SWIFT Code This is a system used for digital transactions carried out by international banks, which is run by SWIFT, an organization established in Belgium. Today we will try to know why the SWIFT code system is so important at the international level. It is said that America and Europe have more influence on the SWIFT code system, so the system has been created by Rashi and China for their own digital international banking transactions.
131 countries and banks of the world are connected by the SWIFT system, so this system is considered to be the most effective medium for the digital transaction of the world. Seeing the signs of war between Russia and Ukraine, for several days, efforts were made by the US and Europe to stop the behavior of Russia’s SWIFT system. The SWIFT code of some banks was also banned, but Russia is dependent on Europe and many countries of the world for commodities like oil, gas and wheat.
Therefore, the SWIFT code system is an effective means of imposing sanctions on any country. In this era of globalization, no country can fulfill its needs completely by itself. Therefore, it has to import internationally to meet some of its requirements, for which SWIFT code system is required. Therefore, say at an individual level or as an organization and country, there is a need for SWIFT code system, so it is a very important digital system, which we will know in detail through this article.
What is a SWIFT Code ? –
- Bank code (four words – abbreviation of bank)
- Country code (two words – abbreviation of country code)
- Location code (two words – head office address of the bank)
- Branch code (three words – branch office address of the bank)
- Nostro (Ours) and Vostro (Yours) Account System
SWIFT code is broadly called “Society for Worldwide Interbank Financial Telecommunication” in English which is also known as BIC Code. The SWIFT code is used for the transaction of money by international banks, in which the first message is used between the international banks through which this transaction takes place and later the money is transferred. With this method, individual, institution can deal with money safely through international banks.
Through SWIFT code, money is given to understand from which country, like in India, we use IFSC code, so that we get to know how the bank is in the state and which branch. It is a modern digital bank transaction system under which 131 country’s banks are attached. The SWIFT code is of 8 or 11 digits in which the first four characters are the bank code, followed by the 2 character is the country code and the last code is the location code.
Through SWIFT code, we can send money to any country in 131 countries in just 10 minutes, in which first message is sent and then money is transferred. Due to which the security of every transaction is determined, so the SWIFT code is used by countries all over the world to do their international business. It is said that the countries of America and Europe have influence on this SWIFT code system, so whenever there is pressure on any country, there is a threat to ban its SWIFT code.
History of SWIFT Code –
SWIFT is an independent financial institution that was established in 1973 under Belgian law, in which 11000 banks conduct themselves and operate in 200 countries. It is a member-run company that has replaced the telex method used in the past, which took a long time to complete a transaction. Seeing the development of computer technology, this method has become very popular in 1973 and through our mobile we can complete international transactions in just a few minutes.
SWIFT company’s business goes to 26 countries around the world and its head office is established in Belgium. It is mainly operated by the central banks of the G-10 member countries, in which the influence of mainly European countries is seen. SWIFT Company This is a company operated by Shareholders, in which it is held by the representative of about 3500 firm and the Board of Directors of SWIFT is made up of 25 people.
The SWIFT company is managed by an executive committee headed by the CEO who oversees the company’s operations in 26 countries. Before 2012, only G-10 member central banks used to have SWIFT, but after 2012, other central banks such as Bank of Australia, Bank of China and Hong Kong Monetary Authority, which are major nations of the world, have been included. The Reserve Bank of India has also been included in this and it is used as an effective medium to impose economic sanctions on any country of the world.
How does the SWIFT code work? –
It is a reliable banking messaging system through which money is transferred from the individual level to the level of the institution or country at the international level. Any import and export is based on this digital system. In today’s time of globalization, all the transactions are seen at the international level, so it is a digital platform with which 11000 important banks of 200 countries all over the world are connected. According to the figures of 2021, 42 million messages are sent through SWIFT every day, which is an increase of 11 percent from last year.
It is an 8 to 11 digit code system which is provided for the country and for the banks of the country. The central bank of almost all major countries is a member of the SWIFT code. The Reserve Bank of India is also a member country of the SWIFT code company through which this system is run. To send money to any country, you have to deal through SWIFT code, in which the first message is sent, which goes to the central bank of the country to which it is sent and from there to the bank to which it is sent reaches the bank.
This messaging system is the most secure system to complete any transaction because it shows how many SWIFT transactions have taken place in a day. The first message of any transaction is then the transaction of money, so this payment system is much more effective than the telex system that preceded it. It is very easy to use through the mobile application and the transaction is completed in just a few minutes.
SWIFT Code & International Politics –
As of 2012, SWIFT code payment system has been the influence of only G10 member countries in this institution, due to which there have been allegations of influence of European countries and America on SWIFT by Asian and other countries. This has been repeatedly denied by SWIFT and it is an independent institution established in Belgium which is run by important central banks. We have seen the political models of two ideologies in the two world wars that took place in the world.
Countries like China and Russia do not want to be completely dependent on this SWIFT international payment system, so they have created their own independent international payment system, even though today it does not have many member countries, but it is creating its own economic group with its effect. want to do. The importance of SWIFT can be gauged from this that when the war between Ukraine and Russia started in February 2022, there has been a demand to ban them through the SWIFT system.
