https://sputniknews.in/20230728/de-dollarisation-india-explores-creating-swift-alternative-3263858.html
De-dollarisation: India Explores Creating SWIFT Alternative
De-dollarisation: India Explores Creating SWIFT Alternative
Sputnik India
ndia’s plan to develop its own financing messaging system on the lines of SWIFT network will present the world with an “alternative” to the west dominated financial architecture.
2023-07-28T20:21+0530
2023-07-28T20:21+0530
2023-07-28T20:44+0530
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India’s ambitious plan to develop its own financing messaging system on the lines of Belgium-headquartered Society for Worldwide Interbank Financial Telecommunication (SWIFT) will present the world with an “alternative” to the west dominated financial architecture, an Indian expert has told Sputnik.Major Indian banks are connected to the SWIFT network, which has a presence in over 200 countries. Overall, 11,000 banks are part of the network, according to its website.Ashwani Mahajan, the co-convenor of economic advocacy group Swadeshi Jagran Manch (SJM), said that having a “Indian version” of SWIFT network would be “logical and a welcome step” in New Delhi’s ongoing drive to “internationalize the rupee” and move away from carrying out trade in US dollar.The UPI has been introduced in countries such as the United Arab Emirates (UAE), Mauritius, Singapore, Nepal and Bhutan. This month, Indian Prime Minister Narendra Modi also announced the introduction of UPI in Paris during his trip to France.Mahajan noted that the Reserve Bank of India (RBI) last July had also allowed foreign banks to open Special Rupee Vostro Accounts (SRVAs) in Indian banks to facilitate trade settlements in rupees.The Indian government told the Parliament this week that banks from 22 countries have opened SRVAs in 20 Indian banks till date. These countries include Russia, Germany, Singapore, Malaysia, Bangladesh, Guyana and the United Kingdom among others, according to Indian commerce ministry.Mahajan said that the India’s Foreign Trade Policy (FTP) for 2023-28 calls for “encouraging” the use of Indian rupee (INR).India’s Own SWIFT Would Help it ‘Circumvent’ Politically-Motivated CurbsSignificantly, New Delhi’s efforts to shed its reliance on the US dollar through rupee-tailored mechanisms such as UPI, SRVAs and plans to have an own financial messaging system have gathered momentum coincide with sweeping western sanctions against Russia.Last March, the European Union (EU) cut major Russian banks off SWIFT network as a payback for Moscow’s special military operation in Ukraine.The move led to economic disruptions globally, including in India-Russia economic ties as both the countries have been using SWIFT to carry out trade. According to reports at the time, Indian businesses were unable to get millions of dollars of their payments out of Russia due to restrictions on SWIFT.Although the trade between the two countries has since broken all previous records due to Russian energy exports to India, Russian Foreign Minister Sergey Lavrov said on the fringes of the Shanghai Cooperation Organization (SCO) Council of Foreign Ministers (CFM) meeting in March that Russian businesses have billions of rupees in Indian banks which they were unable to use.In 2018, New Delhi was also forced to cut off its booming energy trade with Iran after the then Donald Trump administration pulled Washington out of the Joint Comprehensive Plan of Action (JCPOA) and re-imposed economic sanctions on the country.Mahajan, however, cautioned that the process of developing an own financial messaging system would possibly incur a pushback from “established players” such as SWIFT.The Trend of De-dollarizationIn fact, not only India, but many countries such as China, the ten-country ASEAN and other developing states have in recent months been ditching the US dollar in favour of local currencies in trade settlements.As it is, the share of US dollars held by central banks was at a 25-year-low in the fourth quarter of 2020, according to the International Monetary Fund (IMF).The share of US dollar reserves held by central banks fell to 59 percent—its lowest level in 25 years—during the fourth quarter of 2020.
https://sputniknews.in/20230331/de-dollarization-push-indias-new-foreign-trade-policy-to-encourage-rupee-1381160.html
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De-dollarisation: India Explores Creating SWIFT Alternative
20:21 28.07.2023 (Updated: 20:44 28.07.2023) An expert committee of Indian bankers is exploring the possibility of developing India’s own financial messaging system like the SWIFT network, Indian daily Economic Times reported on Friday.
