Swift System: Find out what is this Swift system, what will be the effect if Russia disconnects from it

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- Swift is headquartered in Belgium and is governed by a board of 25 people

New delhi date. Sunday, February 27, 2022

Many countries, including Ukraine, are worried about Russia's attacking mood. Ukraine has also urged all countries to take steps to stop Russia. Following the Russian invasion, the Baltic foreign ministers demanded a ban on Russia for SWIFT, the Society for Worldwide Interbank Financial Telecommunications. The foreign ministers said the facility should not be launched for Russia until the ceasefire. So let's find out now what this Swift facility is that banning it could hurt Russia.

What is the Swift system

In fact SWIFT is a code. Just as the IFSC code is required for banking transactions in India, the SWIFT code has to be used for sending or receiving money from abroad. Swift codes are used to identify a bank or branch in an international money transaction. Its full name is Society for worldwide interbank financial telecommunication. As the name implies, this code is useful in the international settlement of banks. A Swift code consists of 8 to 11 digit code. It includes the name of the bank, the entire information of the country in which the bank is located, the information of the location of the bank as well as the information of the branch of the bank. It was founded in 1973 to replace the Telex. More than 11,000 financial institutions from over 200 countries place payment orders through SWIFT. There is no alternative to SWIFT and that is why it can be an important link for global finance.

Russia demands ban on SWIFT CODE

Swift is headquartered in Belgium and is governed by a 25-member board. It falls under Belgian law and has to comply with EU rules. If one wants to do international transaction, it is not possible without SWIFT CODE. Russia was asked to ban the SWIFT code system after the war in Ukraine because it would not receive foreign exchange if SWIFT disconnected from Russia. Financial institutions will stop sending money inside or outside Russia. When that happens, Russian companies and their customers will face major difficulties.

What happens if SWIFT CODE happens?

If that happened then it would hurt the United States and Germany as well, since their banks use Swift the most to communicate with Russian banks. For Russia, it is said that Russia currently has its own payment system SPFS and currently 20% of domestic transfers are made through SPFS. If placed on SWIFT, China's cross-border interbank payment system may offer another option, or the option of cryptocurrency remains. According to experts, it is not so practical.


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