Traffic of the Financial Message Transmission System (SPFS) from the Central Bank has increased several times
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The financial messaging system (SPFS), which the Central Bank proposed as an alternative to Western SWIFT back in 2014, can already seriously compete with the latter. Traffic of messages about financial transactions through SPFS at the beginning of 2023 increased several times compared to the previous year. The number of countries cooperating with the system has reached 15, and there are 550 players. Moreover, SPFS is in demand both within the Russian Federation for currency transfers between sanctioned banks, and for settlements with partners from friendly countries. Development is hampered by sanctions risks.
SPFS users at the end of September are about 550 organizations, including 150 non-residents from more than 15 countries, the Central Bank notes in the draft document on the main directions of development of the financial market of the Russian Federation for 2024–2026. Traffic in SPFS in the first quarter of 2023 compared to the same period in 2022 increased fourfold, exceeding 40 million messages.
The Bank of Russia launched SPFS in 2014 as a system that can transmit data in SWIFT format, but does not depend on its channels. Initially, it was intended only for domestic Russian users, but by February 2022, credit institutions from Belarus, Armenia, Kazakhstan, Tajikistan, Kyrgyzstan, Cuba, etc. joined it.
The Central Bank does not disclose other countries whose banks have connected to the system, according to Kommersant’s interlocutors in the banking market, including players from China, India, and Arab countries
However, SPFS is not the only alternative to SWIFT. “We can also highlight SURCE, which Iranian banks have switched to; using this system you can interact with countries such as Bolivia, Cuba, Venezuela, Ecuador,” says Gennady Fofanov, president of the Invoicecafe investment platform. “China has a CIPS system that carries out clearing and settlement services with an eye on the yuan.”
According to Kommersant’s interlocutors from among the bankers, in internal transactions SPFS is used by Russian banks mainly for foreign currency payments; for ruble payments, the Central Bank settlement system is more convenient. However, there are no restrictions or recommendations to use it, this is how practice has developed, Kommersant’s interlocutors note.
Olga Skorobogatova,First Deputy Chairman of the Central Bank, at SPIEF on June 16:
“What is most important for business is the payment system. And here we support absolutely all platforms and all solutions that may exist.”
Experts and market participants agree that the era of SWIFT’s total dominance may be coming to an end.
And SPFS is already catching up with its Western competitor in terms of the number of connected users and traffic in the Russian Federation. Thus, according to the annual report of the Russian National SWIFT Association (Rosswift), as of January 1, 2021, 291 users were connected to SWIFT in the Russian Federation – leading credit and financial institutions and corporations. At the end of 2020, global SWIFT traffic (FIN messages) amounted to more than 9 billion messages, and the number of messages sent by Russian users was 143 million.
According to ADB President Alexey Voylukov, for friendly countries everything will depend on the political will of the regulators of these countries and the negotiating actions of our regulator. “In my opinion, in the domestic market, SPFS should replace SWIFT completely,” says the head of the Association of Participants in the Electronic Money and Money Transfer Market, Viktor Dostov. “For international payments, the use of SPFS is a political question: if countries are ready, correspondent accounts are open, why not “
However, Kommersant’s interlocutors from among the major bankers draw attention to the fact that sometimes, even if there are correspondent accounts between banks participating in the settlements and a connection to the SPFS, such settlements are difficult to complete. “A complex of foreign partners is being reinsured, but no one has canceled the risks of secondary sanctions,” explains one of them. “Therefore, messages about settlements in friendly currencies are mainly transmitted through the SPFS; there are those who risk paying through the SPFS in dollars and euros, but there are not many of them.”
Nevertheless, the dynamics of non-resident connections to SPFS is generally positive; it can be stated that this system has shown viability and has further potential for growth, summarizes Gennady Fofanov. “Given that almost all key Russian banks involved in international cross-border transactions find themselves outside the generally recognized international system, the presence of the SPFS is a definite incentive for the development of trade relations in friendly jurisdictions,” he continues. “I believe that this year the adaptation and application of the SPFS are moving at a more confident pace.”
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