Sanctions lists are like blacklists. SWIFT members will block those on sanctions lists.
This means that if you live in a sanctioned country, you ain't getting money from other places.
With Ukraine vs Russia happening and basically WW3, there is not much the world can do if you're not actively taking a side.
Maybe put Russia on the Sanctions list? But it's actually pretty hard.
Customers onboarding in Russia have pretty bad KYC documentation. But also, they might have customers in non-sanctioned countries. The world is interconnected. Hence, you can't just blacklist Russia. Also, Russia is a huge trader of oil, and oil contracts are many, many years long. Some other countries have offices or subsidiaries in Russia. To punish Russia completely, you'd punish the world.
The downside greatly outweighs the upside.
Russia, being Russia of course has been trying to reduce SWIFT and USD reliance for years because they know they suck. They've largely shifted away from it. But this also means they are shifting even further away from global order.
China is building CIPS (Cross-border Interbank Payment System) which is their version of SWIFT. CIPS is still really small but they could just do their own thing in their own world.
I mean, this is also just another way of saying that our (United States) ammunition strength for global domination is reducing and we are parading it under the façade of global peace.
So obviously everyone is just sitting around not really knowing what to do and unable to agree upon it because there are pros and cons to every choice, and what outweighs what is largely dependent on what you prioritize.
Either way, SWIFT is fucking problematic. As with most things in fintech, it's old and barely works, super expensive and slow, but everyone relies on it.
“Don't fix it until it's broken” is the motto of all financial technology - well, it's kind of breaking right now.
Why is SWIFT so very un-swift?
It's extremely difficult to build something new and to get everyone to agree and adopt on it due to all the legal / tax / political implications. It's an important piece of global economic centralization, yet of course countries are looking to decentralize it. And those that can't compete technologically and from a war chest perspective will be left behind.
Aka, even if SWIFT falls apart and the US's influence on global money movement is reduced, the US won't be the biggest loser, it'll be all the smaller countries that now probably will all turn to crypto to solve their problems.
Cue the entrance of all crypto maniacs and those professing the world domination of a stablecoin.
I don't know if crypto / stablecoins are the answer. Call me unhelpful and unopinionated, but crypto and stablecoins are no where near ready for global commercialization with all the issues it still has. Stablecoins definitely closer, but still not there. There isn't global buy-in, and I'm not particularly confident in our government and Fed investing fiscal dollars into pushing for it.
I don't even know if this is an issue for senior world leadership or if it will come from the people. The US has historically been a bottoms up nation, but this issue seems like it needs to come top down.
Influential payments companies such as Visa, Mastercard, Wise, Paysera have been placing restrictions regarding Russia, but obviously it takes more than that. A great start though.
Rant ending soon, but basically we REALLY need to upgrade SWIFT or find some alternative.
At this point it's literally one of the biggest blockers of global peace...
Unfortunately don't have the answer here on how to do that and my conclusion is rather non-revolutionary... but I feel the need to say it anyways.