Venezuela may switch from SWIFT to Russian payment system to skirt US sanctions – report

Venezuela is considering using the Russian alternative to the traditional SWIFT international payment system, as the country braces for new US sanctions that could further weaken its financial sector, according to Bloomberg.

Venezuela’s central bank has sent a request on the matter to the Central Bank of Russia (CBR) as the regulator’s approval is necessary if Caracas wants to use the payment platform, the report said, citing sources. However, neither of the sides involved, nor the world’s largest payment system, SWIFT, has commented on the report.

Russia developed its own money transfer mechanism –called the System for Transfer of Financial Messages (SPFS)– in 2014, amid concerns that SWIFT’s political neutrality could be shattered under US pressure.

The Russian alternative payment system already includes nearly 400 users, including the country’s major banks. Last month, the Central Bank of Russia (CBR) said that foreign banks had shown interest in joining the platform and are already testing it.

Caracas has already been hit by several rounds of US restrictions, including sanctions against its vital oil sector, which accounts for most of the nation’s revenues. Washington has already threatened to ban globally recognized credit systems such as Visa and Mastercard, as well as other financial institutions, from doing business with Venezuela. It is believed that Belgium-based SWIFT may also fall under the new sanctions.

The cut-off from global banking could further cripple the Venezuelan economy, which is already struggling with the disastrous consequences of an economic crisis and with US restrictions. Venezuela’s GDP shrunk by 47.7 percent in the five years since 2013, while inflation reached more than 130,000 percent last year.

The US has been tightening its sanctions grip on Venezuela since January, when the Trump administration started backing opposition leader Juan Guaido, who proclaimed himself ‘interim president’ and called for the ousting of elected President Nicolas Maduro.

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