One sanction that Western allies were hesitant to impose on Russia -- for fear of blowback to their own economies -- was called a “financial nuclear weapon” by France’s finance minister. That sanction is cutting off banks from SWIFT, the messaging system used by financial institutions globally to convey instructions to carry out tens of millions of transactions each day. Most major Russian banks did end up being cut off, underscoring Russia’s isolation as a global pariah and prompting its government to try to steer business with its remaining friends to its own, much smaller version of SWIFT. China, too, has been trying to develop a SWIFT alternative as part of its campaign to decrease its dependence on the Western financial system and use of the dollar.
SWIFT -- the Society for Worldwide Interbank Financial Telecommunication -- is a member-owned cooperative, based just outside Brussels, founded in 1973 to end reliance on the telex system for banking communications. As the Gmail of global banking, SWIFT delivers secure messages among more than 11,000 financial institutions and companies in over 200 countries and territories, directing trillions of dollars in transactions. The message traffic -- 42 million a day on average last year -- includes orders and confirmations for payments, trades and currency exchanges. SWIFT is overseen by the National Bank of Belgium and representatives from the U.S. Federal Reserve System, the Bank of England, the European Central Bank, the Bank of Japan and other major central banks.