When Russian president Vladimir Putin held his annual telethon with voters in June 2021, he was quick to emphasise the country’s ability to thrive in spite of US sanctions. As an idea, it is not without merit: Russia’s economy has performed admirably in recent years, helped by prudent fiscal and monetary policies, as well as regulatory efforts to strengthen the banking system. That much of this success has come in the aftermath of US and EU sanctions, imposed in response to Russia’s annexation of Crimea in 2014, underscores the basic truth behind Mr Putin’s claim. By creating what has been dubbed ‘Fortress Russia’, the Kremlin has engineered a high degree of domestic autonomy for the national economy and, by extension, mitigated the cost of sanctions imposed by foreign actors.
The stunning success of Russia’s national payment system is a case in point. In 2014, several Russian banks were cut off from the Visa and Mastercard payment networks as a result of the sanctions. Not only did this sever the lenders’ ability to process payments on these networks, but it also alerted the Russian government to the risks of depending on US payment groups to serve the national economy. In response, the Kremlin launched an unprecedented effort to develop and mature a domestic payment solution, effectively from scratch. Though some studies of a national scheme were conducted in the early 2000s — before being shelved after the global financial crisis — work started in earnest in late 2014.
