It’s all up in the air. Will Russia suffer by applying similar financial sanctions as EU did on Iran? Although some people are calling for it, SWIFT are not. Just the debate over the subject is sending a strong signal to financial community. Who will be next? SWIFT’s headquarter location in La Hulpe, close to Brussels, means they must obey Belgian law which in turn must obey the EU’s bureaucratic decisions.
The trust in SWIFT as an independent financial messaging operator is gone. Why should Asia, Africa or South America be affected by the EU bureaucrats? This will have direct impact on everyone.
What SWIFT might do?
– Move their headquarters outside of the EU – Japan?, Honk Kong (perhaps not)?, Singapore? Kuala Lumpur? or Switzerland?
What the financial community might do?
– In the EU perhaps nothing. We are on the right side, aren’t we? One scenario might be to create new national currencies (perhaps virtual) and revert back to our own national RTGS systems.
– Outside of the EU – Build own multinational financial messaging systems, perhaps based on ISO standards. With the availability of so many new technologies this could be achieved quickily. It’s not so important how and where messages are transmitted, the most important is that the message format is agreed between counterparties.
What will fail?
– SWIFT supports a local initiative (called SWIFT’s go local) – this will not succeed because of trust issues.
– SWIFT Index – financial indicator – this will fail because of non global data.
We are living in a fragile world, don’t you agree?