[StanislavPetrov]

Its significant because the US has a virtual monopoly over global banking with the SWIFT system, which is used to impose sanctions and punish our perceived geopolitical foes. The use of the SWIFT system as a cudgel has led other countries to develop their own, competing SWIFT-like systems that would not be controlled by the US. Russia, China and India have been signaling their future adoption of this system for several years.

https://finance.yahoo.com/news/china-russia-india-push-forwa...

[magicsmoke]

SWIFT is a Belgian company, not American. They are subject to European law, not the US. However, the US has pressured SWIFT to eject Iranian banks from their system or risk being sanctioned from doing business with the US banking system. SWIFT is not some magic sword that the US can wave around to do their bidding and that the US would be crippled without. Rather, the US banking system is significant enough that they can pressure not just SWIFT but any entity with significant financial ties to the US to enforce sanctions on America's behalf.

[rsj_hn]

SWIFT is owned by member banks all over the world, and in any case they are not particularly important in terms of the power politics at play here. SWIFT provides infrastructure services as it's good for international banks to agree on a specific protocol. The protocol itself is not noteworthy and can be replaced with another. Technologically, SWIFT is neither advanced, nor interesting, nor hard to duplicate. The cooperation is hard to duplicate.

The real issue is the cooperation of banks centered around the dollar system, and the US as the world's custodian and monopoly issuer of dollars, is going to dominate any such system, regardless of which protocol is chosen for communication, or where the headquarters are located of whatever technology company has been selected to create the protocol. It is not a SWIFT system, it is a dollar-system. When you obtain dollars by selling goods to the U.S., you may think you have those dollars, but they are held in custodial accounts in U.S. banks, and subject to US law, regardless of whether you believe they are "your" money. This makes you subject to US law. You can't really withdraw dollars from the United States (or from any country in a fiat system). We don't live in a world of specie flows, we live in a world of custodial accounts.

That statement causes a lot of consternation, particularly in the eurozone, which is desperately trying to position the euro as a rival to the dollar, but as the Eurozone has discovered, what matters is not the nationality of the account holder, but the nationality of the custodial bank. It's impossible for any system which is a net exporter to become a big player in the international system. But everyone holds dollar claims - everyone has custodial accounts in US banks, and so the US can even disrupt transfers that only happen within the EU, because so much international trade is conducted with dollars, even trade between two EMU member nations, and this is an endless source of agitation for those claiming that SWIFT is independent of the US. It's not. Russia realizes that, and for a long time has been complaining about being forced into the global dollar system in order to conduct trade. It means the US can seize whatever Russian funds are used for international purchases and Russia can't do anything about it. And the US has not been shy at using it's control over the international currency markets to seize funds from nations it doesn't like, such as Iran, or lock out/or seize funds from others.

So there are a lot of reasons for Russia to want to separate itself from this system that have nothing to do with the specific type of legal structure used by the main subcontractor for this international dollar system. For Russia, it's all about trying to gain autonomy from the US -- Belgium or the EMU is not a factor.