The Alliance Nobody's Reporting | Russia, China & Iran Just Unified Their Payment Systems

Ajouté : 2026-05-14

[00:00:00]In October 2023, the governors of the central banks of Russia, China, and Iran met in Moscow and announced what they called a harmonization of their respective payment systems. The word they chose was careful. Harmonization sounds administrative. It sounds like paperwork. What it described was the first functional link between three independent financial rails, SPFS, CIP, and the Iranian CPAM capable of moving sovereign transactions outside the Swift network entirely. Most of the coverage that followed treated this as a reaction, a workaround, something assembled in a hurry by countries that had run out of other options. But the Russian payment system they were harmonizing had been under development since 2014. And the Chinese system had gone live in 2015 and the Iranian network had been operational in its domestic form since 2012. You cannot build a decade of parallel infrastructure in response to something that happened last year. Swift, the society for worldwide interbank financial telecommunication is not a bank. It does not hold money.

[00:01:09]It is the messaging layer that tells banks in different countries how to move money between each other. When you remove a country from Swift, you do not confiscate its funds. You make it extraordinarily difficult for anyone outside its borders to transact with it in real time. That difficulty has been the primary mechanism of Western financial sanctions since 2012 when Iran was first removed. The implicit assumption behind that mechanism was that no country outside the western aligned system had the technical capacity or the institutional trust to build something that worked at comparable scale. That assumption was wrong. But more than that, it was wrong before it was ever tested. The detail worth registering here without yet knowing its full weight is a document number, People's Bank of China Payment System Report, 2015, page 47. It describes SIPs the crossber interbank payment system not as a sanctions hedge but as an instrument of yuan internationalization.

[00:02:12]The language is developmental not defensive. The rationale given is about reducing Chinese dependence on dollar clearing for trade with its own partners.

[00:02:22]The sanctions conversation in 2015 barely touched China. Beijing was not yet under pressure. It was building anyway. Russia's trajectory followed a different political calendar but arrived at the same destination.

[00:02:37]SPFS, the system for transfer of financial messages, was authorized by the Russian Central Bank in 2014, the same year Crimea was annexed and the first wave of Western financial restrictions arrived. But the architecture it was built on and the institutional decisions that made it possible trace back further to a 2012 internal review of Russian financial sovereignty commissioned after the Iranian swift disconnection. Russia watched what happened to Thran and began drawing its own conclusions before anyone in Washington had named Russia as the next target.

[00:03:14]Three systems, three different institutional origins, three different political timelines, each one explicable on its own terms, for its own reasons in its own year. What makes them inexplicable together is the convergence. And the fact that the convergence was already structural before the crisis that has since been used to explain it. The mechanism that made harmonization possible is not political. That is the part that gets missed when coverage frames this as an axis of the agrieved. Political alignment between Russia, China and Iran is real. But it is not loadbearing here.

[00:03:53]What is loadbearing is a shared technical problem that each country solved independently and then discovered when they compared notes they had solved incompatible ways. Swift works because it runs on a standardized messaging format ISO 200022 that every participating institution uses to describe a transaction. The format specifies not just the amount and the destination but the metadata, the originating institution, the correspondent bank, the purpose code, the compliance flags. When Iran and later Russia were removed from Swift, they did not lose access to a technology. They lost access to the standardized language that made their transactions legible to the rest of the global banking system. What they built in response, CPAM, SPFS, were essentially translation systems, domestic messaging formats that could describe transactions the same way Swift could for institutions that were willing to read them. The question was always whether enough institutions would be willing. For years, the answer was not enough. China's problem was different in kind, but adjacent in structure. CIP was not built to escape anything. It was built because the dollar clearing system created a specific inefficiency for Chinese trade. When a Chinese company paid a Southeast Asian supplier in Yuan, the transaction still routed through a dollar clearing correspondent bank in New York or London, adding time, cost, and a layer of American regulatory jurisdiction over a transaction that had nothing to do with the United States.

[00:05:32]CIP was the infrastructure to remove that routing dependency. By 2022, it had 276 direct participants and over 1,300 indirect ones, mostly in Asia, the Middle East and Africa. It was not a sanctions instrument. It was a trade efficiency instrument that happened to also function as a sanctions hedge because the two problems, it turned out, shared the same solution. The strongest case against the argument developing here runs as follows. Three parallel payment systems do not constitute an alternative to Swift. The dollar's dominance in global trade is not a product of messaging infrastructure. It is a product of depth. The dollar is used in roughly 88% of all foreign exchange transactions globally.

