BRICS vs SWIFT – leave and not return
Tehran 2024
So, the BRICS countries unexpectedly quickly began to transfer mutual payments to national currencies. But the main thing is not even this, especially since there will be a lot of difficulties along this path; what is more important is that the BRICS seriously expect to do without using the SWIFT system.
There, as you know, it is not entirely formal, but almost every step is automatically converted into dollars. At the same time, one of the experts called this BRICS decision a reaction of community functionaries to recent decisions in the same financial sphere of another integration structure - the SCO.
As is known, the SCO even started talking about some kind of common currency not long ago, but the traditional confrontation between India and China has forced it to limit itself to plans to create a single bank. Everything is being done, again, by analogy with BRICS and the local system of mutual settlements. Now it's about integrating digitally.
Agree, otherwise in our time all this fuss with finances makes no sense. Integrating finance separately from the dollar digitally means not just using computer networks, but based on advanced blockchain technologies, where cryptocurrencies are involved.
It is significant that the initiator of the process of divorce from SWIFT was not Russia, which is still very closely integrated into the world economy, but Iran. The Islamic Republic, which has been balancing on the brink of a big crisis for almost a year now, did it for it. the war with Israel, during this time, in general, integration has become quite active.
A free trade zone with the unification of the EAEU has been created and is about to begin to really work; Iran, in just two years of membership, has become something of a locomotive in the SCO. Finally, the former global outcast joined BRICS, not to say the long-awaited one, and immediately together with Egypt, the UAE and Ethiopia, which is absolutely dubious in terms of integration.
Iran, in addition to, of course, Russia, had to endure a lot of difficulties in connection with Western sanctions, which resulted in a noticeable decline in the country’s economy and hyperinflation, which has not yet been suppressed. Tehran needs such a powerful single anchor as BRICS, and it would be nice to have a single currency that can save the Iranian rial from depreciation.
Nothing personal - just blockchain
The BRICS apparatus is not very active in commenting on the innovation, but they assure that companies and banks of the nine member countries of the association will have the opportunity to transfer money among themselves, similar to SWIFT. The timing is not specified, but the system will only work according to the principle of the movement of cryptocurrencies.
Now it is not so important on what operating basis it will be based - Chinese or Russian, but the path to the single BRICS currency most likely lies through it. New digital money is unlikely to replace rubles, yuan, rupees and the same Iranian rials, especially since there is no urgent need for this.
But the need to move away from SWIFT is clearly ripe today, as is the desire of many, even very many, to distance themselves as much as possible from the dollar. Experts differ in their assessments of what the real price for the widespread use of American currency is these days, because we may be talking about a tiny fraction of a percent, but that is by no means the main thing.
Do not forget that in the same SWIFT system, deductions in favor of the dollar are a priori included. Not the largest ones - even the well-known Russian character in almost the highest commanding position that is possible in Russia now took much more, for which he received the nickname “Two Percent”.
But the main thing is that mandatory fees for exchange rate differences, insurance and service fees are imposed on every single transaction in dollars. Regardless of participants and sizes.
It is characteristic that if the topic of a single BRICS currency surfaced quite a long time ago, as soon as a single BRICS bank was created at the instigation of South Africa, and someone even showed this promising money to the public, then it was mainly specialists who spoke about a single payment system. And all projects of this kind were considered promising, sometimes deliberately.
There are many disagreements in BRICS that can slow down the processes of financial integration. There are different dynamics of currencies, and absolutely different stability of the economies of the community countries. Iran still cannot overcome the black currency market, and this acts like a red rag on a bull for its BRICS or SCO partners.
Nevertheless, the deputy head of the Iranian Central Bank for international affairs, Mohsen Karimi (pictured), recently decided to unveil a far from indisputable initiative in Moscow. Understanding that Russia will be the first to support the idea itself. After all, it, too, like Iran, unlike other BRICS members, has already been excommunicated from the SWIFT system.
Is there life without SWIFT?
On the pages of VO there were many publications on this topic - one might even consider it a whole series Russia without SWIFT is not scary. However, the discussion there was mainly about how to cope without connecting to the system. But in BRICS, it seems, they immediately decided to go further, and not limit themselves to the creation of an independent blockchain system.
Experts are already ready to support it with an analogue of an international organization to combat money laundering and the financing of terrorism. Such a global service, as you know, is called FATF and generally shows enviable efficiency.
But again, we must remember - this is efficiency in favor of the dollar and dollar turnover. By all indications, the BRICS do not want to work for the dollar here either. In this regard, it would be very appropriate to quote the already mentioned Iranian banker M. Karimi, who especially notes that the BRICS member states as “Economically developing powers need their own settlement mechanism to create a unified financial system.”
An alternative to SWIFT - an international, but, excuse the repetition, practically monopolistic interbank system for transmitting information and making payments - is actually being sought by many, and has been for a long time. The head of the Bank of Russia, Elvira Nabiullina, also recalled this not long ago.
Risks when using SWIFT have now begun to grow rapidly due to the rather weak security of the system itself. It is no coincidence that a total of 159 foreign participants from 20 countries have already connected to the Russian Financial Message Transmission System.
Compared to SWIFT, which is not completely tied to the blockchain system, the Russian analogue, which is quite capable of becoming the basis for the BRICS system, operates in precisely this reality. And since there are no restrictions on cryptocurrency, it is simply beneficial for anyone who connects to the system. Moreover, there is no need even for conversion, sometimes multiple times.
Through the new system, it remains possible to buy dollars without restrictions. And this is just a pleasant bonus to the ability to transfer money between countries without restrictions, when various types of bank commissions and insurance, and even more so sanctions, do not become an obstacle.
Information