The Society for Worldwide Interbank Financial Telecommunication (SWIFT), headquartered in Belgium, underpins the global financial infrastructure by providing standardised messaging services for over 11,000 financial institutions in more than 200 countries (Eichengreen, 2022). However, SWIFT’s Western-centric governance and its use as a sanctions tool, evident in its role in disconnecting Iranian and Russian banks, has motivated countries like Russia, China, and Iran to create alternative financial messaging systems to reduce their dependence and mitigate sanctions risk (Sullivan, 2022).

SWIFT’s Geopolitical Significance

Although SWIFT does not handle fund transfers itself, it facilitates the communication needed for such transactions. Because of its central role, SWIFT has been leveraged by Western nations, particularly the U.S., to enforce sanctions by excluding adversarial banks (Eichengreen, 2022). This has elevated SWIFT from a neutral platform to a geopolitical lever.

Russia: SPFS and MIR Systems

In response to sanctions following its 2014 annexation of Crimea, Russia developed the System for Transfer of Financial Messages (SPFS), launched by the Central Bank of Russia. Initially limited to domestic transactions, its relevance surged following the 2022 invasion of Ukraine when key Russian banks were cut off from SWIFT (Jamestown Foundation, 2024). By 2024, SPFS was handling nearly 100% of Russian domestic interbank traffic and included over 550 institutions across 20 countries (Bank of Russia, 2023).

Russia also expanded its consumer card network, Mir, as a domestic alternative to Visa and MasterCard. MIR is accepted in a limited number of countries but serves as a critical domestic payment mechanism post-2022 (Jamestown Foundation, 2024).

China: CIPS and RMB Internationalisation

China launched the Cross-Border Interbank Payment System (CIPS) in 2015 to facilitate international RMB settlements and reduce reliance on SWIFT (PBOC, 2023). Unlike SPFS, CIPS combines messaging and settlement and operates under the People’s Bank of China. As of 2023, it included over 1,600 participants worldwide and processed about ¥385 billion (~$46 billion) daily (China Daily, 2023).

However, approximately 80% of CIPS transactions still rely on SWIFT messaging, limiting its independence (Cai, 2022). China’s goal is to make CIPS fully self-sufficient and central to its broader push to internationalise the RMB (IMF, 2023).

Iran: SEPAM and Regional Interlinkages

Iran’s SEPAM system emerged in response to SWIFT expulsion in 2012 and again in 2018. It supports domestic financial messaging and has become more regionally relevant after being integrated into the Asian Clearing Union’s new payment framework in 2023 (The Hindu Business Line, 2023).

In a landmark development, Iran linked SEPAM with Russia’s SPFS, allowing both countries to conduct direct banking communications and settlements outside of SWIFT (Wilson Center, 2023). Iran is also indirectly leveraging CIPS through Chinese banks willing to process RMB transactions under opaque channels.

Comparative Characteristics

Feature	SWIFT	SPFS (Russia)	CIPS (China)	SEPAM (Iran)
Ownership	Member-owned	Russian Central Bank	People’s Bank of China	Iranian Central Bank
Currency Support	Multi-currency	Primarily Ruble	Primarily RMB	Primarily Rial
International Reach	200+ countries	~20 countries	~100 countries	Limited, ACU-focused
Transaction Volume	Trillions daily	Domestic + limited intl.	~$46B/day	Limited
Messaging Format	ISO 20022	SWIFT-compatible	ISO 20022	Proprietary
Sanction Risk	High leverage	High-risk, under OFAC	Low-risk (so far)	High-risk

Legal and Economic Factors Influencing Adoption

Legal deterrents significantly affect SWIFT alternatives. In 2024, the U.S. Treasury’s OFAC warned foreign banks that participation in SPFS could trigger secondary sanctions (OFAC, 2024). Meanwhile, European regulations have also restricted SPFS usage in EU territory (European Council, 2024).

In contrast, CIPS has not been sanctioned and benefits from China’s robust trade relationships. Still, banks fear U.S. retaliation and continue to rely on SWIFT infrastructure. Iran, under the most severe sanctions, has had to adopt bartering, cryptocurrency, and informal channels in addition to SEPAM.

Post-Ukraine Invasion Effects

Russia’s exclusion from SWIFT following the Ukraine invasion tested these systems under real-world pressure. SPFS was rapidly scaled, while Russian exports were increasingly settled in RMB and rupees (Reuters, 2023). Russian FX trading in yuan surged, and bilateral trade with China transitioned significantly to non-dollar currencies. However, these alternatives came with costs. Russia experienced a yuan liquidity crunch in 2023 due to secondary sanctions, bifurcating internal and external exchange markets (Trading Economics, 2023). This example highlights the limits of alternatives when isolated from global liquidity pools.

Potential for SWIFT Alternatives in a Taiwan Scenario

In a hypothetical conflict over Taiwan, China could be sanctioned similarly to Russia. Chinese policymakers have been preparing by expanding CIPS, promoting RMB settlements, and piloting the e-CNY digital currency for cross-border use (Zhou, 2021). Additionally, China has urged BRICS nations to develop a joint financial infrastructure to hedge against Western sanctions (Kazan Declaration, 2024).

Still, CIPS’s limited global adoption and the modest role of RMB (only ~2.3% of global payments in 2023) mean that the economic disruption of losing SWIFT access would be profound (IMF, 2023).

Conclusion

Russia, China, and Iran have developed significant infrastructure to reduce reliance on SWIFT, with varying degrees of success. While these alternatives: SPFS, CIPS, and SEPAM offer partial buffers against sanctions, they cannot fully substitute for the global liquidity and connectivity offered by SWIFT. Their continued evolution will depend on geopolitical alignment, legal constraints, and the broader trend toward financial multipolarity.

References

• Aizel, A. (2024, January 19). More than 150 foreign banks connect to Russian alternative to SWIFT. The Jamestown Foundation.
• Bank of Russia. (2023). System for Transfer of Financial Messages (SPFS).
• Cai, P. (2022, March 3). CIPS cannot rescue Russian banks from SWIFT ban. The Interpreter.
• China Daily. (2023, August 17). Yuan settlement system CIPS expands global reach.
• Eichengreen, B. (2022). Sanctions and the international role of the dollar. Peterson Institute for International Economics.
• European Council. (2024, July). Council regulation (EU) 2024/1049.
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• Kazan Declaration. (2024, October). 15th BRICS Summit Statement.
• OFAC. (2024, November 16). Treasury issues alert on Russian Financial Messaging System (SPFS).
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• Reuters. (2023, December 20). China’s CIPS logs record volume as countries seek dollar alternatives.
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• Trading Economics. (2023). China currency reserves.
• Wilson Center. (2023, October). Iran and Russia strengthen banking ties amid Western sanctions.
• Zhou, W. (2021). Digital yuan and cross-border payments: Implications for global financial governance. Journal of International Financial Law, 19(4), 233–250.