Russia gets seat on SWIFT board

The West's Plan To Drop Russia From SWIFT Hilariously Backfires

Zero Hedge,

12 March, 2014

Submitted by Simon Black via Sovereign Man blog,

If Vladimir Putin is remotely capable of laughter (the jury is out on that one…) then he’s probably doing so right now.

Russia is once again Arch-Enemy of the United States. It’s like living through a really bad James Bond movie, complete with cartoonish villains.

And for the last several months, the US government has been doing everything it can to torpedo the Russian economy, as well as Vladimir Putin’s standing within his own country.

The economic nuclear option is to kick Russia out of the international banking system. And the US government has been vociferously pushing for this.

Specifically, the US government wants to kick Russia out of SWIFT, short for the Society of Worldwide Interbank Financial Telecommunications.

That’s a mouthful. But SWIFT is an important component in the global banking system because it lays the foundation for banks to communicate and transfer funds with one another.

It’s a network protocol of sorts. Whenever a bank in Pakistan does business with a bank in Portugal, the funds will clear through the SWIFT network.

According to the SWIFT itself, they link over 9,000 financial institutions worldwide in over 200 countries, which transact 15 million times per day.

Bottom line, being part of SWIFT is critical to conducting business with the rest of the world. And if Russia gets kicked out of SWIFT, it would be a disaster.

Now, SWIFT is technically organized as a ‘Cooperative Society’ and governed by a board of directors.

There are 25 available board seats, and each seat is allocated for a three-year term to a specific country.

The United States, Belgium, France, Germany, UK, and Switzerland each hold two seats. A handful of other countries hold just one seat. And of course, most countries don’t hold any seats at all.

Here’s what’s utterly hilarious—

On Monday afternoon, not only did SWIFT NOT kick Russia out… but they announced that they were actually giving a BOARD SEAT to Russia.

This is basically the exact opposite of what the US government was pushing for.

Awkward…

But this story is even bigger than that.

Because at the same time that the US government isn’t getting its way with SWIFT, the Chinese are busy putting together their own version of it called CIPS.

CIPS stands for the China International Payment System; it’s intended to be a direct competitor to SWIFT, and a brand new way for global banks to communicate and transact with one another in a way that does NOT depend on the United States.

We’ll talk about CIPS in more details in a future letter. But in brief, it addresses some serious weaknesses, inefficiencies, and technological challenges of SWIFT.

And it should be ready to go later this year.

Make no mistake, this is the beginning of the end of the US dollar’s global hegemony. 

It’s time to stop hoping that it won’t happen and time to start preparing for it.

Russia gets seat on SWIFT board