What are the alternatives to the SWIFT payment system?

Why in the News

Countries in the Global South are looking for ways around the Belgium based Society for Worldwide Interbank Financial Telecommunication (SWIFT) network for inter country payments, driven by multiple wars and by the use of the dollar as an instrument of financial sanctions. The attempts so far have been patchy, and the felt need for other options is rising. The recent Summit of Brazil, Russia, India, China and South Africa (BRICS) in the national capital took up payments in national currencies, and a proposal to link central bank digital currencies for cross border payments did not survive into its declaration. The contested point is whether a set of national payment rails, each anchored to its builder’s currency, adds up to an alternative to a single global messaging network.

What did the BRICS summit actually commit to?

1. The Declaration’s resolve: The New Delhi Declaration resolved to increase trade between member countries and payments in national currencies.
2. The proposal that was tabled: India was reported to be pushing at the summit to link central bank digital currencies (CBDCs) for cross border payments across BRICS nations.
3. Why it was expected to be difficult: Political and technical hurdles could limit progress, and the limited global adoption of digital currencies could complicate implementation.
4. The outcome: The proposal to link CBDCs was not part of the Declaration.

What are the alternatives to SWIFT, and who runs them?

1. Project mBridge: Project mBridge is a group comprising the Bank of Thailand, the Central Bank of the United Arab Emirates, the Digital Currency Institute of the People’s Bank of China, the Hong Kong Monetary Authority and the Saudi Central Bank.
2. The Chinese system: The Cross Border Interbank Payment System (CIPS) is backed by the People’s Bank of China, which launched its clearing and settlement services in 2015 to internationalise use of the yuan.
3. What CIPS changed: It lets global banks clear cross border yuan transactions directly onshore, instead of routing them through clearing banks in offshore yuan hubs.
4. The Russian system: The System for Transfer of Financial Messages (SPFS) was developed by Russia in 2014 to bypass Western sanctions. Russian banks were cut off from SWIFT in 2022 and the SPFS was of help.
5. The Iranian system: SEPAMA is Iran’s local interbank telecommunication system. The Central Bank of Iran said in 2023 that 52 branches of Iranian banks and four unnamed foreign banks connect with 106 banks using the SPFS.

How is Project mBridge faring after the Bank for International Settlements exit?

1. The withdrawal: The Bank for International Settlements (BIS), an institution owned by central banks to foster international monetary and financial cooperation, exited Project mBridge on 31 October 2024. It had supported the platform since 2019, when the Hong Kong Monetary Authority and the Bank of Thailand launched it.
2. What the platform is: mBridge is a cross bloc multi CBDC platform with no Western bank on it. It attained minimum viability status in 2024.
3. The design: It was envisaged for direct peer to peer CBDC settlement without going through correspondent banks. The project team built a new blockchain, the mBridge Ledger, designed by central banks for multi currency cross border payments in CBDCs.
4. Why the exit drew attention: Media reports attributed the withdrawal to the platform offering a possible basis for a BRICS initiative to circumvent sanctions on Russia.
5. What it became in practice: A Forbes report described mBridge by late 2025 as a wholesale settlement rail denominated in renminbi for trade between China and the Gulf, “running outside the dollar correspondent system”.

How far has CIPS actually scaled?

1. Reserve asset status helped: The renminbi’s inclusion in the basket of currencies making up the Special Drawing Right, an international reserve asset created by the International Monetary Fund (IMF), has increased acceptance of CIPS.
2. Participation: CIPS now has participants in more than 120 countries, including every BRICS member except India.
3. Daily throughput: CIPS processed 679.8 billion yuan of transactions on average per day in 2025.
4. Scale against incumbents: It remains far smaller than established global systems such as the United States based Clearing House Interbank Payments System.
5. Where Beijing is taking it: Beijing appears to be moving towards building CIPS into a global platform compliant with multi currency settlements and other foreign payment channels.

How has the SPFS grown under sanctions?

1. Growth in 2023: The SPFS grew at a record pace in 2023 as Moscow stepped up efforts to resolve financial shortcomings caused by sanctions over the Ukraine war.
2. Participation: 50 new entities joined the system in 2023, taking the total to 440, of which more than 100 are non residents.

How do India Russia trade settlements work now?

1. The rouble rupee channel: Russia and India have built a functioning payments infrastructure using roubles and rupees, which now accounts for 96 per cent of bilateral trade.
2. What gives it volume: India is the second largest importer of Russian oil, which is what supplies the channel with its throughput.
3. Banks servicing it: 22 Russian banks and 17 Indian banks currently service bilateral trade. Sberbank, Russia’s largest lender, was tasked with developing the payments infrastructure.
4. The stated assessment: Sberbank’s India head called it one of the best established mechanisms for Russia’s payments with other countries.

Challenges to building an alternative to SWIFT

1. Bilateral rails strand balances: A channel that settles only between two currencies leaves the surplus partner holding a currency it cannot spend elsewhere. Eg. Russia accumulated rupee balances under the rupee settlement route that it could not readily deploy outside India.
   The Fix: Attach an agreed reinvestment channel for the surplus partner’s balances, such as government securities or project equity, to every bilateral settlement arrangement.
2. A national rail carries its builder’s politics: A system run by one central bank settles mainly in that country’s currency, so joining it shifts a dependence rather than removing one. Eg. A single BRICS currency has drawn a lukewarm response because members are unwilling to accept an instrument the renminbi would dominate.
   The Fix: Build interoperability at the messaging layer between national systems instead of migrating onto any one of them.
3. Secondary sanctions reach the user, not the rail: A commercial bank using an alternative channel still risks losing its dollar clearing, which is what keeps large banks away from it. Eg. Indian refiners and banks scaled back Russian oil payments as United States designations widened.
   The Fix: Route sanctioned trade through designated institutions that hold no dollar exposure, so the risk sits inside a ring fenced entity.
4. Invoicing does not move with settlement: Commodity contracts stay priced in dollars even where payment is made in another currency, so the dollar keeps its price setting role. Eg. Crude oil and most industrial metals are quoted in dollars on the benchmark exchanges.
   The Fix: Develop local currency denominated commodity contracts on domestic exchanges, so invoicing and settlement move together.

Conclusion

No single system has replaced the network the Global South is trying to route around. What exists instead is a set of national rails, each carrying the currency and the political exposure of the state that built it, which is why India has built a bilateral channel with Russia rather than joining one of them. The position that remains unreconciled is that cutting dependence on one currency by moving onto another country’s rail substitutes one dependence for another. The marker to watch is whether BRICS moves from a resolve on national currency payments to a working interoperability arrangement between the systems that already exist.

Back2Basics: SWIFT

1. What it is: A cooperative owned by its member financial institutions, established in 1973 to replace telex based messaging between banks.
2. What it actually does: It carries standardised payment instructions between financial institutions. It does not hold accounts, move money or settle payments itself.
3. Why exclusion bites: A bank cut off from the network loses the standard channel through which counterparties send and confirm instructions, so its correspondent relationships stop functioning.
4. Why the alternatives look similar: Because the incumbent is a messaging layer, most alternatives are also messaging or clearing systems rather than new currencies.

Matching Previous Year Question

“[2023] With reference to the Central Bank digital currencies, consider the following statements: 1. It is possible to make payments in a digital currency without using US dollar or SWIFT system. 2. A digital currency can be distributed with a condition programmed into it such as time-frame for spending it. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answer: (c)”