India’s ambitious plan to develop its own financing messaging system on the lines of Belgium-headquartered Society for Worldwide Interbank Financial Telecommunication (SWIFT) will present the world with an “alternative” to the west dominated financial architecture, an Indian expert has told Sputnik.
Major Indian banks are connected to the SWIFT network, which has a presence in over 200 countries. Overall, 11,000 banks are part of the network, according to its website.
Ashwani Mahajan, the co-convenor of economic advocacy group Swadeshi Jagran Manch (SJM), said that having a “Indian version” of SWIFT network would be “logical and a welcome step” in New Delhi’s ongoing drive to “internationalize the rupee” and move away from carrying out trade in US dollar.
“It is logical because we (India) have been taking steps to internationalize the Unified Payments Interface (UPI, a domestic digital payments platform) and have been encouraging trade settlements in Indian rupees with other countries,” Mahajan underlined.
The UPI has been introduced in countries such as the
United Arab Emirates (UAE), Mauritius, Singapore, Nepal and Bhutan. This month, Indian Prime Minister
Narendra Modi also announced the
introduction of UPI in Paris during his trip to
France.
Mahajan noted that the Reserve Bank of India (RBI) last July had also allowed foreign banks to open Special Rupee Vostro Accounts (SRVAs) in Indian banks to facilitate trade settlements in rupees.
The Indian government told the Parliament this week that banks from 22 countries have opened SRVAs in 20 Indian banks till date. These countries include Russia, Germany, Singapore, Malaysia, Bangladesh, Guyana and the United Kingdom among others, according to Indian commerce ministry.
Mahajan said that the India’s Foreign Trade Policy (FTP) for 2023-28 calls for “encouraging” the use of Indian rupee (INR).
India’s Own SWIFT Would Help it ‘Circumvent’ Politically-Motivated Curbs
Significantly, New Delhi’s efforts to shed its reliance on the US dollar through rupee-tailored mechanisms such as UPI, SRVAs and plans to have an own financial messaging system have gathered momentum coincide with sweeping western sanctions against Russia.
Last March, the European Union (EU) cut major Russian banks off SWIFT network as a payback for Moscow’s special military operation in Ukraine.
The move led to economic disruptions globally, including in India-Russia economic ties as both the countries have been using SWIFT to carry out trade. According to reports at the time, Indian businesses were unable to get millions of dollars of their payments out of Russia due to restrictions on SWIFT.
Although the trade between the two countries has
since broken all previous records due to Russian energy exports to India, Russian Foreign Minister
Sergey Lavrov said on the fringes of the Shanghai Cooperation Organization (SCO) Council of Foreign Ministers (CFM) meeting in March that Russian businesses have billions of rupees in Indian banks which they were unable to use.
In 2018, New Delhi was also forced to cut off its
booming energy trade with Iran after the then
Donald Trump administration pulled Washington out of the Joint Comprehensive Plan of Action (JCPOA) and re-imposed economic sanctions on the country.
Mahajan reckoned that a domestically-developed financial messaging network would facilitate cross-border flows between India and other countries as it would circumvent restrictions imposed due to geopolitical reasons”.
“Such a move would help India to carry out international trade without any concerns about any politically-motivated financial curbs. It would also be in line with Prime Minister Modi’s vision of achieving economic and overall self-reliance (atmanirbharta),” he remarked.
Mahajan, however, cautioned that the process of developing an own financial messaging system would possibly incur a pushback from “established players” such as SWIFT.
“There will also be some technical challenges which would need to be overcome in order to float our own network,” the Indian expert suggested.
The Trend of De-dollarization
In fact, not only India, but many countries such as China, the ten-country ASEAN and other developing states have in recent months been
ditching the US dollar in favour of local currencies in trade settlements.
As it is, the share of US dollars held by central banks was at a 25-year-low in the fourth quarter of 2020, according to the International Monetary Fund (IMF).
The share of US dollar reserves held by central banks fell to 59 percent—its lowest level in 25 years—during the fourth quarter of 2020.
