Russia Vows to Launch Domestic Payment System to Render Western Sanctions Obsolete

Russia is determined to create a domestic payment system to conduct trade and international transactions free from current disruptions. Mikhail Mishustin, Prime Minister of Russia, stated that this will be a joint effort by many institutions to achieve a principles-based system instead of the current one managed by Western institutions.

Kemal Crytpo

October 23, 2024

1 minute

News

Russia is embarking on a mission to achieve independence from the current financial institutions. At the Moscow Financial Forum, Prime Minister Mikhail Mishustin highlighted this system is the only opportunity for Russia to reach a fair principles-based international trade platform.

Addressing the Forum’s assistants, Mishustin stated:

We hope that through joint efforts – the government, the Bank of Russia, and the financial community – we will be able to create a domestic settlement infrastructure that is an alternative to foreign systems.

However, the hypothetical system would also bring other key functions and features that can improve the settlement experience for Russian entrepreneurs and their international partners. Mishustin stated that the upcoming system “will ensure equality of countries, the confidentiality of payments and will allow for instant transactions at a minimal cost.”

In 2023 Mishustin stated that most settlements between Russia and China are settled in national currencies, estimating that these were used in 70% of these transactions.

Read more: Russia and China Carry Out Most Settlements in Yuan and Ruble, Russian PM Mikhail Mishustin Says.

Nonetheless, sanctions have disrupted the normal trading flow between Russia and partners such as Turkey and China, threatening to reduce turnover between these key countries. Russia trades nearly $300 billion with these two nations, whose banks are now threatened by secondary sanctions from Western countries.

Mishustin did not clarify if the system he referred to would be different from BRICS Pay, the payment network recently tested by the bloc, that features a card that can be activated via a web browser.

Writers’ take: establishing new payment systems takes time, not just due to the technical aspect of the network, which is also important, but due to the inherent distrust of a new implementation of that kind. While the platform proposed can be completed relatively quickly, the usage of this payment system will only be massified after several test runs to show its solidity.

What do you think about Mishustin’s payment system proposal? Tell us in the comments section below.