US Using SWIFT as a Political Weapon, A Good Opportunity for Bitcoin & Ripple to Make Presence Known?
- SWIFT is used by the US and other Western powers as a tool for economic diplomacy
- Countries creating own payment systems, ditching the US dollar, and buying gold
- Bitcoin, cryptos, Ripple and state-backed cryptocurrencies could play a role here
The Belgium-based financial messaging service Society for Worldwide Interbank Financial Communications (SWIFT) suspended access for certain Iranian banks in late 2018 after US threatened to slap sanctions on SWIFT if it provided services to the banks blacklisted by Washington.
This member-owned cooperative connects over 11,000 banks, corporations, and financial institutions in over 200 countries around the world.
It is sort of a central nervous system of international financial systems that enables them to send, receive and track information about financial transactions in a secure manner to facilitate the smooth flow of funds across borders.
Cutting off a country from SWIFT can cripple the country financially because money transfer information can’t be forwarded to the bank, meaning they cant pay for import or receive payment for their exports.
Back in March 2012, SWIFT agreed to not forward messages to any individual or Iranian bank that was blacklisted by the EU. It also played an instrumental role in bringing Iran to the negotiations that led to the 2015 Iran-nuclear deal.
Previously reported, the governments of the UK, France, and Germany have developed a special purpose vehicle (SPV) called INSTEX, now operational, to maintain non-dollar trade with Iran without breaking US sanctions.
SWIFT System used as an Instrument of Foreign Policy
Countries across the world are avoiding to use SWIFT to cut off their use of the dollar, a “matter of self-defense,” reported RT on July 2nd.
While SWIFT claims to be politically neutral, Mike Maharrey from the Tenth Amendment Center told the publication that:
“it’s very obvious that SWIFT is being used by the US and other Western powers as a tool for economic diplomacy.”
“The US has used the SWIFT system as kind of a billy club, as an instrument of foreign policy,” added Maharrey.
And it’s a “natural reflex” for countries to avoid such situations and create economic independence as SWIFT has repeatedly blocked access to Chinese and Russian banks due to US sanctions.
Maharrey said this is why Russia has created its own internal payment system and central banks are purchasing gold.
An Opportunity for Ripple?
With countries cutting the US dollar usage, this is not only bullish for Bitcoin but also for decentralized payment systems.
Ripple a SWIFT competitor that markets itself as the frictionless experience to send money globally can emerge as an alternative for Iranian banks.
However, just like with SWIFT, there is nothing stopping the officials to push US-based Ripple to stop providing its services to particular nations.
This could be where Bitcoin, cryptos and state-backed cryptocurrencies could help countries gain economic independence without getting affected by the US sanctions.