Russian state-owned company Rostec says one of its subsidiaries has developed a blockchain-based international transfer system which it describes as “a real alternative to SWIFT in international settlements.” Rostec has more than 700 operating subsidiaries, most of which are in the defense sector.
The CELLS blockchain platform was developed by the Novosibirsk Institute of Program Systems (NIPS) and supports multicurrency payments, digital currency and identity. It’s claimed the platform can process more than 100,000 transactions per second.
“The system will make it possible to switch to settlements in national currencies, eliminate the risk of sanctions and ensure the independence of the national financial policy for clearing participants,” said Oleg Yevtushenko, Executive Director of Rostec.”
Following the Ukraine war, SWIFT barred access to several Russian banks. But Russia has been looking for a way around SWIFT for years. In 2019 it suggested that the five-nation BRICS (Brazil, Russia, India, China, and South Africa) develop a BRICS digital currency.
Russia has been working on a central bank digital currency (CBDC) and started trials in the middle of last year. Around the same time, Bank of Russia Governor Elvira Nabiullina expressed an interest in cross border CBDC. In response, former U.S. Treasury official Michael Greenwald told CNBC, “What alarms me is if Russia, China, and Iran each creates central bank digital currencies to operate outside of the dollar and other countries followed them.”
Chinese state media reacted to Russian banks being banned from SWIFT, saying it was “wanton manipulation by the West” without mentioning the Ukraine war. China is part of the M-CBDC Bridge project, which is exploring and developing a cross border CBDC platform with Hong Kong, Thailand, the UAE and BIS.
CBDCs are likely to fragment the global payment system. Meanwhile, SWIFT plans to play a role in creating interoperability between various CBDCs. Russia is likely to want other avenues.