The SWIFT mechanism has been used by the United States of America to impose several sanctions on Russia. Following the Russian announcement of war against Ukraine, several nations have rushed to coerce Russia into stepping back by using economical arms known as sanctions.
Several leaders have called for Russia to be shut out of the Society for Worldwide Interbank Financial Telecommunication or SWIFT which is the backbone of all international banking transactions. Read out this article to know more about SWIFT and how the USA plans to use it to coerce Russia into backing off and calling off the attack on Ukraine.
What is SWIFT?
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SWIFT is the main system of networks that is used by banks for international transactions. It is basically a cooperative institution created by thousands of other institutions that use SWIFT’s services. It is based in Belgium. It defines itself as a neutral body. The primary aim of SWIFT is to render service to its members.
Will a SWIFT Ban Happen?
While a SWIFT ban may initially seem very promising to stop Russia’s illegal actions against Ukraine, it is not the same case for the United States of America. Even if Russia is banned from this international payments network, Russian banks would still be able to make payments through other countries which are allies of Russia and wouldn’t impose a ban on it.
Russia can also choose to use other payment networks such as the Cips System of China. The United States of America wouldn’t be happy to see the usage of the Chinese payments system spreading. This could also threaten the value of the American dollar as a stable currency. Given the threat the dollar is already facing from cryptocurrencies, any punitive action may result in even more people supporting a decentralized currency. It remains to be seen how the USA finds its way out of this dilemma.
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