This week, RIA Novosti, citing data from SWIFT, reported that the euro’s use in international settlements fell to the lowest level on record in July,
According to the data, the percentage of cross-border settlements which utilized the second most popular currency in the world dropped to 24.4% last month, 6.83 percentage points below the previous month.
US dollar-settled transactions rose to 46.4%, as cross-border settlements which involved the Chinese yuan increased to over 3% – the highest it has registered since the beginning of 2022. As Beijing has launched a push to internationalize the use of its currency in trade settlements, the share of the yuan’s use in global trade has been steadily increasing.
The main tool for processing global payments continues to be the SWIFT (the Society for Worldwide Interbank Financial Telecommunications) system. However alternative inter-banking messaging systems have begun to emerge in recent years.
After the United States targeted Russia with sanctions in 2014 over its annexation of Crimea, Russia began developing its own national payment system. The SPFS offers the secure transfer of financial messages between banks both within and outside of the country. In December of 2015, Russia introduced its MIR cards as replacement for credit cards issued by Western credit card companies, and they are presently in use in a number of different countries.
In China, the CIPS (Cross-Border Interbank Payment System), has emerged as China’s domestic version of SWIFT, as India has developed the SFMS (Structured Financial Messaging System).
As Western sanctions have sought to make it difficult for Russia to engage in international trade through denying it access to Western financial systems, Russia and its partners in international trade have begun to increase their use of local currencies in settlements.
The BRICS trade alliance is also developing its own international currency, which will initially be utilized to settle trade between members, but which may eventually be used more widely among other nations.
