The move aimed at cornering Putin’s Russia is the exclusion from the SWIFT system and targeted sanctions on banks, oligarchs and people close to the Russian president.
What is SWIFT?
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a company that provides tools and data control for national and international transactions between countries around the world.
This system is the most widespread in the international arena and makes it easy to move resources.
Sanctions from around the world
Following the military operation on 24 February, all or most of the world’s countries responded by applying sanctions against Russia.
The superpower first saw Berlin block the Nordstream2 pipeline to supply gas to the West, and Brussels imposed an initial package of sanctions.
Is Bitcoin an alternative?
As a result of the SWIFT shutdown, more and more Russian investors are buying Bitcoin or other cryptocurrencies on the market to evade sanctions.
The massive purchases resulted in Russians being willing to buy BTC, which first went up to $41,000, then $43,000 and up to $65/70,000 causing the value of the currency to skyrocket.
BTC appreciated by 17%, but it was not the only one; Ethereum also jumped by 14%.
The Ruble, on the other hand, is losing ground and is being overtaken by Bitcoin, which has now risen to 14th position by market cap, overtaking the Russian currency.
The primary cryptocurrency also overtakes the currencies of Saudi Arabia, Mexico Thailand and Israel and is trailing the Swiss Franc.
However, to overtake the solid Swiss currency, BTC will have to reach the $70,000 mark, which is still a long way off but within its grasp.
Alternatives to SWIFT
Russia has a payment system called SPFS (System for Transfer of Financial Messages), which has a 30% share of the domestic market but is not as functional for international trade as SWIFT is.
What to do? Despite attempts to develop a virtual ruble (CBDC), the instrument is still in its infancy and China is being looked to for a solution.
Xi Jinping (President of the People’s Republic of China) can already boast of a functioning, secure virtual currency that can also be used via an app (available for both iOS and Android), namely the digital yuan.
The increasingly good relations with China are leading Moscow to think of using the Chinese crypto to evade sanctions, after an increasing trade in gas had already yielded excellent results in countering European resistance.
In addition to Yuan 2.0, Russia will be able to benefit from another instrument that is homologous to SWIFT, namely CIPS.
CIPS is the interbank payment system of the rising sun and is widely used throughout the world, immediately after SWIFT.
The instrument was designed to promote Beijing’s currency around the world but now seems to be reaching out to its powerful neighbour.
The adoption of this system overcomes the problem of Moscow not wanting to lose its wealth after the rouble halved in value this week.