[00:06:20]According to the Bank for International Settlements 2022 trienal survey, that share exists because the dollar has the deepest most liquid financial markets in the world. No messaging system changes that. Iran and Russia are not significant enough as trade partners for most of the world to justify the compliance risk of rooting through their systems. And China, whatever its ambitions, has not made the yuan fully convertible. Meaning that even if SIPs works technically, the underlying currency it moves is still managed, still restricted, still not a genuine reserve alternative. This is a serious argument. It is not wrong about the dollar's structural depth. The BIS figure is accurate. Chinese capital controls are real and consequential. And it is true that as of the end of 2023, SIPs processed roughly 1500th of the daily transaction volume that Swift handles. The scale gap is not trivial.

[00:07:19]If the argument here were that SIP and SPFS are about to replace Swift tomorrow, the counterargument would be decisive. But the argument is not about replacement. It is about threshold.

[00:07:30]There is a specific volume of global trade concentrated in energy, commodities, and bilateral deals between non-western partners for which dollar clearing is already more a habit than a necessity. The question the counterargument does not answer is this.

[00:07:46]At what point does a parallel system become useful enough that enough institutions adopt it to make it more useful? Still threshold dynamics do not move linearly. They move slowly then all at once. And the 2023 harmonization was not a transaction event. It was an interoperability event. The moment three systems that could each only talk to themselves became a system that could talk to each other. Which is a quiet way of saying something loud. Return to page 47 of the People's Bank of China Payment System Report 2015.

[00:08:23]the passage that describes CIP as an instrument of yuan internationalization, not a sanctions hedge. At the time it was written, that framing was accurate, or at least it was the accurate public framing. What the document does not say and what becomes visible only when you place it alongside the internal PBOC communications released during the 2021 Hong Kong legislative review is that the internationalization goal and the sanctions resilience goal were never separated in the design phase. They were the same goal approached from two angles written up differently depending on the audience. The version that went to the international financial press talked about trade efficiency. The version that went to the state council talked about what the report called payment sovereignty, a term that does not appear once in the public-f facing document.

[00:09:15]The infrastructure was the same. The framing was audience dependent. That gap between public framing and internal rationale is where the counterargument from part two begins to lose its footing. The case that SIPs cannot substitute for Swift because the yuan is not fully convertible is technically correct, but it assumes the goal was substitution. If the goal was segmentation, carving out a specific corridor of global trade that could operate outside dollar jurisdiction without needing to capture the whole system, then convertability is not the constraint it appears to be. You do not need a fully convertible currency to settle energy transactions between China and Russia or between China and Iran or between any pair of countries that have already agreed bilaterally on yuan denominated contracts. The convertability argument applies to the dollar's role as a global reserve. It does not apply to the yuan's role as a bilateral settlement currency within a defined network. and the network as of the 2023 harmonization now has a defined perimeter. The counterargument also cannot account for what happened in the 12 months following the harmonization announcement. By the end of 2024, 14 central banks had opened formal observer status with the CIPS governance structure. Not participant status, observer status, which is the step institutions take when they are assessing a system before committing to it. Seven of those 14 were in the Middle East and Africa. Three were in South America. The Gulf Cooperation Council's Secretariat published a working paper in March 2024 examining CIP integration for intraGCC transactions. Saudi Arabia has not moved, but the fact that the question is now being formally examined by an institution that processes some of the world's largest sovereign energy flows is not the same as Saudi Arabia staying put indefinitely. What I keep coming back to is the asymmetry in how this was built. Every western analysis of deolarization has treated it as a demandside problem. The question of whether enough countries want to move away from the dollar. The infrastructure story is a supply side story. For most of the period between 2012 and 2022, countries that might have wanted alternatives did not have a functional one available. The 2023 harmonization changed that calculation not by making the alternative better than Swift. It is not. But by making it good enough for a specific category of transactions where the political will to use it already exists. That threshold had not been crossed before. It has been crossed now.

[00:12:02]The dismantling of the counterargument is not that the dollar is weak. The dollar is not weak. The BIS figures are not wrong. What the counterargument misses is that you do not need to replace a dominant system to damage it.

