U.S. Dollar Dominates Global Payment Network SWIFT

When leaders of the newly expanded BRICS group meet in Kazan, Russia, this week, one of the talking points will be Russia’s push for an alternative international payment platform that would reduce the U.S. dollar’s dominance in global trade and international payments and better shield countries like Russia from sanctions in the future.

In reaction to Russia’s invasion of Ukraine in February 2022, a number of Russian banks were banned from SWIFT as part of the wide-ranging international sanctions imposed against the country, making it harder but not impossible for Russia to take part in international trade and settle cross-border payments. SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a global payment network that banks and financial institutions use to send money to each other across countries. Think of it as a secure messaging system that helps banks communicate financial transactions quickly and accurately. 

As our chart shows, the majority of payments on SWIFT is made in U.S. dollars, with no other currency coming close to the dollar’s role in international payments. In August 2024, the dollar accounted for 49.1 percent of payments handled by SWIFT, followed by 21.6 percent for the euro, 6.5 percent for the British pound and 4.7 percent for the Chinese yuan. Excluding payments within the Eurozone, the dollar’s share even climbs to 60 percent, illustrating its role as the closest thing we have to a “world currency”, much to the chagrin of Russia and other antagonists to the United States.

According to plans distributed to journalists ahead of the BRICS summit, Russia proposes a network of commercial banks across BRICS member states linked to each other through the countries’ central banks. The proposed system would allow for token-based cross-border payments in local currencies, reducing the need for dollar transactions and potentially reducing the costs of settling international payments for BRICS countries.