Can countries replace SWIFT? Evidence from Russia suggests not easily
When the EU and its allies cut major Russian banks off the SWIFT messaging system in 2022, the aim was to disrupt Russia’s ability to conduct international transactions. SWIFT connects over 11,000 financial institutions across more than 200 countries. Without it, cross‑border payments become slower, costlier and more cumbersome.
Russia had prepared. After sanctions in 2014, it built a domestic alternative called SPFS (System for Transfer of Financial Messages). When the SWIFT ban hit, SPFS was presented as a fallback, alongside capital controls and greater use of Russia’s Mir payment system.
At first glance, the strategy seemed to work. Russian export revenues stayed high in the months after the sanctions, leading some observers to call the economy surprisingly resilient.
But a closer look at the data – covering monthly merchandise exports and international reserves from March 2020 to February 2024 – tells a different story.
What the data show
Export revenues remained high largely because global oil prices surged. Once oil prices are taken into account, the apparent export resilience weakens considerably. Russia benefited from unusually favourable market conditions, not from the strength of SPFS.
The real strain showed up in Russia’s international reserves. Reserves – a key measure of external financial strength – fell sharply after the SWIFT exclusion and stayed under pressure. That suggests the financial damage ran deeper than the export numbers alone imply.
Limits of domestic alternatives
SPFS helps preserve some continuity for domestic transactions and a limited circle of foreign partners. But it does not recreate the wider ecosystem that makes SWIFT powerful: global reach, deep liquidity, institutional trust and network effects. A system becomes more valuable the more institutions use it. Replicating that scale requires broad international participation and confidence – which cannot be built quickly.
Conclusion
Russia’s experience does not prove that countries can easily escape sanctions by building local substitutes. It shows that while some adjustment is possible – especially when helped by high commodity prices – the advantages of a truly global network are far harder to replace. Yes, countries can build alternatives to SWIFT. But can they quickly build alternatives with the same reach, trust and financial weight? Evidence from Russia suggests not.
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