NEWS

The U.S., Europe and several other western nations are moving to exclude Russia from SWIFT

SWIFT

WHAT

• Messaging network
• Used by banks and financial institutions globally
• Quick and faultless exchange of information pertaining to financial transactions
• Headquartered in Belgium
• Connects more than 11,000 banking and securities organizations in over 200 countries and territories
• Merely a platform that sends messages and does not hold any securities or money
• Provides standardized and reliable communication to facilitate the transaction
• First used in 1973
• Went live in 1977 with 518 institutions from 22 countries, its website states

HOW IT WORKS

• Each participant on the platform is assigned a unique eight-digit SWIFT code or a bank identification code (BIC)
• If a person, say, in New York with a Citibank account, wants to send money to someone with an HSBC account in London, the payee would have to submit to his bank, the London-based beneficiary’s account number along with the eight-digit SWIFT code of the latter’s bank
• Citi would then send a SWIFT message to HSBC. Once that is received and approved, the money would be credited to the required account

WHAT HAPPENS IF ONE IS EXCLUDED FROM SWIFT

• If a country is excluded from the most participatory financial facilitating platform, its foreign funding would take a hit, making it entirely reliant on domestic investors
• This is particularly troublesome when institutional investors are constantly seeking new markets in newer territories.
• An alternative system would be cumbersome to build and even more difficult to integrate with an already expansive system

HOW IS THE ORGANISATION GOVERNED?

• Claims to be neutral
• Shareholders, consisting of 3,500 firms across the globe, elect the 25-member board, which is responsible for oversight and management of the company
• Regulated by G-10 central banks of Belgium, Canada, France, Germany, Italy, Japan, The Netherlands, the United Kingdom, the United States, Switzerland, and Sweden, alongside the European Central Bank
• Lead overseer is the National Bank of Belgium.
• Oversight forum was established in 2012.
• The G-10 participants were joined by the central banks of India, Australia, Russia, South Korea, Saudi Arabia, Singapore, South Africa, the Republic of Turkey, and the People’s Republic of China.
• In 2021, the SWIFT financial messaging platform had recorded an average of 42 million FIN messages per day, as per the data on its website.
• The full-year figure was an 11.4% growth on a year-over-year basis.
• Europe, West Asia, and Africa, combined sent approximately 4.66 billion messages.
• The Americas and the United Kingdom stood second with 4.42 billion interactions, with the Asia Pacific on third with an approximate 1.50 billion messages.