Russia says SWIFT alternative grows at record pace

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Russia says SWIFT alternative grows at record pace

Russia's alternative to the SWIFT international messaging system has grown at a record pace this year, as Moscow ramps up its efforts to solve financial shortcomings wrought by sanctions, the central bank said on Friday.

The Russian banks have been hampered by Western sanctions on many of Russia's top banks after Russia sent tens of thousands of troops into Ukraine. The total number of non-residents in Russia's alternative system has gone to 440, according to director of the central bank's national payment system, Alla Bakina, said 50 new entities had joined Russia's alternative system this year.

Bakina told a banking forum in Kazan that the System for Transfer of Financial Messages has shown expansion this year because more foreign participants have joined.

She said more participants joined the SPFS in the first half of the year than in all previous years of the system's existence.

The list of countries that have joined the SPFS is not known by the central bank, according to Bakina.

Some banks in Russia, including units of foreign financial institutions that have been blocked from exiting by recent Kremlin laws, still have access to SWIFT and can process payments overseas.

In more than 200 countries and territories, more than 11,000 financial institutions use SWIFT.

Sanctions have increased the use of the SPFS and the issuance of Mir bank cards, Russia's alternative to Visa and Mastercard, companies that have suspended operations in Russia and their cards that were issued in Russia stopped working abroad.

Bakina said that a third of all bank cards in Russia are now Mir cards.

But Mir - which means 'world' or 'peace' in Russian - is facing headwinds abroad. Banks in so-called friendly countries - Turkey, Kazakhstan, Vietnam, and Uzbekistan - have stopped doing Mir transactions after the latest round of U.S. sanctions.

Some foreign banks were forced to withdraw support after Washington included National Card Payments System NSPK head Vladimir Komlev on its sanctions list.

Cuba, South Korea and a handful of former Soviet republics have allowed Mir cards to be used, but Komlev said on Thursday that the NSPK has stopped disclosing the list of countries where the cards are accepted.