[00:12:17]You need to remove enough transaction volume that the network effects which sustain its dominance begin at the margin to erode. Network effects compound in both directions. Swift is dominant partly because everyone uses it. If a meaningful corridor of global trade, energy, commodities, bilateral sovereign deals begins clearing through a different system consistently, the institutions that serve that corridor have a reason to build swift adjacent capability in the alternative and institutions that build that capability have a reason to use it beyond the original corridor. The sequence that began in 2012 with an Iranian disconnection, ran through a Chinese efficiency calculation in 2015, absorbed a Russian sovereignty response in 2014, and arrived at a three system harmonization in 2023, was not assembled by accident. The components were built independently, but the compatibility was not. The verdict is not that the dollar is ending. that framing has been wrong every time someone has reached for it.

[00:13:23]And reaching for it again would misread what the 2023 harmonization actually produced. The verdict is more specific and in some ways more consequential than a reserve currency transition because reserve currency transitions take generations and what was built here operates on a much shorter timeline.

[00:13:44]What was built is a functional off-ramp, not for the global financial system, for a specific subset of it. The corridor of sovereign energy transactions, commodity flows, and bilateral trade deals between countries that have either been sanctioned out of Swift or have calculated that dollar clearing jurisdictional exposure is a liability they would prefer to manage around. That corridor is not small. Russia and China alone account for somewhere between 14 and 17% of global goods trade depending on whether you measure by volume or value. Iran's contribution is modest in absolute terms but strategically significant in energy routing. Add the observer status central banks. Add the GCC working paper. Add the bilateral yuan settlement agreements China has signed with Brazil, Argentina and six Azan members since 2022 and the corridor begins to have a shape. The shape is not a replacement architecture. It is a parallel one. And parallel architectures once they reach minimum viable scale do not need to win. They need only to persist because persistence changes the incentive calculation for every institution sitting on the fence. The 14 observer central banks are not ideologically committed to ddollarization.

[00:15:06]They are institutionally risk averse.

[00:15:09]What the 2023 harmonization gave them was not a better system. It gave them a credible fallback. And a credible fallback changes how you negotiate with the system you are currently inside.

[00:15:21]This is where the opening reframes itself. The coverage in October 2023 asked whether Russia, China, and Iran had built something capable of threatening Swift. That was the wrong question, and the fact that the answer was obviously no meant the story was largely dropped within a news cycle. The right question was whether they had built something capable of threatening the assumption on which Western financial statecraft has rested since 2012. The assumption that exclusion from dollar clearing infrastructure is a terminal condition with no functional workaround available at sovereign scale.

[00:15:55]That assumption is now structurally false. It was made false not in October 2023 but incrementally across 11 years of infrastructure decisions that were each reported when they were reported at all as separate stories with separate explanations. The honest conclusion is this. The sanctions architecture that the United States and its allies have used as the primary instrument of economic statecraftraft for the past decade was built on a monopoly. The monopoly was the absence of alternatives. That absence is over. It does not mean sanctions stop working tomorrow. They remain powerful within the Western Alliance system, which is still most of the system. But the marginal effectiveness of each new sanctions designation will decline from here because the off-ramp now exists and the institutions capable of using it are already examining it. The foreign policy tool that has substituted for military intervention in more crises than any other instrument of the past 20 years just became permanently less sharp. What this produces next is already in motion.

[00:17:00]The GCC working paper will either result in a formal feasibility study or it will not. But the fact of its existence means the conversation has moved inside the institution. Brazil's yuan settlement agreement will either expand into commodity pricing or it will not. But the bilateral infrastructure to support that expansion is already in place. The 14 observer central banks will either progress to participant status or they will not. But the threshold at which enough of them move to trigger network effects in the alternative system is lower in 2025 than it was in 2022 and lower still than it was in 2015.

[00:17:41]Page 47 of the 2015 PBOC report described an instrument of yuan internationalization.

[00:17:48]What it was actually describing in the language available at the time for the audience it was written for was the foundation of a parallel clearing world.

[00:17:58]The foundation took 8 years to pour. The structure went up in the years after in October 2023. They put a roof on it. If this sequence is one you want to keep watching as it develops. The channel is where that work continues. No noise, just the architecture of what comes