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A quick breakdown of what SWIFT is and why it matters

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Re: A quick breakdown of what SWIFT is and why it matters

#151

Post by randyrand »

thomasahle wrote: post #135
lxgr wrote: post #126

Earlier quoted context omitted.

> It can't be just a number on a computer in a bank, right? It really is, but to answer your second question, it's important to consider *which* bank. There's reserves (i.e. balances of banks at the Federal Reserve) and bank deposits (which really are just numbers in banks' databases). Having an account at the former is effectively what makes numbers in the database of the latter "real USD". > Otherwise some Russian…

I suppose what OP was arguing is, when bank A transfers to bank B, does bank B check with the Feds that the money from bank A is "real"? And is a transfer from A to B really a transfer from A's account at the Feds to B's? In that case, why would the US have to act "indirectly", threatening bank A not to work with bank B? They could simply deny any transfers to and from bank B's account at the Feds, which would make a…

A Euro/anywhere bank could be a middle man to a russian bank, and hold USD for them.

Re: A quick breakdown of what SWIFT is and why it matters

#152

Post by vishnugupta »

TekMol wrote: post #26

I often wonder how money is stored. It can't be just a number on a computer in a bank, right? Otherwise some Russian bank could just increase that number to whatever they like. And say "Look, we own 100 Trillion USD. Now let's go shopping.". So I guess USD needs to be recognized by the US somehow? Could the US simply "void" all USD that are owned by Russia?

> So I guess USD needs to be recognized by the US somehow?

You could start here: https://www.federalreserve.gov/releases/h41/20220224/

H.4.1 is a really useful and important data set. For example, you can see that US Fed is holding T2.7$ worth of mortgage backed securities i.e., it's funding them.

> Could the US simply "void" all USD that are owned by Russia?

Beyond a certain threshold those USDs are typically stored as US Treasury bills because it's too risky to deposit billions of $$ in bank accounts. The risk of bank going under is real at those deposit levels.

For anything more I highly recommend reading up Fed Guy blog [1]. It's one of the best sources of this information I've come across; he's extremely concise, no-jargon and explains the core principles really well.

While at it, take a look at this BIS data[2]. tl;dr Russian residents owe ~B121$ to other countries' banks.

[1] https://fedguy.com

[2] https://stats.bis.org/statx/srs/table/b4?c=RU

Re: A quick breakdown of what SWIFT is and why it matters

#153

Post by [deleted] »

[deleted] wrote: post #150
nimbius wrote: post #44

quite a few commenters have pointed out SWIFT as a hand of soft power and i think its important to understand the twitter post doesnt mention an important fact: SWIFT was created in order that Europe may resist Kissingers increasingly capricious hand of soft power as it emerged as a lead sap in an increasingly arbitrary US foreign policy. 40 years ago the US had become effectively drunk on soft-power moves against st…

[deleted]

[deleted]

Re: A quick breakdown of what SWIFT is and why it matters

#154

Post by [deleted] »

Mountain_Skies wrote: post #145
m2fkxy wrote: post #130

Earlier quoted context omitted.

A reminder that two of Western Europe's militaries are nuclear, which hardly makes them "a joke". You seem to be projecting the state of Germany's military to all European forces, which is... questionable.

The nuclear arsenals of France and the UK are a bit meager relative to Russia and the US. That doesn't mean that they can't inflict a good bit of damage but MAD isn't in play with them unless the US is backing them up with its own nuclear arsenal.

[deleted]

Re: A quick breakdown of what SWIFT is and why it matters

#155

Post by anm89 »

mupuff1234 wrote: post #29
chiefalchemist wrote: post #18

IDK. In an interconnected global economy my sanction of you hurts you, but it hurts me as well. For example, the higher price of oil is good for Russia and OPEC, but not the rest of us.So where is the pain? Certainly there are things that Russia has that the West needs. In addition, if Russians are generally used to less - and the West isn't - then again where is the pain? After two years of pandemic are most America…

High price of oil is good for Russia only if they have buyers. And yes, in the short term it will hurt us but in the longer term you are disarming the influence of a bad actor with the added benefit of incentivizing cleaner energy and perhaps more efficient means of transportation.

