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Multicurrency Banking: How Sanctions on Russia Are Accelerating a Global Shift

In recent years — and especially since the heavy sanctions imposed on Russia following its invasion of Ukraine — a quiet yet significant transformation has begun to shake the foundations of global banking. At the heart of this shift lies the dominance of the U.S. dollar as the world’s reserve currency and the main medium for cross-border transactions. While Western countries increase their use of financial tools as instruments of political pressure, other nations are charting a different course — building parallel, multicurrency banking infrastructures aimed at reducing reliance on the U.S.-led system

The SWIFT Disconnect: A Defining Moment

When Russia was partially cut off from the SWIFT network in early 2022, it marked a historic turning point. SWIFT is not a payment system per se, but rather a messaging network between banks. However, control over it essentially means the ability to isolate an entire country from the global banking system. For Russia — a gas and energy superpower — the sanction was severe, but it also served as a wake-up call, not only for Moscow but for many others

In response, Russia began aggressively promoting its alternative SPFS system — a domestic interbank messaging framework similar to SWIFT. More than just a local solution, SPFS became a foundation for bilateral financial agreements with countries like Iran, China, and India, utilizing rubles, yuan, or rupees instead of U.S. dollars

China and the Yuan: The Biggest Winner

China has emerged as a clear beneficiary of this evolving financial landscape. The Chinese yuan, once negligible in international trade, has gained increasing traction as a settlement currency for oil, gas, and other commodities. In the past year alone, Saudi Arabia announced its consideration of selling oil in yuan instead of dollars — a move that would have been unthinkable not long ago. In parallel, China has invested heavily in digital payment infrastructure, including the mBridge initiative, a cross-border payment project involving the central banks of Hong Kong, Thailand, and the UAE

The End of Dollar Dominance?

To grasp the scope of these changes, one must understand the systemic dominance of the dollar. Today, around 60% of global reserves are held in U.S. dollars, and more than 80% of global trade is settled in or through dollars. However, this picture is beginning to change. Several central banks in developing economies have already started reducing their dollar exposure, diversifying into yuan, euros, Swiss francs, and even gold

This is more than a financial strategy — it’s a political statement. Choosing to trade in local currencies or in the currency of a strategic ally signals a desire for economic independence and reduced exposure to U.S. influence. Countries like Turkey, Indonesia, South Africa, and Brazil are increasingly turning to alternative payment systems as a matter of sovereignty and long-term planning

Israel and the International Arena: Are We Ready?

For Israeli banking, these global trends raise serious strategic questions. Major Israeli banks — such as Bank Leumi, Hapoalim, and Discount — currently operate almost exclusively through the American financial system. As of today, Israel lacks an independent payment infrastructure that could interface with non-American financial networks. Israeli banks remain fully exposed to U.S. regulatory oversight, particularly from OFAC (the Office of Foreign Assets Control)

In a world where international trade increasingly favors local currencies and independent systems, Israeli banks may find themselves lagging. The growing link between global trade and flexible, multicurrency banking demands a fresh strategic outlook from Israel’s Ministry of Finance, the Bank of Israel, and the country’s major financial institutions

Conclusion: More Than Just a Financial Shift

The move toward a multicentric global banking system is not just a reaction to sanctions or trade friction — it’s a reflection of deeper geopolitical realignment. A banking landscape built on multicurrency systems, alternatives to SWIFT, and a gradual retreat from dollar dependency is changing the rules of the game. Those who adapt early will gain a tremendous competitive advantage. Those who cling solely to the old system risk being left behind

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