JP Morgan CEO Dimon on SWIFT ban for Russian banks: SWIFT sanctions can be circumvented and may have unintended consequences for the US and its allies | tech news

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In a recent response to Russia’s attack on Ukraine, Western leaders slammed Russia on Saturday with a series of sanctions the world has never seen before. Among the sanctions that will be imposed in the coming days are the asset freezes of the Central Bank of Russia and international reserves.

Then on Saturday, the United States and its allies – Canada, the EU and the United Kingdom – blocked some Russian banks’ access to the SWIFT banking system in a bid to further isolate Russia from the global financial community and put more economic pressure on Moscow and its troops withdraw from Ukraine.

“We will hold Russia accountable and together ensure that this war is a strategic failure for Putin,” wrote leaders of the European Commission, France, Germany, Italy, Britain, Canada and the United States.

Meanwhile, calls to ban Russia from SWIFT are not new. In August 2014, the UK appealed to European leaders to lift the ban on Russia’s use of SWIFT should it attack Ukraine. Then, on April 29, 2021, the European Parliament passed a resolution to bar Russia from SWIFT if its troops invade Ukraine.

But the recent knee-jerk reaction from Western nations may call them back, particularly the United States.

For example, the use of SWIFT as an economic weapon against Russia could be a wake-up call for other nations – like India and China – who believe they may become the target of a similar ban in the future, prompting them to look into SWIFT alternatives. The fragmentation of the payments system can potentially undermine the US dollar’s dominance as a global reserve currency. For now, the SWIFT ban may bring immediate hardship to the Russian people.

However, as JPMorgan CEO Jamie Dimon explained, the ban could also backfire in the coming years. In an interview with Bloomberg’s Ed Hammond at the JPMorgan Global High Yield and Leveraged Finance Conference in Miami, Dimon said that while the SWIFT sanctions mean companies cannot use the messaging system to do business with affected Russian companies , but they can still do business with you.

Dimon added it’s as simple as sending an email with payment instructions, because what SWIFT really is is a messaging holdover from a bygone era, before email, even before fax machines.

When asked about SWIFT and what the ban on Russian banks means for the global banking industry, Dimon replied:

“There is a bit of misinformation today. The government will decide how sanctions will be applied as you use SWIFT. I don’t want to bore your users. A sanction says I can’t do business with you. A SWIFT thing says I can’t use communications to do business with you.”

Dimon continued:

“I can still do business with you and there are many rounds of work with Swift,” Dimon exclaimed. “So they are different tools used for different reasons. And you know the banks talk to the government so everyone understands the issues, not because they’re for or against any particular cause.”

Dimon also added that disconnecting Russian banks from the SWIFT messaging system could have “unintended consequences” including third parties finding ways to circumvent the fine.

“Which countries are you hurting? What people are going to do workarounds?” Dimon said, referring to “bad players” and others finding workarounds, not his own company, according to a company spokesman. Dimon, on the other hand, said sanctions are “very targeted, very specific, very clean.”

Meanwhile, JPMorgan was among Wall Street firms that advised Washington against kicking Russia out of SWIFT, according to a report by Bloomberg on Friday. JPMorgan argued that excluding Russia from SWIFT could have far-reaching consequences that could harm the global economy and undermine the purpose of the penalties.

You can watch the entire video below.

SWIFT stands for The Society for Worldwide Interbank Financial Telecommunication and is a global financial artery connecting banks, financial institutions and governments around the world. The SWIFT financial network is used by banks to send secure messages about money transfers and other transactions. As we have previously reported, SWIFT is a financial messaging system and NOT a payment system, contrary to what most people think.



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