What is Swift, how it works and what will change without Russia
Swift, all the effects of the exclusion of Russia. The Guardian in-depth study
Russia's invasion of Ukraine has amplified pressure for tougher economic sanctions on Moscow. Labor leader Keir Starmer was among many to demand that Moscow be banned from Swift – the world's leading international payments network – with the aim of targeting Russian trade and making it harder for its companies to do business. writes The Guardian .
WHAT THE US AND THE EU HAVE DECIDED ON THE SWIFT AGAINST RUSSIA
What is Swift?
Swift (the Society for Worldwide Interbank Financial Telecommunication) is the leading secure messaging system that banks use to make fast and secure cross-border payments, allowing international trade to flow smoothly. It has become the main financing mechanism for international trade. In 2020, approximately 38 million transactions were sent every day on the Swift platform, facilitating trillions of dollars in transactions.
Who Owns Swift?
Swift, founded in the 1970s, is a cooperative of thousands of member institutions that use the service. Based in Belgium, it remains neutral in trade disputes, being operated primarily as a service to its members.
The prohibition
Boris Johnson told MPs that it would damage the Russian economy if it were ousted from the system. Routine transactions should be conducted directly between banks, or routed through nascent rival systems, adding costs and creating delays.
WHAT THE US AND THE EU HAVE DECIDED ON THE SWIFT AGAINST RUSSIA
The fears
One reason is that the impact on Russian businesses may not be as severe. The head of a large Russian bank, VTB , recently said it could use other payment channels, such as phones, messaging apps, or email. Russian banks could also route payments through countries that have not imposed sanctions, such as China, which has set up its own payment system to rival Swift . A ban on Russia from using Swift could accelerate the use of China's rival Cips system . There is also concern that it could damage the US dollar's status as a global reserve currency, and accelerate the use of alternatives such as cryptocurrencies.
The scenarios
The Biden administration is also concerned that a ban could harm its allies as much as Russian companies . Russia is a major buyer of foreign artifacts, especially from the Netherlands and Germany. Russia is the EU's largest supplier of crude oil, natural gas and solid fossil fuels, and European countries may have a harder time finding replacement suppliers.
Is it bound by economic sanctions?
In the past, the circuit has resisted calls to impose bans on certain countries, describing itself as neutral. But in 2012, the European Union banned Swift from serving Iranian companies and sanctioned individuals in connection with Tehran's nuclear program , setting a precedent for action against Russia. A spokesperson for Swift declined to state how the organization would respond to any US sanctions, Reuters said.
WHAT THE US AND THE EU HAVE DECIDED ON THE SWIFT AGAINST RUSSIA
(Extract from the press review of eprcomunicazione)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/cosa-e-swift-russia/ on Sun, 27 Feb 2022 07:19:52 +0000.