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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

#351

Post by dahdum »

danbruc wrote: post #214
infamouscow wrote: post #83

Earlier quoted context omitted.

The inescapable fact is Germany intentionally put themselves in a position to be more dependent on Russian oil/gas with their shutdown of nuclear power. The previous US president made a point about how Germany's decision contradicts the purpose of NATO.[1] 1: https://twitter.com/Cernovich/status/1496917092351692810

Mutual economic relationships have been seen for decades as means to lower the risk of military conflicts with Russia. I am not sure how much this was considered for the nuclear exit, but in general Germany has more consciously chosen closer ties with Russia over seeking independence than it accidentally stumpled into them.

Germany has traded energy dependence on Russia for pharmaceutical, machinery, and car exports that Russia can get elsewhere. Interdependence works well but this appears quite one sided. In explains their inaction in part, though 40% of Germans also supported the annexation of Crimea.

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

#352

Post by anonporridge »

temp12192021 wrote: post #349
anonporridge wrote: post #313

Earlier quoted context omitted.

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?

Pretty much all human interaction is trust based.

Except the scientific process, which focuses on working as hard as you can to prove the other guy's work is wrong.

Only if you can't do that do you start to trust and build off it.

This scientific process of embedded mutual distrust is one of the most successful, generative, and important institutions humanity has ever created.

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

#353

Post by Natsu »

burnte wrote: post #342
anonporridge wrote: post #324

Earlier quoted context omitted.

"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust." -- Satoshi Nakamoto

All currency is fiat. No medium of exchange that isn't strictly bartering is of arbitrary value.

Coinage evolved from standard weights for bars of useful metals.

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

#354

Post by krick »

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…

> Swift is "just" a messaging system. No money is transferred over it.

I don't really understand this distinction. But before I can ask a question, there are some points about my understanding of how payments work, so that you can verify me:

1. All payments, no matter which payment system, can be performed only between 2 bank accounts. In order to send or receive money I must have an account in a bank.

2. A bank is pretty much defined by regulations it must follow. Following these regulations gives a bank some amount of trust/authority to say that a given person/entity has that much money within this bank. This money don't necessarily have to be backed by anything, so, ultimately, "it's just a number".

3. All transfers in a given currency are directly or indirectly performed via central bank that emits this currency (or FRS in case of USD). This is the ultimate top-level ledger for transfers in this currency.

4. So, ultimately to transfer non-physical assets (i.e. fiat money) 2 authorities for a given currency (i.e. central banks, or banks that follow CB regulations) must communicate one to another that a given number is deducted from account X and added to an account Y. There's nothing more.

So, if money is just a number, "transferring" it is just a message. So why exactly SWIFT is a messaging system that doesn't transfer money, and how money is transferred, then? And what (in general terms) even are these messages SWIFT is needed for, that aren't money transfers?

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

#355

Post by aryamaan »

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?

Is there a book and/or more detailed resource (if entertaining too-- that's an icing...) anyone could share?

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

#356

Post by robwwilliams »

temp12192021 wrote: post #349
anonporridge wrote: post #313

Earlier quoted context omitted.

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?

Pretty much all human interaction is trust based.

@anonporridge

That is the “optimistic” Popperian take on science—aka good science. The reality is a different matter ;-)

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

#357

Post by kasey_junk »

anonporridge wrote: post #347
burnte wrote: post #342

Earlier quoted context omitted.

All currency is fiat. No medium of exchange that isn't strictly bartering is of arbitrary value.

Fiat currency here is obviously being used to refer to currencies created by government decree. Plenty of other moneys come into existence emergently, most obviously gold and silver without any authority mandating their use. Money is an emergent property of human society, not a gift handed down by our divinely established kings. The idea that money can only exist by government decree is patently absurd.

Gold and Silver are not “money”. Money is almost by definition based on authority mandated value.

It’s true that lots of money exists outside of government decree but equating any commodity to be money redefines the term.

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

#358

Post by prox »

user3939382 wrote: post #345
june_twenty wrote: post #337

The way people write things on Twitter amuses me. Is this person a SWIFT expert or did they just google all this stuff to be able to tweet about it? Plus.. I can't read it all because Twitter throws a sign up modal.

I can tell you something you can’t Google in 2 seconds: have a close friend who’s also a programmer that worked on SWIFT: the transactions are conducted through XML files on FTP(!) drops.

What the heck. I can’t wrap my head on how that would work. Can you elaborate?

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

#359

Post by temp12192021 »

anonporridge wrote: post #352
temp12192021 wrote: post #349

Earlier quoted context omitted.

Pretty much all human interaction is trust based.

Except the scientific process, which focuses on working as hard as you can to prove the other guy's work is wrong. Only if you can't do that do you start to trust and build off it. This scientific process of embedded mutual distrust is one of the most successful, generative, and important institutions humanity has ever created.

With unlimited resources, sure.

But most scientists trust the peer review process and base their work on their own ideas and the ideas/results they read in journals.

In short, scientists trust other scientists.

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