Is it really possible to technically disconnect a country (e.g. Russia) from SWIFT?

[Marie Manila]

Hi there,

since the war in Ukraine started many people are asking for disconnection of Russia from SWIFT "like Iran got disconnected" many years ago.
I am wondering, how that would be technically be possible.
I thought SWIFT is a distributed system, where banks have relations with other banks.
If I send money from an account in Bank A to an account in Bank C, they either have a direct correspondence or they have to fine a routing for the SWIFT message.
The money transfer can be processed via Bank B for example.
As far as I understand, there is no central institution where all banks are connected to.

For Iran, I thought they are not technically disconnected from SWIFT, there are only sanctions in place, that no bank is allowed to send money / receive money to / from Iranian banks.

Do I miss anything?
Can you enlighten me?
Is it really possible to disconnect Russia from SWIFT?

 

[RealDude]

Is it really possible to disconnect Russia from SWIFT?

Yes, this will happen soon when the bloody massacre in Kiev starts.

 

[CaptK]

Yes it is possible but its a big issue because Russian banks are holding massive amounts of USD, EURO, GBP and other top 20 currencies.
They also hold a huge amount of debt and massive amounts of shares in big multi nationals on the various stock exchanges in Europe, America and UK.
Shipping, commodities and oil and gas, heavily invested in by Russians so you stop them trading we normal people suffer.

 

[Sols]

From a purely technical perspective, it's easy. SWIFT is centralised across a handful of data centers in the world. It is not a P2P network. Closing out Russia could be as simple as rejecting or dropping messages from any SWIFT BIC (Bank Identification Code) owned by a Russian bank.

 

[Martin Everson]

Is it really possible to disconnect Russia from SWIFT?

Yes it is.

However it would mean huge loses for the western creditors (banks and other FI's) that financed Russia foreign currency debt i.e sovereign and corporate bonds and loans. It could cause a global financial shock to the system that was not anticipated.

Cutting Russia off SWIFT may actually benefit Russia in weird way. Imagine being given an international mortgage to buy a house in Russia and then that bank closes all your bank accounts globally and you have no means to repay that mortgage. You just been given free money by the bank and bank has no means to recoup your house in Russia as money can never get back to them....lol. Now scale that model up to billions lent to Russia businesses by the west . It would mean huge writedowns by banks potentially.

Also countries especially EU countries need to continue buying energy from Russia as Russia is a major oil and gas supplier that cannot be replaced overnight. They would be shooting themselves in the foot to remove Russia from SWIFT. They will be asking for sky high energy prices and hence huge inflation. It is one of reason why EU did not agree to Biden wanting Russia removed from SWIFT.

 

[JamesDonkey]

I was told that in the event of disconnection, the cards emitted in Russia, Visa and Master, will continue to work abroad, because SWIFT and a global payment system are 2 separate things. Is this correct?

 

[JohnnyDoe]

Sleepy Joe has not the slightest clue of what SWIFT is. Probably he doesn’t even know where Ukraine is, since he gets easily disoriented even in his own garden.

 

[Sols]

SWIFT and a global payment system are 2 separate things. Is this correct?

Correct. SWIFT is not directly involved in card processing. The card networks are separate networks.

They only overlap for the purposes of clearing/settlement if that is for some reason not done entirely domestically. For example, sending or receiving settlements in foreign currencies may become practically impossible (cards issued/denominated in a foreign currency). That's probably a fairly small edge case, though, and depends on how the card schemes are set up in Russia and exactly how the sanctions are worded.

I was told that in the event of disconnection, the cards emitted in Russia, Visa and Master, will continue to work abroad

...But it's worth noting that cards issued by sanctioned banks do not work, and VTB issues cards on behalf of a few other banks which are now also affected. This is why Russia built the Mir/Мир card payments network recently. Those cards are still mainly useful in Russia but there has been some adoption in a few other territories/countries.

 

[Martin Everson]

The west have agreed to cut off some Russian banks from SWIFT. And guess what it seems it may just be the banks already sanctioned . This will make the EU and US look strong in keeping their word to the average headline only reading pleb. My guess is they excluded banks they use to buy oil or gas from Russia as that will not stop the "if necessary" is important cavet...lol.

https://www.bbc.com/news/world-60542433
---- quote start

The banks affected were not immediately named, but the German spokesman said they would include "all those already sanctioned by the international community, as well as other institutions, if necessary".