They are absolutely not going to have issues selling oil . Note that the US didn't even sanction their oil because a) they need it on the market b) they know they are going to sell it anyway

Re: A quick breakdown of what SWIFT is and why it matters

#156

Post by ascar »

Mountain_Skies wrote: post #145
m2fkxy wrote: post #130

Earlier quoted context omitted.

A reminder that two of Western Europe's militaries are nuclear, which hardly makes them "a joke". You seem to be projecting the state of Germany's military to all European forces, which is... questionable.

The nuclear arsenals of France and the UK are a bit meager relative to Russia and the US. That doesn't mean that they can't inflict a good bit of damage but MAD isn't in play with them unless the US is backing them up with its own nuclear arsenal.

A combined amount of about 500 nuclear warheads sounds like enough for mutual assured destruction or even nuclear winter, no?

That's enough to send two warheads to every single city with over 100k population in Russia and then there would be the Russian retaliation...

Re: A quick breakdown of what SWIFT is and why it matters

#157

Post by anm89 »

rcpt wrote: post #32
chiefalchemist wrote: post #18

IDK. In an interconnected global economy my sanction of you hurts you, but it hurts me as well. For example, the higher price of oil is good for Russia and OPEC, but not the rest of us.So where is the pain? Certainly there are things that Russia has that the West needs. In addition, if Russians are generally used to less - and the West isn't - then again where is the pain? After two years of pandemic are most America…

To be honest high oil prices would be a godsend.

for who? Is this some kind of environmental argument. If so I think that is very short sighted. Renewables aren't going to magically overcome all of their headwinds because oil get's more expesnive.

All we are going to get is huge inflation and maybe a very marginal increase to the renewables time frame while we get a huge and costly headache in the short term.

Re: A quick breakdown of what SWIFT is and why it matters

#158

Post by EarthIsHome »

TekMol wrote: post #26

I often wonder how money is stored. It can't be just a number on a computer in a bank, right? Otherwise some Russian bank could just increase that number to whatever they like. And say "Look, we own 100 Trillion USD. Now let's go shopping.". So I guess USD needs to be recognized by the US somehow? Could the US simply "void" all USD that are owned by Russia?

> I often wonder how money is stored.

In a computer account. Here's a 22-second clip[0] from a 60-Minutes interview with a former chair of the Federal Reserve talking about how money is lent to banks. Literally just numbers on a computer.

"...We simply use the computer to mark up the size of the account that they have..."

[0]: https://www.youtube.com/watch?v=hiCs_YHlKSI

Re: A quick breakdown of what SWIFT is and why it matters

#159

Post by 13415 »

majormajor wrote: post #139
TekMol wrote: post #26

I often wonder how money is stored. It can't be just a number on a computer in a bank, right? Otherwise some Russian bank could just increase that number to whatever they like. And say "Look, we own 100 Trillion USD. Now let's go shopping.". So I guess USD needs to be recognized by the US somehow? Could the US simply "void" all USD that are owned by Russia?

This is similar to the "why are banks allowed to print money by issuing loans and I'm not?" confusion that sometimes goes around. Your internal balances are only good so long as the rest of the system trusts you. Magic up some fake balances and good luck getting the rest of the world to continue to take you seriously. "You want us to believe you've actually got that 100 Trillion? Show us?" How would this Russian bank…

I'm sure you're right in principle but have to point out that ten million dollars is peanuts, people have loaned more than that and not given back.

Re: A quick breakdown of what SWIFT is and why it matters

#160

Post by gruez »

astoor wrote: post #87
gruez wrote: post #9

Earlier quoted context omitted.

1. Russia has been building up gold reserves, not crypo reserves 2. It's actually much harder than convincing 51% of miners that Russia is bad. You'll need to get them to agree on a list of addresses to freeze/sanction. Given that bitcoin addresses are pseudonymous, I'd imagine on agreeing on such a list would be politically impossible. Not to mention, how such action would affect trust in the network and the value o…

There's plenty of services which map Bitcoin addresses to real-world entities, e.g. Chainalysis Reactor, so coming up with a list of addresses to freeze/sanction would be the easy part.

>coming up with a list of addresses to freeze/sanction would be the easy part.

Coming up with a list of suspects is easy, convincing others that they're totally guilty is the hard part. I doubt miners would want a company like Chainalysis to be judge, jury and executioner of the bitcoin network.

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