“Blocking rogue states’ access to the world’s financial-messaging network is a potent measure, but it carries long-term risks.
In 1973 global finance saw a back-room revolution when a group of banks formed a co-operative to offer those moving money across borders a slick alternative to the clunky old telex. Today the electronic financial-messaging system of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) transmits more than 5 billion bank-to-bank messages each year. In 2013 it oiled the transfer of trillions of dollars globally by the 10,500 banks, asset managers and firms that are its members. SWIFT does not initiate transfers, hold customers’ money, or clear or settle payments. Rather, it provides a template that helps international transfers flow smoothly and be tracked.
Without SWIFT, global trade and investment would be slower, costlier and less reliable. But the network’s very usefulness means it is increasingly being cast in a new role, as a tool of international sanctions. In 2012 it was obliged, under European law, to cut off access for Iranian banks that had been subjected to sanctions by the European Union. Now there are calls for Russian banks to be banned from SWIFT in response to Russia’s invasion of Ukraine.”
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