----- quote end

Now the danger is if these sanctions don't work the west will have nothing left to use against Russia. The reality of sanctions is they DONT WORK with a determined country. Iran has been under sanctions for decades since the Islamic revolution and it is still there and is even more self reliant and busy building its peaceful nuclear program and launching rockets into space and selling oil. North Korea has been under sanctions for decades also and again is self reliant and building its nuclear weapons and missile program with no change in regime while people starve. Cuba has been under sanctions for decades also and is still there with no change in regime either with tourist visiting every year. Same with Syria as Assad is still there and has support of his people etc etc. Sanctions don't work.

Seriously what are sanctions such as SWIFT disconnection gonna achieve? Is goal to harm Russia economy and try and collapse it...lol? Yes it will harm average Russian person very badly and in short term. But with time people will work around it and the country becomes more independent from global system which is not good . More oil and gas will flow east. Trade with China will cushion the blow for Russia and damage west.

P.S Want to hear a joke? Despite US sanctions on Iran and a pledge by US to reduce Iran's oil exports to zero. Iran is still selling oil to clients and even the US bought 1m barrels or Iranian crude last year . And America will continue to buy Russian oil and gas - sanctions are a joke .


https://www.nasdaq.com/articles/u.s...n-march-despite-sanctions-eia-data-2021-05-30

https://www.forbes.com/sites/kenrob...nited-states-top-source-of-imported-gasoline/

 

[JamesDonkey]

This is why Russia built the Mir/Мир card payments network recently. Those cards are still mainly useful in Russia but there has been some adoption in a few other territories/countries.

Мир works in Turkey with some banks, Vietnam Kazakhstan (?) and even UAE. In a limited manner, but it works.

 

[Marie Manila]

From a purely technical perspective, it's easy. SWIFT is centralised across a handful of data centers in the world. It is not a P2P network. Closing out Russia could be as simple as rejecting or dropping messages from any SWIFT BIC (Bank Identification Code) owned by a Russian bank.

I think I misunderstood how SWIFT works.
I thought SWIFT were the message standard and you are connected to SWIFT, if you find a correspondence bank.
If you have a correspondence relationship, the SWIFT messages will be exchanged through that correspondence bank.
But it seems I am wrong?

If I have understood it correctly now, a bank needs a correspondent bank and another independent connection to the SWIFT data center. Is that right?

 

[Sols]

I think I misunderstood how SWIFT works.
I thought SWIFT were the message standard and you are connected to SWIFT, if you find a correspondence bank.
If you have a correspondence relationship, the SWIFT messages will be exchanged through that correspondence bank.
But it seems I am wrong?

If I have understood it correctly now, a bank needs a correspondent bank and another independent connection to the SWIFT data center. Is that right?

Your understanding is correct.

SWIFT is a messaging service. It's comparable to email. Messages go from a sender to a recipient, via an email server (SWIFT server).

When you wire money from bank to another via SWIFT, details about your transaction are sent by your bank to SWIFT and from SWIFT to the recipient bank. It gets a little more complicated when there are correspondent banks, but it's still essentially the same.

SWIFT sits on an absolute treasure trove of data. They have three data centers: US, Netherlands, and Switzerland. Data is no longer mirrored between Europe and US. This split happened about 10-15 years ago when the US was getting a little too nosy for SWIFT and EU.

 

[bastard]

The west have agreed to cut off some Russian banks from SWIFT. And guess what it seems it may just be the banks already sanctioned . This will make the EU and US look strong in keeping their word to the average headline only reading pleb. My guess is they excluded banks they use to buy oil or gas from Russia as that will not stop the "if necessary" is important cavet...lol.

in reality nothing has changed for Russia and SWIFT - it is a sick game the lords of the world play. Fooling the average Joe on the floor who don't understand nothing

 

[CaptK]

The west have agreed to cut off some Russian banks from SWIFT. And guess what it seems it may just be the banks already sanctioned . This will make the EU and US look strong in keeping their word to the average headline only reading pleb. My guess is they excluded banks they use to buy oil or gas from Russia as that will not stop the "if necessary" is important cavet...lol.

https://www.bbc.com/news/world-60542433
---- quote start

The banks affected were not immediately named, but the German spokesman said they would include "all those already sanctioned by the international community, as well as other institutions, if necessary".

