A quick breakdown of what SWIFT is and why it matters • Hacker News Board

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

#431

Post by remram » Sat, Feb 26, 2022, 5:33 AM UTC

bally0241 wrote: post #278

HideousKojima wrote: post #240

Earlier quoted context omitted.

>What is even more amazing is watching these same people (no necessarily you OP, but prevailing opinion on HN...) then go on an argue that a permission-less distributed ledger like Bitcoin is a completely unnecessary waste of resources. Hating the way modern banking works doesn't mean blockchain is a flawless solution. It comes with a ton of its own problems (not the least of which being that it's utterly inscrutable…

Sure, I'd agree commodity money is preferable (and certainly trustless in p2p transactions), and in many ways better than blockchain. I just don't see how to map that paradigm onto a world where people who have never met each other regularly transact across continents without introducing some trusted 3rd party. And the moment you add that 3rd party you end up right back where we are now.

How do you transact across continents without a trusted 3rd party, with blockchains? The only transactions you can do trust-less are transactions that happen completely on-chain, i.e. exchanging some cryptocurrency for other cryptocurrency or similar tokens. As soon as you want to exchange currency for good or services, that trusted 3rd party becomes necessary in the exact same way, no matter how "smart" your blockchain money is.

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

#432

Post by yamrzou » Sat, Feb 26, 2022, 5:33 AM UTC

JacobThreeThree wrote: post #277

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…

>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…

I read the other responses to your question, and I feel like they're all using complicated language and are still ambiguous.

Can we have a simple "for dummies" answer that explains how does the system guarantee that nobody's creating money without notifying everyone in practice?

Is there some kind of a public ledger? Do banks automatically broadcast their money creation operation to other banks?

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

#433

Post by landemva » Sat, Feb 26, 2022, 5:35 AM UTC

nradov wrote: post #251

beambot wrote: post #188

Earlier quoted context omitted.

> It can't be just a number on a computer in a bank, right? And yet people question the utility of a decentralized, trustless, public ledger -- ie. blockchain.

What is the utility? Sure it makes money laundering and buying illegal goods slightly easier than dealing in cash but otherwise what's the point?

In part, one of the points is to disallow a country from forcing bank depositor bail-ins. Like 2013 in Cyprus. https://www.theatlantic.com/business/archive/2013/03/everyth...

The country north of USA targeted a certain group and took their funds earlier this month. https://www.insurancejournal.com/news/international/2022/02/...

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

#434

Post by TheOnly92 » Sat, Feb 26, 2022, 5:39 AM UTC

yamrzou wrote: post #432

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…

I read the other responses to your question, and I feel like they're all using complicated language and are still ambiguous. Can we have a simple "for dummies" answer that explains how does the system guarantee that nobody's creating money without notifying everyone in practice ? Is there some kind of a public ledger? Do banks automatically broadcast their money creation operation to other banks?

Well the simple way to look at this is that usually when you transact with another bank, you're required to have an account at that bank. Just as a consumer can't magically change their balance, a bank simply can't magically increase their balance at other banks. To perform increased transactions, you have to send money to that bank.

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

#435

Post by redisman » Sat, Feb 26, 2022, 5:40 AM UTC

morelisp wrote: post #308

sealthedeal wrote: post #260

If we "cut" off SWIFT it would hurt Europe and the States just as much as it would Russia because this is how all money moves. Think paying for natural gas, oil, commodities, etc etc.

That's... that's the point. We should not be paying them for gas. We should not be funding their war.

Germany shut down their nuclear plants and built a expensive pipeline from Russia to use nat gas instead. Why?! This mistake could be one of the biggest in EU in the 2020s

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

#436

Post by redisman » Sat, Feb 26, 2022, 5:43 AM UTC

eunos wrote: post #416

chalst wrote: post #264

Earlier quoted context omitted.

I think this has things the wrong way around. Russia and China have for the last twenty years been trying to break free of the dollar-centric financial system with some degree of success: both countries have, for instance, built up large gold reserves. Now Russia is using that prior preparation to engage in old-fashioned revanchism. Rather than being a move in a bigger game, I think this is Russia cashing in its chip…

What? China is still biggest dollar forex out there.

