Swift stands for Society for Worldwide Interbank Financial Telecommunications. It is a platform that connects thousands of financial institutions from all over the world for money transfers. Excluding Russian banks from this payment circuit has been called the mother of all sanctions, but it is also a double-edged sword that not all states want to apply.
This standardized messaging system it has been used for more than forty years among 11 thousand operators including banks, intermediaries and public authorities. Physically it is a string of numbers and letters, between 8 and 11 characters. It does not have a nationality, but there are representatives of several banks in the world on the board. It is based in Belgium and is supervised by the central banks of the G10 countries.
Swift does not hold funds and does not transfer them, does not make payments, but provides codes. These are essential for secure financial communications: they are recognized all over the world, they guarantee the passage of money and the operation done. Operators can track movements in real time and confirm safety. That’s over 40 million messages a day.
If a bank is outside the Swift it cannot use its own code and cannot recognize that of others. Applied to Russian banks it would cut them out of world finance and the world economy, but it would also affect all partners of those banks. Russian companies could neither pay abroad nor receive it. Like all economic measures it can be a boomerang. It could also lead Russia, China and Turkey to create their own systems.
The Italian premier Dragons he said he was in favor of this measure. France has done the same, not yet Germany. Yes also from Cyprus and Hungary. British Prime Minister Boris Johnson said he was in favor and the US administration is also discussing it.
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Source: Vanity Fair