The former head of the People’s Bank of China (PBOC) says that the use of the SWIFT payments telecommunications network to apply sanctions to countries such as Russia will prompt a search for alternatives by other concerned parties.
“If SWIFT is used extensively as a tool of sanctions, consideration should be given to other people certainly being able to find other communications channels to complete trades,” said Zhou Xiaochuan (周小川) on 16 April at the 2022 Qinghua Wudaokou Global Financial Forum in Beijing. “SWIFT is not irreplaceable.”
Zhou said that replacing SWIFT would still prove to be time-consuming and challenging, given the advantages that it enjoys in terms of scale, efficiency, number of participating financial institutions as well as confidentiality measures.
Zhou pointed to the possibility of expanded use of China’s own CIPS clearing and settlements system for cross-border payments purposes.
“In terms of design, CIPS is for renminbi cross-border payments, and is a renminbi cross-border payments and settlement system,” said Zhou. “Of course this system can also accommodate the use of other currencies.”