The Central Bank of Russia plans to implement the distributed ledger technology in its financial messaging system created as an analogue of the International Service for Interbank Financial Communication (SWIFT), reports “Izvestiya”, The Russian Newspaper, citing the Bank of Russia’s public affairs office.
“The Bank of Russia considers the perspective of its financial messaging system development with the use of distributed ledgers”, reads “Izvestiya” referring to the press office of the Bank of Russia. The office explained that the Russian SWIFT is used by Russian banks in two major ways: firstly, as a backup channel for financial message exchange and, secondly as an alternative to SWIFT when it is most expedient from an economic point of view.
As of now, 326 Russian banks are connected to the Russian SWIFT system – this is only 46% of all Russian banking institutions. Experts suggest that via blockchain implementation the Central Bank intends to inspire more Russian financial institutions to use its service – during the last year the number of Russian SWIFT participants did not grow at all.
The Central Bank regards the possibilities of the Ethereum blockchain-platform or its analogues implementation, “Izvestiya” cites the source familiar with the Bank of Russia’s plans.
Experts that commented on the Central Bank initiative do not think that blockchain implementation will encourage large Russian banks to abandon SWIFT and turn to its Russian analogue because now there is no threat to the SWIFT functioning in Russia but the transition to the new system can entail huge costs. However they admit that Russian SWIFT can be a good solution for regional and local banks that do not have international transactions.
The Russian service for financial messaging was created in 2014 as a backup channel for interbank communication. In 2014 there were some discussions at the European Parliament about removing Russia from SWIFT as part of the sanctions.