Delegates attending the Sibos 2014 conference in Boston at the end of this month organised by Swift will be interested in whether the issue of economic sanctions against Russia has elbowed its way onto the agenda.
The financial messaging services provider has responded angrily to a recent European Parliament (EP) resolution calling on the European Union (EU) to expel Russia from the Swift network. The proposed legislation will now be submitted to the European Commission (EC), where it will need the collaboration of individual states acting in unison if it is to take effect.
The statement issued by Swift in response read: “Under fundamental principles of European law, enshrined in the EU Charter of Fundamental Rights, the singling out of Swift in this manner interferes disproportionately with Swift’s fundamental right to conduct business and its right to property. It also constitutes discriminatory and unequal treatment.
“Explicitly mentioning Swift in a European Parliament resolution of this kind on such an international sensitive matter also creates immense damage to our company’s reputation. Our mission remains to be a global and neutral service provider to the financial industry. The provision of financial messaging services to Russian entities is not affected by the current measures in force.”
The EP’s resolution has echoes of a similar request by the European Council (EC) to Swift in 2012, when the EC ordered the network to cut off funding to Iran as part of a campaign to stall the country’s nuclear energy programme. Although Swift’s stance is to be politically neutral, it complied with the EC’s wishes.
However, at least one prominent figure in Russian’s banking system has indicated that he believes the EP is bluffing. Speaking at this year’s international investment forum, held in the Russian city of Sochi, Andrei Kostin, chief executive officer (CEO) of VTB Group, Russia’s second largest bank, said on September 19: “I think this is not going to happen. I would have called it an act of direct aggression against Russia’s financial system with all subsequent consequences. This is a very tough measure.”
Swift’s alarm has no doubt been heightened by reports that Russian authorities are in discussions with China on establishing an alternative interbank transaction system. Russia has been publicly announcing its intention to reduce the financial market’s dependence on SWIFT since the US began stepping up economic sanctions against Russia. As a result, both Visa and MasterCard denied services to some Russian banks owned by blacklisted individuals.
Data from Swift’s latest RMB tracker shows exceptional growth in RMB adoption in the United Arab Emirates (UAE), witnessing a 210.8% growth in payments value of the currency since August 2014, albeit from a low base.
SWIFT has announced that it has successfully completed the first phase of the global payments innovation (GPI) initiative pilot, clearing the way for the go-live of the service in early 2017.
Sentiment in the financial services sector deteriorated in the three months to September, as firms digested the challenges of lower interest rates and the uncertainty caused by the vote to leave the European Union (EU), according to the latest CBI/PwC Financial Services Survey.
However, a London summit on the industry’s introduction of the technology cautions that testing and acceptance are still at an early stage and firms should proceed with caution.