Digital Rupee: Future Alternative to SWIFT

Digital Rupee has potential to emerge as a neutral, scalable alternative amid global dissatisfaction with SWIFT.

- ABHINANDAN MISHRA

Washington's recent economic sanctions against multiple countries, leveraging the US-dominated Society for Worldwide Interbank Financial Telecommunication (SWIFT), have repeatedly highlighted the vulnerabilities of the global financial system's reliance on a single network. With $5 trillion in daily transactions across 11,000 institutions in 200 countries, SWIFT dominates the global financial landscape. As of 2024, 60% of global reserves and 88% of SWIFT transactions are denominated in dollars.

These actions, often seen as economic coercion, have pushed nations to explore alternatives, though without much success thus far. China's Digital Currency Electronic Payment (DCEP) and Russia's System for Transfer of Financial Messages are examples of such attempts.

(SPFS) aim to challenge SWIFT's dominance, but both face substantial challenges regarding trust and scalability as they are viewed as rivals of the US.

India's Digital Rupee (e), currently in its pilot phase, is uniquely positioned to provide a neutral and technologically advanced solution to address the evolving global financial landscape.

The imposition of U.S. sanctions, which threaten to disconnect countries from SWIFT's clearing system, has been criticised as "geopolitical bullying" by Professor Jeffrey Sachs, a renowned economist and public policy analyst at Columbia University.