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Russia’s Economic Development Minister, Maxim Reshetnikov, has offered countries belonging to the Shanghai Cooperation Organization (SCO) to join its financial messaging system SPFS, the Russian equivalent of SWIFT. Moscow wants to boost the volume of settlements in national currencies and introduce global inter-banking alternatives.

“In order to ensure uninterrupted cooperation between our banks, we suggest that members of the SCO join the Russian financial messaging system,” Reshetnikov said in his video address to participants at the SCO forum currently being held in Tashkent.

Reshetnikov noted that SCO countries need to continue to promote full compatibility of national payment systems and boost the volume of mutual settlements in national currencies. “We have already seen positive results, for example, a quarter of the trade turnover between Russia and China is settled in Rubles and Yuan” Reshetnikov said.

In Europe, both Germany and Switzerland already have banks connected to the SPFS system, while it is already in use in Armenia, Belarus, Kazakhstan, and Kyrgyzstan and another six countries. Most Russian banks are already connected to the system.

The SCO currently comprises eight member states: China, India, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Pakistan, and Uzbekistan, while Iran is due to join next month. Observer states include Afghanistan, Belarus, and Mongolia, while Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkiye are dialogue partners.

Upcoming dialogue partners include Egypt, Saudi Arabia, and Qatar, while long standing guests include ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) and the Commonwealth of Independent States countries, which includes Moldova and Tajikistan among countries not already mentioned, in addition to Turkmenistan. Serbia, which has a free trade agreement with the Eurasian Economic Union, is also expected to be given the opportunity to join, as are the other BRICS nations such as Brazil, and South Africa.

In March this year, Anatoly Aksakov, the Chairman of the State Duma Committee on the Financial Market, announced that the Bank of Russia and the People’s Bank of China were working on connecting the Russian and Chinese financial messaging systems. He also pointed to the beginning of the development of information transfer schemes using blockchains, including the digital ruble and the digital yuan.

Also in March, the Economic Times of India stated that the Indian government has offered Russia a new transaction system with the transfer of trade to the ruble and SPFS, which will work through the Reserve Bank of India and Russia’s Vnesheconombank. That system is now operational as India and Russia now trade via rubles and rupees.

Russia has been actively promoting its domestic financial messaging system ever since being cut off from SWIFT as part of Western sanctions imposed on the country over the conflict in Ukraine. Both facilitate financial transactions between banks, but Russia’s SPFS was used only in Russia up until this year, while SWIFT is an internationally adopted system. There is no reason why countries could not belong to both systems – unless the United States threatens SWIFT termination should they take up the Russian offer. Should countries decide to join the Russian SPFS system it will emerge as a competitor to SWIFT and offer emerging economies an alternative to both US monitoring of their international transactions, eradicate the current system of having to pay US corresponding bank charges, lessen US dollar dependence and the impact of any future US sanctions, and provide greater strength to their respective currencies.