World Desk, AnyTV, Moscow
Published by: Harendra Chaudhary
Updated Mon, 28 Feb 2022 07:21 PM IST
Summary
According to experts, Russia may also use China’s SIPs (Cross-Border Interbank Payment System). China has made Sips as an alternative to Swift. But it is rarely used now. Now there is a possibility that along with China, Russia and other countries suffering from US sanctions may try to make it more prevalent.
The withdrawal of the international payment system – Society for Worldwide Interbank Financial Telecommunication (SWIFT) will have a very bad effect on Russia’s economy. The Russian government is also aware of this. But Russian analysts say that Russia was prepared for this. So he has put in place measures to limit the injury of this expulsion.
Taking strong action against the Russian attack on Ukraine, the US and European countries have decided to exclude several Russian banks from the SWIFT system. In view of this, the Central Bank of Russia – the Bank of Russia – has announced to provide a sufficient amount of cash to domestic banks. The Central Bank has said that with this measure, financial stability will remain in the country. Bank of Russia started repo (re-purchase agreement) auction on Monday for this purpose. He said that during this period the amount of cash that the banks would request for, would be made available to them.
Huge hike in interest rate
Meanwhile, on Monday, the Bank of Russia drastically increased the interest rate in the country. Now the interest rate in Russia will be 20 percent. Its purpose is to encourage Russian citizens to deposit their money in banks. The bank also announced that now 80 per cent of its income received in foreign currency will have to be exchanged by Russian citizens. That is, after depositing 80 percent foreign currency, they will have to take ruble (Russian currency) instead.
Bank of Russia had designed its own system like SWIFT a few years back. Its name is Financial Message Transfer System (SPFS). Now Russia has decided to use this system for domestic and international transactions. Anatoly Aksakov, head of the Financial Markets Committee of the Russian Parliament Duma, has said that SPFS is an alternative system through which international transactions can also be done. Some Russian experts have claimed that Russia’s expulsion from Swift is good news for it. This would prompt Russia to use its power to make the SPFS an international system and try to make the ruble an international currency.
Alternative to Swift made from China
According to experts, Russia can also use China’s SIPs (Cross-Border Interbank Payment System). China has made Sips as an alternative to Swift. But it is rarely used now. Now there is a possibility that along with China, Russia and other countries subject to US sanctions may try to make it more prevalent. International trade experts have said the new sanctions on Russia are a double-edged sword. This will definitely harm Russia, but it will also have a bad effect on European countries.
Hosuke Lee-Makiyama, head of the European Center for International Political Economy, told the British newspaper The Guardian that Russia has aligned itself with Russia, while Russia has tried to isolate itself from Europe. European Union companies have invested $300 billion in Russian assets. Russia can confiscate this money.
Expansion
The withdrawal of the international payment system – Society for Worldwide Interbank Financial Telecommunication (SWIFT) will have a very bad effect on Russia’s economy. The Russian government is also aware of this. But Russian analysts say that Russia was prepared for this. So he has put in place measures to limit the injury of this expulsion.
Taking strong action against the Russian attack on Ukraine, the US and European countries have decided to exclude several Russian banks from the SWIFT system. In view of this, the Central Bank of Russia – the Bank of Russia – has announced to provide a sufficient amount of cash to domestic banks. The Central Bank has said that with this measure, financial stability will remain in the country. Bank of Russia started repo (re-purchase agreement) auction on Monday for this purpose. He said that during this period the amount of cash that the banks would request for, would be made available to them.
Huge hike in interest rate
Meanwhile, on Monday, the Bank of Russia drastically increased the interest rate in the country. Now the interest rate in Russia will be 20 percent. Its purpose is to encourage Russian citizens to deposit their money in banks. The bank also announced that now 80 per cent of its income received in foreign currency will have to be exchanged by Russian citizens. That is, after depositing 80 percent foreign currency, they will have to take ruble (Russian currency) instead.
Bank of Russia had designed its own system like SWIFT a few years back. Its name is Financial Message Transfer System (SPFS). Now Russia has decided to use this system for domestic and international transactions. Anatoly Aksakov, head of the Financial Markets Committee of the Russian Parliament Duma, has said that SPFS is an alternative system through which international transactions can also be done. Some Russian experts have claimed that Russia’s expulsion from Swift is good news for it. This would prompt Russia to use its power to make the SPFS an international system and try to make the ruble an international currency.
Alternative to Swift made from China
According to experts, Russia can also use China’s SIPs (Cross-Border Interbank Payment System). China has made Sips as an alternative to Swift. But it is rarely used now. Now there is a possibility that along with China, Russia and other countries subject to US sanctions may try to make it more prevalent. International trade experts have said the new sanctions on Russia are a double-edged sword. This will definitely harm Russia, but it will also have a bad effect on European countries.
Hosuke Lee-Makiyama, head of the European Center for International Political Economy, told the British newspaper The Guardian that Russia has aligned itself with Russia, while Russia has tried to isolate itself from Europe. European Union companies have invested $300 billion in Russian assets. Russia can confiscate this money.