Considerations about SWIFT

Swift has emerged from banks back offices to a debated topic in media and publis discourse. Below are some considerations about it.

  • SWIFT is a fast, structured, safe and cheap messaging service, tightly integrated with banks’ IT systems serving practically all relevant banks in the world
  • The Russian and the Chinese messaging system are no alternative for international transactions, except for Russian-Chinese transactions
  • Financial transactions can take place also without SWIFT (when I started working in Banca d’Italia armies of telexes were doing the job, SWIFT started operations only in 1977) but they are slower, haphazard, unsafe and costlier. It is a bit as if one could not use telephone any longer and had to have recourse to pony express for communications
  • Suspending the banking system of a country from SWIFT is a wholesale measure touching all financial transactions
  • But does not, per se, impede banks from that country from carrying out transactions, unlike in the case of being frozen out of the payment system
  • More targeted sanctions (excluding specific banks from SWIFT and freezing them out of the dollar, euro or sterling payment systems) can be a more efficient measure and are separate from the SWIFT issue
  • The freezing of the Russian Central Bank severely limits its operability, including in its use of large foreign reserves, independently of the issue of access to SWIFT
  • China cannot help significantly reducing the impact of the sanctions on the Russiam financial system and economy.
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