Western partners to disconnect Russia from SWIFT.

Much of the West’s power comes from our financial hegemony. Our ability to cut people off from loans, payments and so on. Since this new system is Russian only, it isn’t, right now, that big a deal.

But start connecting other countries to it, say China, Iran, India and so on, and it becomes a way of breaking financial blockades.

Include some calculable financial law (less of a challenge than it used to be as New York and London courts make increasingly punitive decisions), and start lending in Yuan (with which one can buy much of what one needs in the world, since the Chinese make so much of it), and you have a fully credible financial system.

The key is to get one major manufacturing country in. Most of the nations the West is punishing these days, financially, are oilarchies ( Venezuela, Iran, Argentina). They need the ability to buy manufactured goods.

Complete story at - The 4th Media » Russia Creates Its Own Payment System

‘SWIFT is archaic, doesn’t stand up to modern digital age’ — RT Op-Edge

RT: Bank bailouts and refocusing budgets - do you think the newly-approved anti-crisis plan will help the Russian economy?

Patrick Young: Well, let’s put it this way. I mean rumors of the death of the Russian economy have been strictly exaggerated so far. There is no doubt there is a problem out there; we are looking at the possibility with oil prices where they are of two and a half possibly five percent retrenching in the economy, and recession during the course of this year. What’s come out today has been an initial offering; it’s a plan from Mr. Medvedev’s office which is trying to provide a degree of a security blanket, a cushion, perhaps a mattress if you want to think about it in this way, underneath the most important parts of the economy in order to keep the wheels of economic action still going. What we are looking at is something where there is not enough money to underpin every single aspect of the Russian economy, but significant critical aspects of it are going to receive support.

Therefore there is targeting towards banks, particularly larger banks that are lending to all aspects of the Russian ‘corpocracy’. We are also seeing some measures that are coming in to help smaller businesses like agriculture and so on. And also indeed because of inflation that’s been let loose recently there seems to be some increases in pensions, so that therefore the average Russian retiree is not going to be suffering too much hardship as the result. All around, net-net, this is a safety blanket; it’s something to try out a little bit of a smoothening to stop ruffling the feathers of the Russian economy and help things come to a balance.

RT: Just several days ago the S&P credit rating agency downgraded Russia's status to junk. The agency has faced criticism in the past. It was sued for fraud, accused of market manipulation and political bias.How much do international investors rely on these ratings in their decisions?

PY: The ratings agencies provide a standard bench mark indicator in order to help investors decide on what they are going to invest in. But at the same time what you’ve said is absolutely correct. Over the course of the last five or six years rating agencies have taken a buffeting. Part of this may have been a result of their own actions, they may have been too eager to try and give people that sort of ratings that they ultimately wanted, including, it has to be said, governments. Ultimately there has been a follow-through after the course of the property crushing.We are seeing at the moment rumors coming through perhaps indeed this agency S&P is going to settle for about 1.5 billion claims against them in relation to all of the US property issues of 2007-2008, the junk mortgage debacle and so on. But at the same time ironically the politicians were most apoplectic in Europe when the rating agencies had the temerity to downgrade their own ratings. Where does this leave Russia? Ultimately it was inevitable we were on the course towards seeing probably a junk rating for Russia once S&P and the other rating agencies put in place earlier maneuvers over the course of the last couple of months. What does it actually mean for Russia per se? Look, people know Russia is an emerging economy, it is therefore more speculative, and it is always going to be slightly more risky than a country with very little borrowing.

Complete story at - ‘SWIFT is archaic, doesn’t stand up to modern digital age’ — RT Op-Edge

Cutoff of Russia from SWIFT banking system is threatened - New Cold War: Ukraine and Beyond

What SWIFT threats would mean for Russia

By Howard Amos, The Moscow Times, Jan. 28 2015

Discussions among European leaders about new sanctions on Moscow [following rebel military advances in eastern Ukraine] have again raised fears that the SWIFT international payments system might be cut off, a move that experts warn would wreak financial havoc on Russia.

The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a cornerstone of the world’s financial architecture and integral to the functioning of Russia’s stock exchanges and its Central Depositary, as well its banks and companies. In 2012, Western countries forced the Belgium-based payments system to cut ties with Iran, a move credited with bringing Tehran to the negotiating table over its nuclear program.

“Before SWIFT they used telexes, which are now in museums,” said Vasily Solodkov, head of the Banking Institute at the Higher School of Economics. “Russia used to use stallions and sticks as money and we could return to that, but why?” he asked.

Under discussion

Amid surging violence in eastern Ukraine fueled by Kremlin support for a separatist rebellion, European foreign ministers are currently considering what to include in a new round of sanctions. The new restrictions are likely to be signed off by EU leaders at a Feb. 12 summit.*

Complete story at - Cutoff of Russia from SWIFT banking system is threatened - New Cold War: Ukraine and Beyond

Russia's Alternative to SWIFT Would Cause Big Problems for the West - Russia Insider

The Inevitable Blowback of Russia’s New Interbank System

Iran isn’t in a position to challenge the United States. But when the U.S.’ most loyal ally in Europe, the United Kingdom, called for Russian banks to be ejected from SWIFT during the height of the Ukraine crisis, the two Anglo countries met their match.

A few weeks ago, Russia announced its intention to launch an alternative to SWIFT by May 2015. Russia’s new interbank system would dominate transactions in rubles, with conversion to and from U.S. dollars at either end.

For example, an Iranian government agency could use dollars to buy rubles, transmit them via the Russian system, and have them paid to a supplier in Europe who then converted them back to dollars.

Short of hacking into the Russian system, the U.S. would have no way of knowing who was paying what to whom or for what reason.

Opportunity or Curse?

It’s not hard to imagine the opportunities this could present — and I’m dead sure the IRS and other U.S. agencies are doing so right now. One relates to “terrorist” financing and sanctions-evasion. But there are others.

For example, “U.S. persons” could send funds to a FATCA-compliant bank overseas, withdraw them, convert into rubles, and have them sent across the Russian interbank system to a non-compliant bank. They would then be outside the international tax reporting system the U.S. is trying so desperately to construct.

Complete story at - Russia's Alternative to SWIFT Would Cause Big Problems for the West - Russia Insider