US Treasury Secretary Steven Mnuchin recently threatened SWIFT, the global financial messaging service, with penalties if it does not comply with new US sanctions and cut off entities doing business with Iran, which has created a demand for alternatives to SWIFT.
The Belgium-based institution, SWIFT (Society for Worldwide Interbank Financial Telecommunication), supports over 11,000 financial institutions in over 200 countries and territories with messaging services to facilitate interbank transfers. The action would inhibit Iranian businesses from receiving funds for its exports and paying for imports. This occurred previously in 2012 when the US and EU pressured SWIFT to “cut financial transactions with at least 30 of Iran’s financial institutions, including the central bank”. The financial blockade was lifted in 2016 with the Iranian nuclear deal, but that has since fallen apart under the current US presidential administration.
The recent developments have forced many leaders in Europe to push for an alternative to SWIFT, including German Foreign Minister Heiko Maas and EU Foreign Affairs Chief Federica Mogherini. Russia has already built an alternative, System for Transfer of Financial Messages (SPFS), that now handles the financial transfer data for more than half of Russian’s institutions, according to an RT report. The SPFS was built in the wake of sanctions from the US and Europe for the Crimea issue. Both issues signal a demand for solutions to the monopoly that is SWIFT.
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Discussion of international sanctions and economic blockades often leaves out the fact that the penalties will harm thousands of businesses and millions of individuals directly and indirectly. The creation of alternatives to SWIFT mitigates risks for businesses and individuals so they do not have to suffer lower economic well-being for the actions and opinions of government leaders. This...