----- quote end

Now the danger is if these sanctions don't work the west will have nothing left to use against Russia. The reality of sanctions is they DONT WORK with a determined country. Iran has been under sanctions for decades since the Islamic revolution and it is still there and is even more self reliant and busy building its peaceful nuclear program and launching rockets into space and selling oil. North Korea has been under sanctions for decades also and again is self reliant and building its nuclear weapons and missile program with no change in regime while people starve. Cuba has been under sanctions for decades also and is still there with no change in regime either with tourist visiting every year. Same with Syria as Assad is still there and has support of his people etc etc. Sanctions don't work.

Seriously what are sanctions such as SWIFT disconnection gonna achieve? Is goal to harm Russia economy and try and collapse it...lol? Yes it will harm average Russian person very badly and in short term. But with time people will work around it and the country becomes more independent from global system which is not good . More oil and gas will flow east. Trade with China will cushion the blow for Russia and damage west.

P.S Want to hear a joke? Despite US sanctions on Iran and a pledge by US to reduce Iran's oil exports to zero. Iran is still selling oil to clients and even the US bought 1m barrels or Iranian crude last year . And America will continue to buy Russian oil and gas - sanctions are a joke .


https://www.nasdaq.com/articles/u.s...n-march-despite-sanctions-eia-data-2021-05-30

https://www.forbes.com/sites/kenrob...nited-states-top-source-of-imported-gasoline/

Correct. Russian market for crypto is insane right now. I have been told that some products coming out of Russia is being bought with crypto. My client is with me in Dubai right now and he sells electronics and has a cyber security and IT business.

All intentional payments are being sent to me to convert to crypto. He is paying his staff in Rubles that he has in the bank and once he finishes those funds, he will pay his staff in crypto.

Even on the street the retailers are also accepting crypto.

 

[Martin Everson]

If I have understood it correctly now, a bank needs a correspondent bank and another independent connection to the SWIFT data center. Is that right?

Not true. SWIFT is NOT essential for banks to talk to each other at all. It is a nice to have option only to automate communication in a secure standard format and that is all. I discussed SWIFT with you already years ago in another thread.

Access to SWIFT has not affected Iran selling oil or signing a 25 year $400bn deal with China...lol. And like wise Russia has an equally large deal with China agreed years ago. No access to SWIFT will not cause problems but will hurt smaller businesses in short term.

All countries central banks can talk to each other outside SWIFT. Correspondence account (aka Nostro accounts) can function without SWIFT. In end a SWIFT message is just an instruction to perform an action i.e debit or credit an account etc. These instructions used to be done manually and still can be done manually...lol.

In end if Russia, China, Iran etc use their own payment methods outside SWIFT i.e central bank to central bank payments, credit notes etc etc then its not good for world or US Dollar dominance.

Even EU have developed a payment network to trade with Iran and buy oil and bypass US Sanctions, the US Dollar and SWIFT called INSTEX. SWIFT is not important any more...even for little man who has access to crypto now

https://instex-europe.com/about-us/

 

[JackAlabama]

Not true. SWIFT is NOT essential for banks to talk to each other at all. It is a nice to have option only to automate communication in a secure standard format and that is all. I discussed SWIFT with you already years ago in another thread.

Access to SWIFT has not affected Iran selling oil or signing a 25 year $400bn deal with China...lol. And like wise Russia has an equally large deal with China agreed years ago. No access to SWIFT will not cause problems but will hurt smaller businesses in short term.

All countries central banks can talk to each other outside SWIFT. Correspondence account (aka Nostro accounts) can function without SWIFT. In end a SWIFT message is just an instruction to perform an action i.e debit or credit an account etc. These instructions used to be done manually and still can be done manually...lol.

In end if Russia, China, Iran etc use their own payment methods outside SWIFT i.e central bank to central bank payments, credit notes etc etc then its not good for world or US Dollar dominance.

Even EU have developed a payment network to trade with Iran and buy oil and bypass US Sanctions, the US Dollar and SWIFT called INSTEX. SWIFT is not important any more...even for little man who has access to crypto now

https://instex-europe.com/about-us/

Eliminating countries from swift mainly drives up cost.

This is also an alternative besides crypto.
https://en.wikipedia.org/wiki/Hawala