Right after SIBOS, as the SWIFT Interbank Operations Summit is called, was held in Beijing from 21-24 October, I posted this video and some notes on my LinkedIn account, not realising that the reaction I was going to get was going to be lesson on how geo-politics work out behind the scenes. I modified my original notes as follows:
1. This was the first time that China volunteered to host SIBOS, through the Bank of China, but when the meeting actually arrived in Beijing, the Chinese government downgraded its keynote speaker from the governor of the central bank to the deputy governor at short notice. The chairman of Bank of China was present, but that was as a courtesy as his bank was the host. It was a busy week, even for China, as it was also participating in several conferences in October. But it was clear that the governor of the central bank backed out from making any of his significant statements that could have been construed as China’s commitment to the rest of the world at SIBOS.
2. It was a busy week for geopolitics. The BRICS Summit was held in Moscow in the same week and the BRICS member states, which includes China, discussed many things including the future of the global financial infrastructure. It was also the same week as the Annual Meetings of the IMF and World Bank held in Washington DC.
One of the themes discussed at the BRICS and which had papers presented was on BRICSPay as an alternative payment system to SWIFT. This received full coverage in the local Chinese newspapers, which were clearly also trying very hard to underplay SIBOS by not directly reporting on the event itself although it gave coverage to several Chinese speakers but without mentioning SIBOS.
So, why did China invite SWIFT to hold SIBOS in China, and even more significantly in Beijing? In all likelihood, the country was assessing SIBOS as a potential platform for making significant statements about the internationalisation of China’s financial infrastructure, but in the course of events, the BRICS Summit and the IMF and World Bank Meetings took preference.
3. Having said that, the BRICS Summit projected several very confusing messages on its plans for an alternative financial system to that dominated by the West, which had even me fooled for a moment. During the BRICS Summit, there were several fake news purporting that Russia revealed a BRICS currency, which was not true, but bloggers who supported BRICS and China were parading these as if they were a victory over the Western dominated financial system.
Some press also discussed the potential for a BRICS Payment system, openly suggesting that the mBridge project originally pioneered by the Hong Kong Monetary Authority (HKMA) could be repurposed for BRICS, which includes Russia. There is some truth in this one, because the People’s Bank of China (PBOC) is now actively involved in mBridge, and there is no reason at all that it would be in a position to recreate a similar but different version for BRICS.
Perhaps more inflammatory was the claim that BRICS was working with the Bank for International Settlements – BIS on this initiative. I had originally written that the BIS would be heading for a collision course with the US if it did.
The BIS later wrote to me to clarify that Agustin Carstens, its general manager, had since made the categorical statement in DC that “we cannot directly support any project for the BRICS because we cannot operate with countries that are subject to sanctions” which would refer to Russia but not to China, which added to the confusion because members of BRICS could make it all fungible.
But there was also nothing in the Kazan Declaration suggesting that BRICS was actually working with the BIS. I watched the press conference that President Putin gave in full after the BRICS Summit, and even he made it categorically clear that there was no decision on any alternative payment system to SWIFT at all. But there was this paper presented by Yakov and Partners paraded during the Summit that suggested that the Russian government was indeed pursing an alternative payment system.
The Kazan declaration simply said that the BRICS member states would “encourage the strengthening of correspondent banking networks within BRICS and enabling settlements in local currencies in line with BRICS Cross-Border Payments Initiative (BCBPI), which is voluntary and nonbinding” and that it looked forward to further discussions in this area, through the BRICS Payment Task Force. It appeared that the organisers of this year’s BRICS Summit clearly intended the confusion.
4. Given all that was happening around the world, the worst session at the SIBOS conference was the one where the BIS, the Financial Stability Board (FSB) and SWIFT were congratulating themselves generously without a clue about these clouds of controversies forming over their heads.
5. Still, the difficulties that the Global South is facing with an onerous, expensive and punitive U.S. defined global payment system is now reaching epidemic proportions. It is setting the stage for these countries to consider the alternatives, even those by repressive regimes. But SIBOS is really a western-dominated talk-shop that ignores their real concerns.
5. It is unlikely that SIBOS will be invited again to China. It is also unlikely that SWIFT would want to hold SIBOS in China. Many global and U.S. banks, consulting firms and technology companies did not allow their employees to carry laptops and mobile phones to China. Attendance from the U.S. was clearly lower than normal. It’s too difficult for now.
The whole experience impressed on me the importance of being accurate in assessing the intentions and abilities of different protagonists in developing their respective agendas, even as many fake news swirl around the world pretending to be facts.
