The Rostec Group is a government-owned corporation that owns several technology enterprises in Russia. They’ve revealed that they’ve built a blockchain platform to create a digital system for international transactions that might eventually replace the global Swift system.
Due to sanctions by Western countries in reaction to the Russian-Ukrainian conflict, Russian banks were kicked out of the SWIFT system in February. Since then, Moscow has been looking for a financial payment system to replace SWIFT to secure its international trade dealings.
Thanks to the digital international payment system, Russia will be able to pay for imports in its national currency, the Ruble, rather than the dollar. According to the Rostec company, the new method will also allow foreign countries to pay for the imports from Russia in their currencies.
The platform used to build the blockchain
The CELLS blockchain platform, on which the worldwide payments system was built, was designed by the Novosibirsk Institute of Software Systems (NIPS), which is linked with the Rostec Group, according to a statement released by Rostec.
The platform is intended to create an integrated solution using distributed ledger technology.
As per the Russian group, the network features a digital method for transactions in the national currencies of countries affiliated with it.
The business said its new technology “may provide a credible alternative to the payment processing services offered by the SWIFT system,” from which Russian banks have been cut off due to Western sanctions.
As per the announcement, the CELLS platform allows customers to build wallets to hold digital currencies and international payments.
Russia guarantees the safety of transactions
According to Oleg Yevtushenko, CEO of the Rostec Group, the new international payment system would assure “high speed and secure transactions,” with the new digital system capable of doing 100,000 transactions per second to double this number.
Yevtushenko also stated that the new system’s payment capability in local and national currencies would allow customers to avoid Western sanctions against Russia.
“A digital payment system based on a blockchain platform can be used as a full-fledged replacement for SWIFT, providing high speed, security, and irrevocable transactions. The system will make it possible to switch to settlements in national currencies, eliminate the risk of sanctions and ensure the independence of the national financial policy for clearing participants.“
The Rostec group is after significant corporations with commercial ties to Russia, foreign government agencies that deal with Moscow, and financial institutions & banks.
Change in Russia’s stance on cryptos
The new mechanism was announced just a few days after the Russian government said it was exploring using cryptocurrency in foreign payments. Last January, the Russian Central Bank suggested banning the establishment and usage of all cryptocurrencies.
The notion of employing cryptocurrencies in global trade settlements is being discussed within the Russian government, according to Ivan Chepskov, head of the Russian Finance Ministry’s Financial Policy Department.
The Russian Central Bank had cautioned earlier this year about the hazards to the country’s financial system. Thus, this is seen as a reversal in Russia’s stance on cryptocurrencies. Cryptocurrency is said to jeopardize a country’s monetary policy autonomy.
In Russia, on the other hand, the legal position of cryptocurrencies is still in flux, and prior attempts to legalize cryptocurrencies have failed. The administration is pushing for them to be allowed to attract foreign investments and remove domestic trade from the shadow of Western sanctions.