Russia and Iran, as members of the BRICS alliance, have formally discontinued their utilization of the SWIFT payment system for conducting cross-border transactions. Instead, both nations have opted to facilitate international trade settlements through direct bank transfers. The abandonment of the SWIFT payment system signifies a strategic shift in the financial mechanisms employed by Russia and Iran for their bilateral trade.
Transactions will now transpire directly through designated banks, with emphasis placed on conducting these exchanges in their respective local currencies rather than the US dollar.
Direct bank transfers without utilizing the SWIFT system are currently limited to transactions between Russia and Iran, with no such arrangements for other BRICS member countries.
BRICS: Initiates Trade in Local Currency Following their expulsion from the SWIFT
In 2022, both Russia and Iran faced SWIFT restrictions following the imposition of sanctions by the United States. Despite an initial allowance for limited transactions, both nations have opted to discontinue their engagement with SWIFT. Notably, the central banks of these BRICS member countries are actively collaborating to facilitate direct bank transfers,
Two BRICS member nations are presently circumventing US sanctions by opting for direct bank transfers, thereby bypassing the traditional SWIFT system. Mohsen Karimi, the Deputy Head for Central Bank of Iran and International Affairs, has officially affirmed that the nation has successfully eliminated its dependency on SWIFT.
“We have successfully integrated the messaging transmission systems of the two nations. Consequently, the reliance on Switzerland for communication between the banking entities of both countries has been eliminated. Commercial banks in each respective country can now directly establish intermediary relations. This facilitates a streamlined process wherein exporters are able to generate invoices denominated in Rials for the Russian counterpart, subsequently receiving funds directly from Russian banks operating within the Iranian financial framework,” stated Karimi in an interview with the Fars news agency.
