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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

#311

Post by JumpCrisscross »

rosndo wrote: post #199
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…

> Indirectly, yes: They can force every bank holding USD balances for embargoed beneficiaries to freeze these assets. Failing to comply could, in the absolute worst case, lead to that bank's Fed accounts being frozen as well (which would take away its ability to settle in USD with other banks). They could also go much further. US has the power to force any bank that wants to transact in USD to freeze all Russian asse…

> US has the power to force any bank that wants to transact in USD to freeze all Russian assets no matter the currency

Ish. In reality, this power is constrained by our courts. Which is why we have the privilege. A foreign person wrongly frozen can take on the U.S. government in court and win.

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

#312

Post by lxgr »

Slartie wrote: post #297
mohanmcgeek wrote: post #235

Earlier quoted context omitted.

Isn't that what blocking them on SWIFT actually is? Or do they have another way?

No. Swift is "just" a messaging system. No money is transferred over it. Blocking Swift access makes it very inconvenient for banks to perform international settlement, because banks today rely on automated Swift messages to coordinate such transfers. However, even before Swift, international transfers were possible: by phone or telex. The banks have to find other ways to communicate, which isn't easy in practice, bu…

Yep – I suspect that when people say "block them from SWIFT", they really do mean "put them on international embargo lists and/or block anybody violating these at the various currency's settlement layers".

But as a short-term measure, revoking SWIFT access is probably also somewhat effective. As you say, setting up alternatives is not impossible, but not easy either.

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

#313

Post by anonporridge »

lxgr wrote: post #296
JacobThreeThree wrote: post #277

Earlier quoted context omitted.

>I can 100% confirm that all money in the world is just literally numbers, and it is balanced by the different federal reserve systems around the world to ensure no one can "create" money without notifying everyone. How does the system guarantee that nobody's creating money without notifying everyone? Furthermore, does the system guarantee that the central banks of each country are correctly adjusting their books in…

> How does the system guarantee that nobody's creating money without notifying everyone? Through a series of regulations regarding minimum liquidity/capital [1] and/or reserve [2] requirements. > Furthermore, does the system guarantee that the central banks of each country are correctly adjusting their books in consequence? By requiring them to periodically report on their assets and liabilities, checking for complia…

So it's all trust based?

We have to trust that all the governments of the world, who pinky promised to follow the rules, aren't secretly cheating internally and reporting false numbers to everyone else?

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

#314

Post by anonporridge »

periheli0n wrote: post #284
sealthedeal wrote: post #257

CEO and co-founder of Routefusion here, a cross-border bank to bank payment API. We use the SWIFT network regularly. I can 100% confirm that all money in the world is just literally numbers, and it is balanced by the different federal reserve systems around the world to ensure no one can "create" money without notifying everyone. I guess if I was super cool I would do an AMA because this is the only thread that is re…

What would keep some entity that has its SWIFT access revoked from switching to China's CIPS or even crypto? Would it be merely an inconvenience, requiring the change of a few processes, or would it create hard problems?

Or Russia's new SWIFT alternative that they stood up after the west threatened SWIFT censorship after they annexed Crimea?

https://en.wikipedia.org/wiki/SPFS

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

#315

Post by anonporridge »

kuprel wrote: post #265
sealthedeal wrote: post #257

CEO and co-founder of Routefusion here, a cross-border bank to bank payment API. We use the SWIFT network regularly. I can 100% confirm that all money in the world is just literally numbers, and it is balanced by the different federal reserve systems around the world to ensure no one can "create" money without notifying everyone. I guess if I was super cool I would do an AMA because this is the only thread that is re…

Sounds like decentralized consensus in crypto world

With significantly more cost, complexity, obscurity, and gatekeeping.

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

#316

Post by myko »

diognesofsinope wrote: post #59
sega_sai wrote: post #37

All these sanctions are a bit of the joke when you are dealing with an insane leader in a country without elections and sitting on top of a pile of reserves. And the west is not doing one thing that could actually actually make a difference -- cutting oil and gas export because the west thinks it'll be too expensive for the west. I feel these sanctions are still more of signalling, than actually doing something usefu…

They are signaling. Push came to shove and the unfortunate reality is that Ukraine isn't that important to most countries and the risk of a greater war is worse. The lesson here is that every country should learn to defend itself.

I think the lesson is Ukraine should have joined NATO years ago and countries should only elect leaders who respect the alliance and want to keep it strong.

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

#317

Post by adolph »

lxgr wrote: post #296
JacobThreeThree wrote: post #277

Earlier quoted context omitted.

>I can 100% confirm that all money in the world is just literally numbers, and it is balanced by the different federal reserve systems around the world to ensure no one can "create" money without notifying everyone. How does the system guarantee that nobody's creating money without notifying everyone? Furthermore, does the system guarantee that the central banks of each country are correctly adjusting their books in…

> How does the system guarantee that nobody's creating money without notifying everyone? Through a series of regulations regarding minimum liquidity/capital [1] and/or reserve [2] requirements. > Furthermore, does the system guarantee that the central banks of each country are correctly adjusting their books in consequence? By requiring them to periodically report on their assets and liabilities, checking for complia…

It seems like the linked regulation is not yet implemented. Further, your response to a question about a guarantee is regulation and reports? How does anyone know the reports of another central bank are true? When a central bank fakes numbers, what are the consequences, if any, and who adjudicates them?

Basel III was agreed upon by the members of the Basel Committee on Banking Supervision in November 2010, and was scheduled to be introduced from 2013 until 2015; however, implementation was extended repeatedly to 1 January 2022 and then again until 1 January 2023, in the wake of the Covid-19 pandemic.

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

#318

Post by myko »

lesuorac wrote: post #64
daenz wrote: post #49

Earlier quoted context omitted.

I was watching a mainstream news report (I'll try to find it and edit my comment) where the host and the guest were talking about the impact of economic sanctions. They said it's not intended to stop Russia, but to inflict pain on the citizens, so that they citizens will turn against leadership. In that moment, it really clicked for me how much normal people are pawns to be used in much larger games. And there appare…

That's how war (hard diplomacy) works as well. World leaders don't get into an octagon and duke it out to see who controls what territory. They send normal people (soldiers) to go acquire it for them. Occasionally the soldiers capture/kill a world leader but usually they reach some kind of (conditional/unconditional) agreement before that point. But the soldiers are not world leaders themselves anyways.

Zelensky and Poroshenko are carrying rifles into battle as we are posting comments on this thread.

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

#320

Post by myko »

charcircuit wrote: post #182
m_ke wrote: post #54

Earlier quoted context omitted.

With all due respect Russian people are the only ones who can stop Putin.

Ukraine complying with Russia would also stop Putin from attacking Ukraine.

Complying means losing their sovereignty to a foreign autocrat who literally has a list of people he intends to kill.
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