Russian financial institutions are prepared to survive without access to SWIFT (The Society for Worldwide Interbank Financial Telecommunication) – the global dollar-based interbank payments network – should the US and European Union follow through with threats to cut it off, according to Deputy Prime Minister Arkady Dvorkovich.
“Certainly, it is unpleasant, as it will prove a stumbling block for companies and banks, and will slow down work. It will be inevitable to deploy some aged technologies for information transfer and calculations. However, the companies are technically and psychologically ready for the shutdown as this threat was repeatedly voiced,” Dvorkovich said, according to TASS and RT, adding that such a dramatic step would negatively corporations doing business in the US and Europe.
“In general, disconnecting Russia from SWIFT would be a crazy step on the part of our Western partners. It is obvious that for the companies which work in Europe and the US it would be harmful. And this applies not only to the shutdown of the service,” he said.
The US and European Union have been periodically threatening to disconnect Russia from SWIFT since 2014 (over SWIFT’s own objections), when the conflict in Ukraine flared up and the two powers introduced the first round of international penalties against Moscow for its alleged involvement.
As a reminder, at the time, the MasterCard payment system stopped serving clients of seven Russian banks without warning after Washington imposed its first set of sanctions on Moscow in 2014. In response, the Russian government ordered the creation of a national payment system. With the support of the country’s banking system, the Mir charge card was introduced in 2015, although there is no data on what its adoption rate has been in the following years.
This wouldn’t be the first time the US has threatened to cut off a major ally from the international banking system (indeed, it’s a threat frequently leveraged against nations, like Pakistan, which will be added to a list of terrorism financing nations). Over the summer, it even threatened to expel China, it’s largest trading partner, from using dollars if it didn’t crack down on North Korea. In September, Russia received its latest SWIFT expulsion threat if it violated North Korea sanctions.
In 2017, Russia’s Central Bank Governor Elvira Nabiullina told President Vladimir Putin that Russia’s banking sector had been provided with all the necessary conditions for operating lenders and payment systems in case of disconnection from SWIFT. According to the regulator, 90 percent of ATMs in Russia were ready to accept the Mir payment system, a domestic version of Visa and MasterCard.
SWIFT was famously the object of a hacking attack – since blamed on shadowy North Korean agents – that saw $81 million of reserves from the central bank of Bangladesh stolen from the New York Fed and transferred to Manila, where it was later traced to Macau and then vanished. No perpetrator has ever been identified.