Author: Samreen Fatima Siddiqui

The financial warfare against Russia, inter alia, has cut off Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) thereby blocking Russia from rapid money transfers internationally. Even though SWIFT accounts for no more than 1 percent of the transactions involving Russian entities and payments, the ban may potentially disrupt its trade in energy and agricultural produce as well as Foreign Direct Investment (FDI) and Foreign Institutional Investors (FII). In totality, the sanctions against Russia may shrink its economy by 5 percent. The current crisis has made many countries of the world think of developing alternative payment systems and capabilities. This would be a challenging task as the alternative to SWIFT would work only when a larger number of countries become willing to cooperate and agree to become a part of the alternative network.