NATO allies have agreed to penalise Russia by excluding it from the global SWIFT banking ecosystem after Russia’s invasion of Ukraine last week. However, this might give birth to central bank digital currencies (CBDCs), particularly the Digital Yuan produced by the US’s economic adversary China.
According to sources, China has already begun development on a viable successor to CHIPS – the Clearing House Interbank Payments System. China is constructing its own Cross-Border Interbank Payments System (CIPS). CHIPs has a 40 percent global market share, whereas CIPS handles just 3 percent of global transactions.
According to Bloomberg analysts, China can reinvent its position in the global financial market with the Digital Yuan, also known as the e-CNY. According to the central bank of china, the currency is “technically ready” for cross-border usage.
According to the expert, China may easily persuade countries such as Russia to utilise the e-CNY after being barred from SWIFT and CHIPS.
According to John Hopkins economist Steve Hanke, imposing sanctions on Russia might be harmful to the West. On February 27, Hanke tweeted: “Weaponizing the SWIFT international payment service may cut Russia off, but it risks undermining the dollar-dominated world’s economy.” Indeed, other systems established by China and Russia will emerge.
The United States’ economic supremacy will not go quickly. However, other payment systems that are gaining traction might pose a threat to SWIFT and CHIPS over the next two decades.
