Kyrgyzstan should not have to choose between SWIFT and CIPS; the country needs its own settlement architecture

Kyrgyzstan should not rely solely on a single international payment system, including switching exclusively from SWIFT to the Chinese CIPS. The country needs to develop its own clearing architecture, according to Kubatbek Rakhimov, director of the ‘Applikata’ Centre for Strategic Solutions.

He said that whilst CIPS does indeed reduce dependence on the US dollar infrastructure, it simultaneously increases dependence on the yuan. Therefore, simply replacing one system with another does not solve the problem of Kyrgyzstan’s financial stability.

“The aim should not be to choose a single system, but to build a clearing network”, — the expert stated.

Rakhimov noted that Kyrgyzstan already has practical experience of alternative settlement methods. He said the country has effectively created a functioning mechanism for netting reciprocal payments, which helps to reduce the cost of cross-border transactions and lessen dependence on SWIFT and intermediary banks.

Now, the expert believes, the main task is to transfer this experience from the informal sphere into a legal clearing hub with clear rules and compliance standards.

“We have learnt to operate in the grey area. We must now bring the best and most effective practices into the white area”, — said Rakhimov.

In his view, this approach will enable Kyrgyzstan to use its position between Russia and China as an economic advantage, rather than simply adapting to the restrictions imposed by external financial systems.