Last week we wrote about The European Commission removing Russian Banks from SWIFT. Most people miss that SWIFT is not a payment system but a messaging system (like email) used by over 11 000 banks in over 200 countries. Patrick McKenzie from Stripe has explainedÂ
how money moves internationally and why SWIFT is the worldâs most expensive encrypted messaging service. He also explains that SWIFT does not even monopolize the thing that everyone assumes it monopolizes:
There is a document in a binder in Tokyo which describes âHow to move money to the U.S. if SWIFT is downâ and it does not say âPause the Japanese economy until SWIFT gets their #%()#% together.â MUFJ knows the phone numbers for the U.S. banks holding billions of dollars of their money and can transact with them in any of the ways that youâd expect a bank to make available to a customer with billions of dollars deposited.
The next in line with the financial sanctions of Russia isÂ
Visa and Mastercard, which are suspending their operations in Russia. More specifically, any transactions made with Mastercard or Visa cards issued by banks in Russia wonât work outside of Russia. In contrast, any cards issued by banks outside the country wonât work at Russian merchants or ATMs.
