Russian authorities are planning to transfer the country’s money transfer system to blockchain technology in 2019 according to a report in Izvestiya.
Sources close to the Russian central bank told the media outlet that the Financial Communications Transfer System (SPFS) would be converted to a blockchain system. SPFS is the Russia equivalent of SWIFT. It was developed and implemented in 2014 following Western threats to withdraw SWIFT from Russia as part of sanctions for the invasion of Crimea. Russia developed its own version of Visa, called Mir, for the same reason.
This threat wasn’t carried out in the end but is still under discussion. SPFS exists as an alternative system, and 582 Russian banks use the system as standard. The remainder keeps it in reserve should SWIFT be withdrawn.
According to the article, the transaction costs of the Russian system are lower than those of SWIFT. In February of this year, the central bank announced that the system had been extended to cover all countries of the European Economic Area – Marina Frolova, Deputy Director of Rosbank, told Izvestiya that SPFS must expand its user base in order to be considered a valuable alternative to SWIFT.
Tamara Kasyanova, managing director of a local audit company, said that transferring to blockchain technology will attract more people to use the new system.
Maxim Osadchy, head of the analytical department of a local bank, said: “The use of blockchain technology will undoubtedly increase the level of protection in relation to hacker attacks.”
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Here he refers to hack attacks which have been suffered by SWIFT users. For example, a Russian bank lost 6 million USD in February 2018 as a result of a hack involving SWIFT, and hackers attempted a larger heist on Globex in December 2017. The Bangladeshi central bank lost 101 million USD in this way in 2015.
A major world power transferring its entire national payment system to blockchain technology is a fairly significant development regarding cryptocurrency and mainstream acceptance.
The Central Bank of Russia is planning to replace their domestic version of SWIFT transactions with blockchain in 2019.
This is big & it won’t be the last. 👊🏽
— Pomp 🌪 (@APompliano) May 4, 2018