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MOSCOW, September 22. /ITAR-TASS/. Russian authorities do not believe the country will be removed from the SWIFT electronic interbank payment system, but still say it is worth preparing for a worst-case scenario. Experts also assess a low chance of European leaders taking a decision that will hit the economies of European countries. Many will lose. There will be no winners, they say.
SWIFT’s response to the suggestion was abrupt, the company calling the decision violation of its rights as a provider and causing major reputational damage: Every second Russian credit institution depends on SWIFT. The nation’s 600 major banks use the system for more than 80% of settlements.
Prime Minister Dmitry Medvedev responded to the threat on Friday. “Both we and our G20 counterparts without doubt will feel it both in terms of economic and political relations,” he said.
Russia should be prepared for the worse scenario, Minister of Economic Development Alexei Ulyukayev said on Friday. “I hope the European Union will not follow the tastes [of the parliamentarians] as it would be insane,” he said on the sidelines of an international investment forum in Sochi. “But we should be prepared even for a low-probability scenario.”
Russia has been discussing with China a new local equivalent of the payment system, Russia’s Deputy Prime Minister Igor Shuvalov said.
Experts say that without SWIFT, Russian banks would not be able to carry out their key functions, fearing higher costs in interbank operations both inside the country and for transnational operations in foreign currency.
“The negative scenario is bound to affect both Russian and foreign companies equally,” Gazeta.ru quotes QB Finance’s chief analyst Dmitry Kipa as saying. “Very many foreign, including European, companies are working in the Russian Federation. If the banking sector is denied SWIFT, subsidiaries of European banks will feel the impact,” he said.
“Many across the world will lose, but winners there will not be,” leading expert of the Higher School of Economics’ Centre of Development Institute Dmitry Miroshnichenko told ITAR-TASS, commenting on prospects of denial. “This problem is not fatal, but extremely unpleasant.”
EU politicians are unlikely to “risk their own economies”, he added.
Head of the Higher School of Economics’ Banking Institute Vasiliy Solodov has a forecast: “Everyone having contracts with the Russian Federation is bound to lose.”
“Everyone will feel bad, though differently,” he said. A local equivalent of SWIFT “may be possible. But it will require time and money.
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