What is the SWIFT system? Western logic against “Putin thinking” (maps)

Russia’s president, Vladimir Putin (born 1952), launched an invasion of Ukraine on February 24, 2022. As the aftermath of the dramatic escalation of the Russo-Ukrainian War that began in 2014, this new war is the largest conventional military attack on European lands since World War II.

   The Economist journal states that Putin said he was seeking to “de-Nazify” Ukraine. However, Putin’s attack was immediately condemned by Western countries. In response to the Russian invasion of Ukraine, NATO (North Atlantic Treaty Organization) countries are working together to tackle this nonsense aggression.

    The punishment of Russia starts with a massive hit against its financial system. Russia as a country is still connected to the global economy. Meanwhile, in a joint statement, the United States (US), Canada, United Kingdom (UK), Germany, France, Italy, and the European Commission said they would prevent the Russian central bank from using its internal reserves to undermine broader sanctions. Also, and most importantly, the leaders said they would eject some Russian banks from SWIFT, ensuring they are disconnected from the international financial system and harming their ability to operate.

   What is the SWIFT system? The global provider of secure financial messaging services (Society for Worldwide Interbank Financial Telecommunication, SWIFT) was founded in 1973, creating a global financial service as a common language for international financial messaging.

   The Belgium-based system is run by its member banks as a cooperation. SWIFT handles over 42 million of daily payment instructions across more than 200 countries and territories and 11,000 financial institutions.

   This payment network system allows individuals and businesses to take electronic and card payments even if the customer or vendor uses a different bank than the payee. SWIFT assigns each member institution with a unique ID code that identifies not only the bank name but country, city, and branch. Prior to SWIFT, Telex was the only available means of message confirmation for international funds transfer, but it was extremely vulnerable as Telex senders had to describe every transaction in sentences without unique IDs.

   In the context of SWIFT, each financial organization has a unique code that has either eight characters or 11 characters. The code is interchangeably called the bank identifier code (BIC), SWIFT code, SWIFT ID, or ISO 9362 code. The first four characters represent the institute code, the next two characters the country code, the next two characters the location/city code, and the last three characters (optional), are used for individual branches.

   The Economist journal mentioned that Putin has lost touch with reality (while he has hidden wealth of over 100 billion US dollar according to The New York Times). Putin (Russian politician and former intelligence officer) is the president of Russia since 1999 (except 2008-2012 when he was the prime minister). After 22 years at the top this crisis has come from nowhere, and even Russian people cannot understand this way of “Putin thinking”.

   Russia today records an unemployment rate of 4.3%, while the inflation rate is 8.73%, and the tax rates are around 20% for corporations and 13% for personal income. With a minimum wage of 177 US dollars per month Russian people cannot feel the power and wealth of Russia. 144 million people, a gross domestic product (GDP) of 1.5 trillion US dollars (while Germany has 3.8 trillion and Italy 1.9 trillion US dollars), and with enormous natural resources (particularly oil and natural gas) contributing 60% of the country’s GDP, Russia has a mixed, but weakened, economy.