One The West is declaring an economic war on Russia imposing severe financial sanctions. because of Russian invasion of Ukraine. One of the most important o foreclosure of major Russian banks from the international interbank system Society for Worldwide Interbank Financial Telecommunication, the so called Swift.
In the modern capitalist world, every crisis, every war – inside or outside quotation marks – adds new words and concepts to our vocabulary. If we learned the spead with the memoranda now with the war in Ukraine, it is time to talk about Swift, the powerful paper that the West activated against Russia, a move that will of course have consequences and costs for itself.
What is Swift?
The SWIFT is messaging system between banks worldwide. Is the global financial highway that allows the smooth and fast transfer of money across borders. According to Mega’s report, this is an interbank system through which financial institutions record, inform and process cross-border financial transactions.
Founded in 1973, it has based in Belgium and connects 11,000 banks and institutions in more than 200 countries.
SWIFT sends more than 40 million messages a day as trillions of dollars change hands between companies and governments.
More than 1% of these messages are estimated to involve payments from Russia. SWIFT was created by American and European banks, which did not want a single institution to develop its own system and have a monopoly and is jointly owned by more than 2,000 banks and financial institutions. It is supervised by the National Bank of Belgium in cooperation with the largest central banks in the world.
Who owns and who controls Swift
The SWIFT network is jointly owned by more than 2,000 banks and financial institutions.
The supervision of has the National Bank of Belgium in cooperation with the largest central banks in the world, including the US Federal Reserve and the Bank of England.
In addition, Swift ensures its members the security of international trade and is not supposed to be involved in disputes between them.
However, Iran was excluded from SWIFT in 2012, as part of sanctions for its nuclear program. The embargo deprived Iran of almost half of its export earnings and about 30% of its foreign trade revenues.
The exclusion from the swift is a decision made exclusively by the governments of the countries and not by the authorities that supervise it.
How Russia will be affected by its exclusion from SWIFT
According to the BBC, the exclusion of Russian companies from SWIFT, will deprive them of access to the smooth and direct transactions provided by the system. This means that payments for valuable energy and agricultural products would be severely disrupted.
The banks that will be excluded should probably be traded directly with each other, adding delays and additional costs to their operation. The blockade means a cut in valuable revenue for the Russian government, which is unable to recoup international profits from its oil and gas exports.
It is recalled that in 2014 Russia was again threatened with exclusion from SWIFT due to the events in Crimea. The Kremlin had said at the time that the move would be tantamount to a declaration of war, but the West did not carry out its threat.
Source: News Beast
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