SWIFT Explained: Messaging Network and the Alternatives to It
Why in the news
Worried by the dollar being used as a sanctions tool, BRICS and Global South nations are working to bypass SWIFT.
About SWIFT
- Society for Worldwide Interbank Financial Telecommunication: standardised, secure messages carrying payment orders, letters of credit and securities instructions.
- Money itself moves through correspondent accounts (Nostro/Vostro).
- Uses 8- or 11-character BIC codes and ISO 20022.
- Under Belgian and EU jurisdiction, so EU sanctions apply.
- Security: end-to-end hardware encryption, dedicated lines, distributed operations centres.
| System | Details |
|---|---|
| CIPS (China, 2015) | Internationalises the yuan; RMB clearing and settlement across 120+ countries |
| SPFS (Russia, 2014) | Built after Western sanctions; links with foreign banks incl. Iran’s SEPAM |
| mBridge | Blockchain multi-CBDC platform by central banks; direct cross-border settlement |
Exam angle
- SWIFT: messaging only; CIPS is China; SPFS is Russia.