China and Russia launching payment clearinghouse to route around SWIFT
Aviso | Control of how payments are processed – and in what currency – carries a lot of weight. Most recently the likes of President Assad in Syria and Russia’s Vladimir Putin have been on the receiving end of payment-related sanctions. This is why there is an ongoing global political power play as Russia and China explore payment processing possibilities to challenge ‘Western’ – and dollar – dominance in this sphere.
In March 2014 Western governments used Visa and MasterCard to cut off prominent Russian businessmen and political aides of Russian President Vladimir Putin from their accounts. The sanctions also targeted Russian financial institutions (including Bank Rossiya which was also included in a U.S. Government blacklist), a move that infuriated Russia. The businessmen and institutions were placed on this blacklist after Putin’s annexation of Crimea.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) declined to add its name to those imposing sanctions, allowing Russia to maintain access to the global payments system. They did, however, get involved in 2012 when expelling Iranian banks from their system.