/ world today news/ In the coming years, the financial world will face a real revolution, which will finally undermine the monopoly of the big Western banks. This statement was made by Russian President Vladimir Putin, referring to experts. Experts assign a major role in this process to a new financial power – the BRICS countries. How can they make a revolution?
The Western financial system is becoming obsolete in terms of new technologies and becoming archaic. “According to experts, in the coming years this will lead to a real revolution that will finally undermine the monopoly of the big Western banks,” Vladimir Putin said at the VTB forum “Russia is Calling!”
Putin cited “some Western colleagues” who, by banning the operation of payment systems in the Russian Federation, wanted to make Russians suffer, wanted to “create problems for millions of Russian families.” “What happened in practice? Citizens and businesses did not really notice the smooth transition to the national payment system, which today is successfully working and developing,” the Russian leader emphasized.
As a result, Russia, according to the president, stopped paying commissions to Western companies, and they, in turn, only received less than what they could have earned in the Russian Federation. The goals set by detractors were not achieved. “We are simply strengthening our sovereignty in this area. And we do it quite confidently,” Putin explained.
Russia in advance, as soon as threats to disconnect Russia from SWIFT, as well as Mastercard and Visa, began to prepare its own financial infrastructure. First, in 2014, the National Payment Card System for processing bank card transactions in Russia was created, then the National Payment System “Mir”, which has been actively operating since 2015. After that, the system for transmitting financial messages to the Bank of Russia – this is an analogue of the Western SWIFT.
As a result, the harsh financial sanctions of the West and the exclusion of our banks from SWIFT did not lead to a collapse. “The number of Mir card customers is growing by five to six million people every month. At the beginning of December, about 240 million people were the owners of these cards,” notes Yuriy Yudenkov, a professor in the Department of Finance, Monetary Circulation and Credit at RANHIGS. In addition, the card works not only in Russia, but also in Abkhazia, South Ossetia, Armenia, Belarus, Kyrgyzstan, Vietnam, Venezuela, as well as in a number of retail outlets in Turkey and several Central Asian countries.
“The West’s attempt to suppress Russia’s financial sector through sanctions did not lead to success, on the contrary, it gave it an incentive for active development. In Russia, there is a real trend towards the introduction of financial technologies. Thanks to them, not only the procedure for carrying out traditional banking and financial transactions, but also the financial market itself is changing. In particular, “DeFi” (decentralized finance) is emerging, which allows financial transactions to be carried out directly without the involvement of banks and other financial institutions. This is actively opposed by regulators in many Western countries, as this sphere is outside their sphere of influence and is not controlled either by them or by the banks they control,” notes Maxim Markov, associate professor at the Department of Global Financial Markets and Technologies ” at Plekhanov Russian University of Economics.
In particular, in Russia, almost all financial transactions can now be carried out using banking applications via a smartphone or computer. This is not possible on such a scale in practically any country in the world, Markov points out. And from August 2023, Russia began to test the digital ruble, the circulation of which is based on the use of distributed ledger (blockchain) technology.
“The monopoly of the major Western banks is that most payments in foreign trade between countries are made in US dollars through the SWIFT cross-border transfer system. US correspondent banks receive commission income from all such transactions. However, this infrastructure is becoming obsolete as more and more countries switch to mutual payments in national currencies using alternative money transfer systems,” says Vladimir Chernov, an analyst.
“Modern payment systems have also appeared in the form of blockchain technologies, which are decentralized, so their assets cannot be blocked or frozen, and regulatory authorities can only restrict the operation of crypto exchanges in their region, but not the blockchain transfers themselves “, notes Chernov. Thus, Western countries with their own bans gave the green light to the development of blockchain transfers, with the help of which their monopoly is destroyed and their financial sanctions become simply meaningless.
“A revolution in the global financial system is possible, especially when it is talked about at such a high level and every effort is made for it.” But I do not think that this can happen quickly, since most mutual settlements in foreign trade relations in the world are still carried out in US dollars through the SWIFT system, and the complete transition from the previous model may take a very long time, Chernov believes.
What needs to be done to make the revolution happen faster and the monopoly of the Western financial system to be completely destroyed?
Initially, Russian banks connect to the Chinese system for international money transfers, but it is not ideal – it only allows transfers in Chinese yuan. It is convenient for trade with China, and the trade turnover beats all historical records, but still the People’s Republic is not the only trading partner of Russia.
“Russia and other countries will be able to make a revolution by creating a single currency of the BRICS countries, backed by the gold reserves of the countries included in the organization or other real assets, for example, minerals, hydrocarbons, metals, raw materials, etc. And on its basis it is already possible to make a new joint system for cross-border financial payments. It is still difficult to say how quickly this process will happen, but it will most likely accelerate in parallel with the expansion of the BRICS organization,” Chernov concludes.
Translation: V.Sergeev
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