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![]() This note investigates how far China has gone in creating alternatives to SWIFT, Western banks, and the dollar. Specifically, countries are looking to China, which has large internationally active banks, has created its own clearinghouse for cross-border transactions and is embarked on a campaign to encourage broader international use of its currency, the renminbi. Such options could include building a substitute for SWIFT to send instructions regarding cross-border interbank transactions identifying financial counterparties other than Western banks with which to do international business and platforms other than Western clearinghouses through which to make payment and finding a vehicle other than the dollar for denominating and executing transactions. These developments have led Russia, as well as other countries contemplating whether they might find themselves in the same position, to explore alternatives. 1 These sanctions bar Russian banks from using SWIFT (the Society for Worldwide Interbank Financial Telecommunications) to facilitate cross-border payments, prohibit banks from doing most forms of business with Russian entities, and freeze assets held abroad by the Central Bank of Russia in the form of treasury securities and bank deposits. In response to Russia’s attack on Ukraine, the United States and a coalition of cooperating countries imposed harsh financial sanctions on the Russian government, corporations, and individuals. ![]() In the wake of unpredicted sanctions levied against Russia, will China be able to advance its own efforts to challenge US dollar dominance and promote alternatives to SWIFT? While its progress has been limited to date, how might dynamics evolve in the coming months and years as the global financial system responds to recent geopolitical shocks? In the inaugural Marshall Paper, Barry Eichengreen explores how China’s efforts to build alternatives to SWIFT will be impacted by the war in Ukraine. Inspired by the work and legacy of Andrew Marshall, the founding director of the Office of Net Assessment, the Papers will be rigorous yet provocative, continually pushing the boundaries of intellectual and policy debates. The Marshall Papers is a new essay series edited by Jude Blanchette of CSIS and Hal Brands of SAIS that will probe and challenge the assessments underpinning the U.S.
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