What is the SWIFT system?

The SWIFT (Society for Worldwide Interbank Financial Telecommunication) system is a nonprofit consortium among the G-10 central banks. It functions as the switchboard of the international banking system, facilitating secure, efficient, and standardized messaging and transaction processing between banks worldwide. Each bank has a unique SWIFT code, which is essential for conducting international transactions. This system is crucial for the global financial infrastructure, allowing banks to transfer funds and communicate securely and consistently 1 2.

In addition to its role in transaction messaging, SWIFT is important in the context of financial sanctions. Entities like North Korean, Iranian, and certain Russian banks have been excluded from SWIFT as a form of economic sanction, underscoring its significance in global financial operations and financial warfare 1.

Despite its foundational role, SWIFT is also seen as old, inefficient, and expensive by some experts, which has led to discussions about alternatives, including digital currencies, that promise to reduce costs and increase efficiency in international finance 3.