SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. SWIFT was formed in 1973 and it is headquartered in Belgium. It connects more than 11,000 financial institutions in more than 200 countries and territories worldwide so banks can be informed about transactions.  It is a global messaging system connecting thousands of financial institutions around the world.

SWIFT is a method of transfering money. Its a Globally accredited Payment System. You can imagine its like a Worldwide Google Pay.

Lets say you are in Central Bank of India, Besant Nagar Branch and you want to send $ 10,000 to Chase Manhattan Branch in San Jose Downtown – you simply fill out a SWIFT Form and your Indian Bank will send a SWIFT message to Chase Manhattan Branch which will immediately deposit $ 10,000 minus comissions into the destination account.


Removing Russian Banks from Swift would be a hit. Barring Russia from SWIFT would not only damage the country’s economy but in the long term, cut Russia off from a swath of international financial transactions. That includes international profits from oil and gas production, which make up more than 40% of Russia’s revenue.

Lets say a Russian Energy Company sells you energy for EUR 15 Million and you have to pay. With SWIFT – its just a single minutes transaction. You transfer 15 Million Euros and in a matter of hours or minutes – an Account in Donblosk or Moscow gets a credit of 15 Million Euros or its equivaent.

Without SWIFT – How do you do a Bank Transfer?

You need an Intermediary –

Lets say Bank of China acts an Intermediary. Then You pay 15 Million Euros to Bank of China and Bank of China uses a special payment system with Russia and credits the equivalent using its own payment system.

But what if you are an ordinary Russian Citizen with a Daughter working in US and sending you a remittance every month????

Its for sure Bank of China cannot be an Intermediary for all such transactions. So then this remittance cannot be made. She has to issue you a Bankers Draft for USD and post it to Moscow where you have to deposit it into your Moscow Bank and then get it cleared which could take upto 30 – 45 days.

Ehen India was not part of SWIFT, we used to use Bank of America as Intermediary Bank for all our Transactions. We would use our Domestic Settlement System to pay Bank of America and they would give a SWIFT message to a Foreign Bank and credit Dollars or Pounds into the destination accounts.

It would take 3–4 days to get a transaction which now would take perhaps a few hours.

That is what Russia will have to do. Use Intermediary Banks in Countries that have Swift and are also part of the Domestic Payment Systems with Russia. 

Why would it be hard to revoke Russia from SWIFT?

Without money – one cant buy stuff from Russia. So energy will still need to be purchased and paid for. How would Germany or France pay for the Energy? It would be a big blow to European Financial Systems and it would case a big headache to European Nations which rely heavily on Trade with Russia.

My Guess is Putin is prepared. At the end of the day – When a guy decides Do whatever you want – I just dont care anymore – He becomes invincible. I think Putin doesnt really care. He has made his arrangements and i am sure he can handle public unrest better than any Domestic Leader. And the Russians are a long suffering lot. They have suffered through Famines, Winters, World Wars, Communism, Oligarchy and Autocracy right from 1894 to 2022 without a moments respite. So i presume – Putin anticipates a worst case scenario and will use his Domestic Banking Systems and Energy Credits to sustain himself.

While Russian banks could use alternative messaging systems such as phones, messaging apps or email to make payments via banks in countries that have not imposed sanctions, they are likely to be less efficient and secure, transaction volumes could fall and cost debt-to-GDP present, Russia has a massive amount of forex reserves and its debt-to-GDP ratio is only around 10 percent. In comparison, the US has a debt-to-GDP ratio of nearly 130 percent. Not to forget, Russia has become a big oil and gas supplier.

Among other things, Russia also came up with an alternative to SWIFT. The country developed SPFS — the financial messaging system of the Bank of Russia. Currently, SPFS has 400 users and the system handles about a fifth of domestic payments. In a statement on SPFS, Russia’s central bank said, “This is a reliable and secure channel for sending electronic messages on financial transactions.”

At the end it all boils down to – How much can Putin Take and if he gets really angry – what will be the Impact.








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