Russia and its trade partners are developing new financial systems and currencies to get around economic pressure from the West, particularly the United States and Europe. These efforts aim to reduce the world’s dependence on the US dollar and Western-controlled financial networks, allowing Russia to keep its economy running despite sanctions. This move began in 2014, when the West imposed trade restrictions on Russia after it reunified with Crimea. The sanctions intensified in 2022, following Russia’s military actions in Ukraine, but Moscow has been finding ways to adapt and keep trade flowing.
One of Russia’s key strategies has been developing its own financial systems to replace those controlled by the West. Russia’s central bank governor, Elvira Nabiullina, highlighted that since 2014, Russia has worked to create its own systems to minimize the risks of relying on global financial networks, which could be used as tools of economic warfare by the West.
One such system is the System for Transfer of Financial Messages (SPFS), Russia’s alternative to SWIFT, the Western financial messaging network that connects banks around the world. SWIFT has long been the global standard for cross-border financial communication, but Western sanctions blocked Russia from it. In response, Russia has increasingly used SPFS, which now connects 556 organizations across 20 countries. The system’s usage surged after the 2022 sanctions, as Russia’s trade partners looked for ways to keep business going without relying on the US-controlled SWIFT.
Russia has also partnered with other countries that are either sanctioned or looking to reduce their reliance on Western financial networks. For instance, Russia’s Mir card payment platform has been linked with Iran’s Shetab system, allowing for smooth transactions between the two countries. Russia is also benefiting from financial systems developed by China and India, two major economic players who are building their own alternatives to Western-controlled networks.
China’s Cross-Border Interbank Payment System (CIPS) has been particularly important, processing over $17 trillion in transactions last year alone. This system helps Russian businesses and other countries avoid using the US dollar and SWIFT, further weakening the US’s financial influence. India’s Unified Payments Interface (UPI) is another system that’s rapidly expanding, offering a way to make payments without touching the US-dominated networks.
In addition to these systems, Russia is also exploring new technologies like central bank digital currencies and cryptocurrencies. Both offer alternatives to the traditional global financial order, with the potential to challenge the US dollar’s status as the world’s reserve currency. By using digital currencies, Russia and its trade partners can bypass the restrictions placed by Western sanctions, further undermining US financial control.
But Russia isn’t stopping there. It’s looking at an old strategy from the Soviet era: barter trade. This method allows countries to directly exchange goods, bypassing the need for money altogether. In a way, it’s a throwback to simpler times, but it’s proving to be an effective way for Russia to keep trading with countries like China and others. Barter has also been used by countries like Cuba and Venezuela, which have faced similar sanctions from the West.
Ultimately, Russia and its allies are actively reshaping the global financial landscape. By creating new systems, linking with like-minded nations, and even reverting to age-old methods like barter, they are chipping away at the West’s economic dominance and building a new financial world that doesn’t revolve around the US dollar. This shift is slowly eroding America’s grip on global trade, making it clear that the global financial order is changing.
