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Kicking Russia Out of SWIFT Actually Weakens Western Hegemony

Forced to find alternatives, the Russians are building a separate system, which, once linked with similar systems in other countries, will rival SWIFT

The new payments system will be attractive to many countries - as protection against Western bullying

This post first appeared on Russia Insider


This has received scant attention in the West but is a further example of how the West's sanctions policy is backfiring.

The Brussels based Interbank payment system or SWIFT is a fundamental piece of the West's financial architecture.  Its whole premise however is that it is totally apolitical and is accessible for use by banks in all countries.

<figcaption>SWIFT Interbank System - How it Works</figcaption>
SWIFT Interbank System - How it Works

It seems, however, that Western governments cannot however resist the temptation to use SWIFT in order to apply pressure on other countries. Iran's banks have already been excluded from SWIFT.  

More recently the British government, almost certainly acting as a stalking horse for the US, proposed that Russian banks should also be excluded.  

Though other EU governments have resisted the idea, the European Parliament, a body that never misses an opportunity to have a bash at Russia, ignoring SWIFT's protests, passed a Resolution that called for the same thing.

Inevitably, in light of these calls, the Russians are now busy settiing up their own Interbank payments system, which could be up and running in a few months.  

If it links up with banks in China and Iran and the other BRICS states, as is very likely, two parallel interbank payment systems will have come into existence where there was previously one.

In that case the new system will inevitably be seen as an attractive alternative by more and more countries who will have been given an object lesson in how the West does not hesitate to use SWIFT to apply pressure to achieve its political goals.  

It is very likely that more and more banks outside the West will join the new system and eventually Western banks may find that they have no alternative but to do so as well.  

Though SWIFT will doubtless continue to exist, its monopoly will have been broken and it will be left much diminished whilst the end of the West's dominant position in the world financial system will have been brought a giant step closer.

 

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