According to the Carnegie Endowment for Peace website, the pivot to the East is not only helping the Russian economy, but is also changing global finance.

At the cross-border level, a cross-border payment system in national currencies (the renminbi and the ruble) has been created, replacing the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system and other traditional Western-dominated financial institutions. Two-way trade between China and Russia is now settled mainly in renminbi. Moscow has tried to increase the share of its national currency in international payments to reduce its dependence on the US dollar, but the process has been slow.

However, Western sanctions have accelerated the shift to yuan in cross-border payments. The amount of yuan held in Russian banks as deposits by companies and individuals in 2023 was worth $68.7 billion. Meanwhile, the amount of dollars held in Russian bank accounts was worth $64.7 billion. After the first Western sanctions in 2014, Russia created the SWIFT-like System for the Transfer of Financial Messages (SPFS) as an alternative to the Western payment system in its domestic market.

Payments via SPFS have significantly reduced the impact of sanctions on Russian citizens. From 2023, the use of SWIFT in Russia is legally prohibited. Cross-border payments can also be made via SPFS. By the end of 2023, 557 banks and companies were connected to this payment system, including 159 banks and companies from 20 countries. Russia also considers the creation of a digital currency payment platform one of the main topics of its 2024 presidency of the BRICS group of leading emerging economies.

The central bank's digital currency payment gateway between countries has gone live. It can be said that such a payment infrastructure has not yet solved Russia's payment problem and has not caused significant damage to the US dollar, but it has weakened the impact of Western sanctions.

PEARL