SWIFT: What Is SWIFT, How the SWIFT System Works.

SWIFT(Society for Worldwide Interbank Financial Telecommunication) : Recently, SWIFT Banking System has been discussed a lot in the world’s media. Especially since the United States of America has imposed Sanctions on Russia regarding the SWIFT Banking System, this topic is very much discussed.

Through this artical, we are trying to share detailed information regarding the SWIFT Banking System and its importance to any country. So read the complit article.

What Is SWIFT:

OrganizationSociety for Worldwide Interbank Financial Telecommunication
Organization TypeFinancial Cooperative (Which monitors the transaction between or among banks)
Founded In03rd May 1973

Society for Worldwide Interbank Financial Telecommunication:

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a cooperative society that usually acts as an intermediary and an executor between the financial transactions of banks worldwide.

SWIFT was founded in Brussels on 3 May 1973. Since then, SWIFT has been working as a cooperative financial society.

SWIFT works like a transitional bank and only monitors transactions between or among the banks or financial institutions. More than 11,000 institutions all over the 200 countries and territories are connected with the SWIFT. It usually alerts the banks and financial institutions when the transaction(s) is/are going to occur.

A fact about the Society for Worldwide Interbank Financial Telecommunication is that last year, it received 42 million daily messages regarding international transactions between financial institutions and banks. This is 11% more transactions from the year 2020. You will be amazed that 1.5% of transactions were made for Russia and by Russia.

Who Uses SWIFT?

In the beginning, SWIFT founders designed the network to facilitate communication about Treasury and correspondent transactions only. The robustness of the message format design allowed for the massive scalability through which SWIFT gradually expanded to provide services to the following:

  • Banks
  • Brokerage institutes and trading houses
  • Securities dealers
  • Asset management companies
  • Clearinghouses
  • Depositories
  • Exchanges
  • Corporate business houses
  • Treasury market participants and service providers
  • Foreign exchange and money brokers

What are the Alternatives to SWIFT?

  • SPFS (System for Transfer of Financial Messages) is a Russian equivalent of the SWIFT financial transfer system developed by the Central Bank of Russia. The Russian central bank established it after the 2014 invasion of Crimea.
  • The financial messaging system of the Bank of Russia (FMS) forms an alternative electronic financial messaging channel called a ‘SWIFT analogue’.
    • The FMS guarantees the uninterrupted transmission of financial messages within the country.
  • China also has an alternative to SWIFT called the Cross-Border Interbank Payment System (CIPS).
    • But CIPS is much smaller, with roughly 1,300 financial institutions participating, most of them indirectly.
  • Financial technology companies like Ripple have been offering their platform based on inter-ledger protocol (the same technology behind cryptocurrencies) as an alternative.
  • Cryptocurrencies are another avenue for cross-border remittances. Russia has also been working on a ‘digital’ rouble, which is still not launched.

We hope that after reading this artical, you have gotten detailed information regarding the SWIFT Banking System. Even after reading this writing, if you have any questions or queries related to the Society for Worldwide Interbank Financial Telecommunication, then feel free to ask them by commenting below; we will try to answer all your questions and queries as soon as possible.

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