As part of the Western sanctions, Russia was cut off from the global payment system recognized as SWIFT because of its invasion of Ukraine. This prompted the country to develop an alternative and now a blockchain-based analogue has been developed by a Russian university. According to its development team, the system is designed to prevent banks and countries from being disconnected.
A SWIFT substitute
The Russian St Petersburg State University had been working on developing an alternative to the global SWIFT payments network. Experts from its National Technology Initiative announced that they had successfully developed a new interbank payment system and were preparing for its trial.
Major Russian banks are no longer able to access the SWIFT payment system because of the financial restrictions that have been imposed due to the decision of the Moscow authorities to send their troops into Ukraine. The university’s statement said that they were ready with the pilot of the decentralized financial messaging system and banks can make use of it.
The development team of the project comprises of specialists in distributed ledger technology and they have leveraged blockchain technology for developing the platform.
Alexander Kireev, the technical director of the Competence Center, asserted that they had gotten good results during preliminary testing. He stated that the current transfer speeds were more than 25,000 per second for every node and they could expand the capacity of the network in the future.
The university also stated that they could scale up the program and add new financial organizations to the platform. The representatives of the university also added that disconnecting any banking institution or participating state would be impossible because the system would grant the same access and right to every client.
The development team also added that making a cross-border financial transactions via the distributed ledger technology also ensures reliable and secure transactions. It should be noted that the blockchain-based project by the university is the second one to be introduced in Russia as an alternative to SWIFT. Back in June, a similar platform had been introduced by Rostec, which was aimed at allowing Russia to make international settlements with its partners.
It should also be noted that there is already a traditional alternative to SWIFT in Russia, which is called SPFS i.e. the System for Transfer of Financial Messages. It had been launched back in 2014 when tensions had been similar because of the country’s annexation of Crimea. A report shows that SPFS is connected to about 70 organizations that belong to different countries.
The CELLS platform developed by Rostec is also aimed at enabling multicurrency transactions and international payments. Plus, it can also be used for storing digital currency. Due to its ongoing military conflict in Ukraine, the Russian Federation has been cut off from the financial system globally and this also applies to its foreign country reserves. Therefore, Moscow has switched to using its national currency for payments with its trading partners and also considering the use of crypto for making international settlements.