This system is very important to destroy any country financially, so that SWIFT code payment system can be used to get a political talk from any country. Today, the import and export of all countries is based on the SWIFT payment system, so it may be misused by the people of the country whose influence on the SWIFT institution, it seems to some countries.
Alternative for SWIFT Code of Russia –
System for Transfer of Financial Messages (STFM) Russia’s own digital payment system for international money transfer was established in 2014. It was established through the Central Bank of Russia in view of the influence of America on the SWIFT payment system. Cryptocurrency is an alternative system of international money transfer, which is not run by any country. Cryptocurrency This is a completely independent system and by keeping it in front, Russia is working to make the ruble an international currency like a cryptocurrency.
The ideological and political war of America and Russia has already started, which we have seen through the Cold War, in which after defeating Russia by America, Russia wants to re-establish itself on the international level. SWIFT Today, about 200 countries of the world are working on this digital medium, due to which the countries of America and Europe control the economic system of the world. To counter this, Russia has created its own international payment system.
Russia’s geographical position is such that it is connected to Europe and Asia, and Russia’s influence has always been there. It is happening. Therefore, when Russia takes any security related action on its western countries, they are always threatened with expulsion from the SWIFT payment system, due to which Russia’s own STFM system was created in 2014.
Option for SWIFT code of China –
Cross-Border Interbank Payment System (CIPS) This international payment system organization was established in 2015 by the Peoples Bank of China, the central bank of China. In the next ten years, China will become the world’s largest economy, which is the biggest threat to super power like America. Analyzing it from a political point of view, China is a communist country and if it becomes the most powerful country in the world, then the message will go to the world that we cannot become financially successful only with capitalist democracy.
Therefore, ever since the realization of America has been done by America to block China economically. Although China has never fought America with Russia in the Cold War, but with the help of America, it has created its own economic model, on the basis of which it is today the world’s second number economy. In view of the impact of the SWIFT code, China has prepared a new independent payment system to do international trade itself in 2015.
Today important banks like HSBC, Standard Chartered is connected to it through CIPS system and Australia and New Zealand Group are also connected to it. Russia and China themselves are working together on such a payment system so that the impact of SWIFT is reduced from all over the world and in a way it is China’s strategy to incite America. By 2021, 12 trillion US dollars have been handled by this institution and 1280 financial institutions and 103 countries have joined it from all over the world.
SWIFT Code & India’s View –
India has to face many problems for doing business with countries like Iran, Russia and China, for example, when sanctions were imposed on Iran by the SWIFT institution, it had an impact on the trade of India and Iran, for which India had created a new digital payment system to do its own international business. Therefore, it seems that India should create its own independent payment system.
Because today’s international wars are fought less with guns and more through economic sanctions. Today Ukraine and Russia’s war have started for the last five months, due to which some sanctions have been imposed on Russia by the SWIFT organization. Due to which the trade of India and Russia has been affected, so India has to understand the effect of America and Europe on its stand SWIFT like China and Russia.
In India, such as IFSC, this code is run as a payment system within the country, which is controlled by the Reserve Bank of India. Similar SWIFT digital payment system is used internationally, which is used by about 200 countries of the world. Attempts to make international trade synonymous with SWIFT have already been initiated by China and Russia, in order to counter the strategy of placing the entire economy through SWIFT.
Critical Analysis of SWIFT Code –
Due to the payment system of SWIFT code, the whole world has been divided into two parts, China and Russia believe that the US is using SWIFT to financially influence Asian countries. It has already been said by SWIFT that it is a completely independent organization and an organization registered in Belgium which fully complies with the legal rules.
Due to the Russia-Ukraine war, we have already seen that many important banks have been banned by SWIFT on Russia to do international transactions, due to which Russia has started making its own international payment system. On the other hand, China, this country is a competitor to America from the point of view of economic development, which is ready to leave America behind in development in the coming days.
Therefore, for different reasons, China is also being politicized by America through diplomacy, so China has created its own international payment system. That’s why we get to see the economic war here in major countries around the world through SWIFT. Therefore, the SWIFT code is used to have an economic influence on the rest of the world through Europe and America, such allegations are there. The security of the SWIFT code was broken in Bangladesh in the past, so it cannot be said that it is completely secure.
If we want to know how the world’s economic and political system works, then it is necessary for us to understand how the SWIFT international digital payment system works. For the past few days, this topic has been widely seen in front of the world through SWIFT’s ban on Russia. It is not that this was not known to anyone earlier, but through the media, ordinary people came to know about it for the first time.
If a person has to send money to any country internationally or to send money from any country in India, then this payment transfer system is commonly used. India has earlier created these problems in its international trade, in which the relations between Iran and India are good, but the relations between Europe and America are bad, due to which India’s business has to suffer.
That’s why we have tried to see through this article how SWIFT affects international trade. We have tried to know how international transactions are done through SWIFT. SWIFT is influenced by the countries of America and Europe, such allegations have been made on this institution, which has always been denied by the institution, but in the work we get to see this effect which is the ideological effect which we see through the cold war. had received.