"SWIFT Alternatives and De-dollarization Efforts Gain Momentum"
SWIFT
A Belgium-based messaging network for cross-border payment instructions between banks; it does not itself settle payments.
CIPS
China's Cross-Border Interbank Payment System, launched in 2015 to internationalise the yuan.
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a Belgium-based messaging network. It does not itself move money. It only carries payment instructions between banks, which then settle the actual transaction through correspondent banking relationships, most of which run through the US dollar system. This is why cutting a country off from SWIFT, as happened to Russia in 2022, can cripple its ability to trade internationally even though SWIFT itself holds no funds.
India's own Digital Rupee (e-₹), a Central Bank Digital Currency (CBDC), is relevant here. Unlike a UPI transfer, where the liability sits with commercial banks and users, the Digital Rupee is a direct sovereign liability of the Reserve Bank of India, similar to physical cash. This is significant because a CBDC can, in principle, be exchanged directly between two central banks without passing through the dollar-based correspondent banking network at all. It can also carry programmable conditions, such as a fixed time-frame within which it must be spent. These two features, direct settlement and programmability, are exactly why several countries now see linked CBDCs as a potential way to settle trade without touching SWIFT or the dollar.
This search for alternatives has intensified as countries in the Global South weigh the risk of financial sanctions. The recent BRICS Summit in New Delhi produced the New Delhi Declaration, which called for greater trade among member countries to be settled in national currencies rather than the dollar. A proposal to link CBDCs across BRICS nations for cross-border payments was reportedly discussed ahead of the summit but did not make it into the final Declaration, reflecting real political and technical hurdles.
Several working alternatives to SWIFT already exist, each built around a specific country's strategic needs. China's Cross-Border Interbank Payment System (CIPS), launched in 2015 by the People's Bank of China, allows global banks to clear yuan transactions directly onshore instead of routing through offshore yuan hubs. It now has participants in a large number of countries, but its daily transaction value remains a fraction of the US-based Clearing House Interbank Payments System (CHIPS), showing that dollar dominance persists despite the yuan's growing international use.
Russia built the System for Transfer of Financial Messages (SPFS) in 2014, well before the 2022 sanctions, precisely to have a fallback once SWIFT access was cut. …
With reference to 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 a time-frame for spending it.
Which of the statements given above is/are correct?
Consider the following statements with respect to the digital rupee:
1.It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy.
2.It appears as a liability on the RBI's balance sheet.
3.It is insured against inflation by its very design.
4.It is freely convertible against commercial bank money and cash.
Which of the statements given above are correct?
Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is not correct?
With reference to India's Digital Rupee (e-₹), consider the following statements:
1.It is a liability of the Reserve Bank of India.
2.It functions identically to a UPI-linked bank deposit in terms of liability.
3.It is a Central Bank Digital Currency.
Which of the statements given above is/are correct?
Which of the following statements about SWIFT is/are correct?
1.SWIFT itself transfers funds between banks across countries.
2.SWIFT is headquartered in Belgium.
Select the correct answer using the code given below:
Consider the following payment/messaging systems and the country or institution primarily associated with them:
1.CIPS - China
2.SPFS - Russia
3.SEPAM - Iran
4.mBridge - A single national central bank
Which of the pairs given above is/are correctly matched?
Project mBridge, mentioned in the context of alternative cross-border payment systems, is best described as:
The Cross-Border Interbank Payment System (CIPS), compared to the US-based Clearing House Interbank Payments System (CHIPS), is best characterised as:
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