Author: Ghadeer Ibrahim
Many of us use the curse of the swift ban during our banking dealings, but have you ever known the importance of this financial system?
The Swift Cooperative was founded in Belgium in the 1970s and allowed for securing and automating exchanges, thus saving much time compared to old fax machines.
It is a secure messaging system used by thousands of banks worldwide on their exchanges to make simple transfers to settle their clients’ transactions or exchange securities, shares, or bonds.
There are about 11,000 SWIFT members, including nearly 300 Russian banks. Suppose Russian banks are separated by a decision of the European Union or the United States from SWIFT’s messages. In that case, they will have to carry out their transactions with their foreign partners in the old way, i.e., by fax, thus obstructing the conduct of banking transactions.
Russia can use e-mail or even telegrams, but doing so involves much human effort and does not provide the same level of security, so those transactions will be “boring and risky, with legal dangers, so there will be a major impact on the economy.”
It is worth mentioning that Russia has taken the lesson from the sanctions imposed on Iran, which have deprived it of this system since 2012.
Its impact has been enormous, so the Central Bank of Russia has developed a financial messaging service program “SPFS since 2014 and entered service in 2019, and there are about 400 financial institutions and a Russian bank involved in it and only eight foreign banks,” which means that swift’s domestic alternative will not allow smooth and secure exchanges with foreign countries, leading to Blocking Swift to renounce the use of Russian banks.
Russia is also heavily dependent on the SWIFT system because of its billions of dollars in hydrocarbon exports.
The risk of separating Russian banks from SWIFT is to reduce the volume of international transactions, leading to currency fluctuations and massive capital flight abroad.