5 answers to your questions about Swift, a potential economic weapon to sanction Moscow

US President Joe Biden said on Thursday that cutting Russia off from the Swift banking network remained “an option”, after Kiev asked to exclude Moscow from this discreet but essential cog in international banking exchanges.

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Questioned by the press, Mr. Biden clarified that the decision to resort to such a possibility was “currently” not a “position” shared by Europeans, while ensuring that the new sanctions on Thursday had “as much impact see more”.

But what would happen if Western countries finally decided to resort to the Swift weapon to sanction Moscow after the invasion of Ukraine?

Swift is one of the largest banking and financial messaging networks founded in 1973. The company, an acronym for Society for Worldwide Interbank Financial Telecommunication, is based in Brussels.

Unlisted, Swift is organized as a banking cooperative. The company presents itself as neutral.

It is notably at the origin of the BIC code, which makes it possible to identify a bank via a unique code composed of 8 to 11 characters, taking into account the name of the bank, its country of origin, its location and the branch. having processed the order in question.

Implemented to replace the aging Telex technology, the group performs several tasks: transit of payment orders between banks, funds transfer orders from bank customers, purchase and sale orders for securities, etc.

All thanks to standardized messages, allowing fast, confidential and inexpensive communication between financial institutions.

The company touts its reliability on its website and claims “over 11,000 banking and securities organizations, market infrastructures and corporate clients in more than 200 countries and territories.”

Swift’s role goes beyond finance: an agreement signed in mid-2010 by the United States and the European Union officially allows the American Treasury services to access the banking data of Europeans via the network, on behalf of the fight against terrorism.

According to the site of the national association Rosswift, Russia would be the second country after the United States in number of users with some 300 Russian banks and institutions members of the system.

More than half of Russian credit organizations are represented in Swift, it is specified by this source.

However, Moscow is setting up its own financial infrastructure, whether for payments (“Mir” cards, intended as the equivalent of Visa and Mastercard), rating (Akra agency) or transfers, via a system called SPFS.

In November 2019, as part of the sanctions decided by the United States against Iran, Swift “suspended” the access of certain Iranian banks to its network.

Then-Treasury Secretary Steven Mnuchin promised to subject the company “to U.S. sanctions (if it provided) financial courier services to certain Iranian financial institutions.”

Yet subject to the only Belgian regulator, Swift had only taken a few days to comply, judging in a press release the measure “regrettable”, but in line with “the interest of the stability and integrity of the global financial system as a whole “.

Iran had already been disconnected from the Swift system from 2012 to 2016.

Tactically, “the advantages and disadvantages can be discussed,” said Guntram Wolff, director of the Bruegel think tank interviewed by AFP.

Cutting off a bank’s access to the Swift network means prohibiting it from receiving or issuing payments via this channel. By extension, it is also prohibiting foreign establishments from trading with this bank.

However, taking out a country as important as Russia could accelerate the development of a competing system, with China for example. The Swift system is all the more effective when everyone participates in it.

“Operationally, it would be a real headache,” continues Mr. Wolff, especially for Europeans who have many economic exchanges with their Russian neighbor, a supplier of gas, among other things.

Westerners had already spoken of Russia’s exclusion from the Swift system shortly after Russia’s annexation of Crimea in March 2014.


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