Revolutionary decision in the financial industry: Russia excluded from SWIFT.

Revolution in the Global Financial Infrastructure: Russia Excluded from SWIFT

The situation in Ukraine and the aggression from Russia have triggered a series of international reactions, including imposing drastic sanctions aimed at hitting the Russian economy. One of the key decisions was to exclude Russia from the Society for Worldwide Interbank Financial Telecommunication – SWIFT, which has been labeled by some authorities as the “nuclear option” of financial sanctions.

What is SWIFT?

SWIFT is a communication network used by most banks worldwide to transfer money between countries. It is a critical element of the global financial infrastructure, enabling the execution of international transactions on a massive scale. However, SWIFT’s operations can be cumbersome at times, and transfers may take several days, which, in the age of instant payments, poses a certain anomaly.

SWIFT and Central Bank Digital Currencies

In the face of Russia’s exclusion from SWIFT, many central banks have begun considering the introduction of Central Bank Digital Currencies (CBDCs). These are tokenized versions of fiat currencies designed to expedite and facilitate international transactions. SWIFT has also taken steps in this direction, conducting experiments related to CBDCs and other advanced financial technologies.

The Future of SWIFT

SWIFT plans to deliver a CBDC platform within one or two years, aiming to help survive amid the growing threat from tokenized assets. The company hopes that by providing sufficiently advanced solutions to its customers, it can avoid the need for introducing new blockchain-based applications.

It is worth emphasizing that SWIFT’s move towards CBDC technology also aims to impede the actions of Russia and China, which are also seeking to leverage blockchain instruments to facilitate their international monetary flows.