China is very different philosophically. Hide your strength, bide your time. Their economy has also had a meteoric rise unlike Russia which is a flatlined raw resource economy. I mean Russia did for about 8 years but China is going for multi decade before they start cashing in.

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

#437

Post by landemva » Sat, Feb 26, 2022, 5:48 AM UTC

CommanderData wrote: post #75

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…

The sanctions are theatre and will be lifted in a year or so. If the West really cared Swift would have happened long ago. The reality is they do not care for Ukraine.

>> The reality is they do not care for Ukraine.

The facts support that interpretation. USA withdrew troops two weeks ago, which signaled to Russia they could move in.

https://www.trtworld.com/americas/us-withdraws-nearly-all-re... ' US withdraws nearly all remaining troops from Ukraine '

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

#438

Post by endisneigh » Sat, Feb 26, 2022, 5:55 AM UTC

dannyw wrote: post #419

Suncho wrote: post #392

Earlier quoted context omitted.

> How does the system guarantee that nobody's creating money without notifying everyone? This is a comment that's not related to SWIFT in particular. Every asset (including money) is generally someone else's liability. The money that we hold as an asset is the liability of a bank. Anyone can issue their own liabilities, but you can't create money that's a liability of someone else. For example, I can't go to my bank…

To be more specific, central banks are allowed to create money. Their liability is /dev/null. It's how they added trillions to their balance sheet during COVID.

Not really their liability is basically the present value of the future which is indeterminate, not null. If the future pain is greater than the present value, or billions printed, then they printed too much, otherwise it was worth it.

You can’t really know for sure if it’s worth it now though.

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

#439

Post by redisman » Sat, Feb 26, 2022, 5:56 AM UTC

layer8 wrote: post #281

chrisco255 wrote: post #213

Earlier quoted context omitted.

By your own [2] above, Germany still consumes more than 67% of its energy from oil, gas and coal. Had it chosen to scale up nuclear instead of scale down nuclear, it would be less dependent on that 67%. France famously gets over 75% of its electricity from nuclear, and has plans to expand capacity by adding 6 more reactors [4] U.S. is not a major importer of Russian energy. U.S. is a net exporter of natural gas.[2].…

> Had it chosen to scale up nuclear instead of scale down nuclear, it would be less dependent on that 67%. In my understanding, it wouldn’t change much for the natural gas portion, because that can’t be replaced by electricity for the most part (heating).

Heat pumps? Resistive heaters?

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

#440

Post by conductr » Sat, Feb 26, 2022, 5:56 AM UTC

lxgr wrote: post #303

rocgf wrote: post #275

Earlier quoted context omitted.

Well, since you semi-offered... :) Could you explain this to me like I am a complete moron? I understand that SWIFT allows for international payments, but I don't understand exactly how it differs from a normal bank account transfer within the same country.

When people say SWIFT, they usually mean "international payments via correspondent banking". SWIFT is just a messaging layer to enable that. Look into correspondent banking if you're curious how all of that works – SWIFT is just one (very popular) way correspondent banks can communicate with each other and/or look up paths to facilitate international payments for their account holders.

When I worked for JP Morgan 08-10, I used swift and after learning about it on college was very disappointed. It was just an email inbox where other banks/fi’s scanned in orders, trades, etc. think fax2email where the fax came over as a TIFF file. There was no metadata, ocr, or anything, I’d have to manually read the image file to get the account number dollar amounts etc to key in on a piece of proprietary custodian software. This meant there was also no way to parse the inbox. Looking for a specific transaction? Ask them when they sent it and read the hundreds of messages that came over within +/-5 minutes and hope they remembered the time right.

I always wondered about the security behind it, because it seemed like anything that hit our inbox that was a tiff and have a recognizable letterhead got acted on, no confirmations, 9-10 digit amounts were moving around based on that alone. Also Not sure that I saw the whole system or just a piece.