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Russia Eyeing Blockchain for National Bank Transfers System

Cryptocurrency May 07, 2018 06:01AM ET
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The authorities of Russia are contemplating a major step toward applying blockchain technology in the sphere of national banking and finances. The country’s central bank will move the Financial Communications Transfer System (SPFS) to blockchain in 2019, local media outlet Izvestia reports, citing people familiar with the matter.

Recently, Russia has been actively exploring blockchain solutions as a possible option to reduce its dependence on SWIFT. Thе move was considered in response to threats from London to cut Russia's banking system off from SWIFT and rising geopolitical tensions denting the international position of Russia.

The prospects of becoming a rogue state on the world stage have forced the government to take some preventive measures. In 2014, Russia’s central bank launched SPFS, which is designed as an alternative payment framework in case access to SWIFT is denied. The Russian authorities have also developed Mir, a domestic analog of Visa.

The decision to transfer SPFS to blockchain aims to ensure maximum security for financial transactions, a Bank of Russia insider told the newspaper. This information was also confirmed by two bankers familiar with the matter.

The system based on the distributed ledger technology is characterized by a high level of transparency and security since data on blockchains cannot be deleted or forged. Besides, this solution can provide the best protection from cyber attacks, making SPFS safer and more reliable than SWIFT.

According to Izvestia, the authorities and experts believe that applying the cutting-edge blockchain technology to SPFS should increase the popularity of this Russian analog of SWIFT among banks and companies and attract new participants to the system.

However, it is still unclear whether Russia's central bank plans to use a proprietary blockchain-based system or go with the existing public Ethereum platform as a basis, the sources added.

Currently, Russian banks and companies use SPFS as a backup channel for exchanging financial messages and transactions. Sometimes the Russian system is more cost-efficient than SWIFT since a message via SPFS costs about 1.5-2 rubles (0.02 euro) compared to the SWIFT transaction cost of about 0.03 to 0.05 euro per message.


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Russia Eyeing Blockchain for National Bank Transfers System
 

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