What is the Society for Worldwide Interbank Financial Telecommunication (SWIFT) System?

About SWIFT System:

• It is a member-owned cooperative that provides safe and secure financial transactions for its members.
• Establishment: It was founded in 1973 by 239 banks from 15 countries.
• SWIFT is a network that banks use to communicate with each other securely, mainly to give instructions for transferring funds between accounts. 
• SWIFT is the largest and most streamlined method for international payments and settlements.
• SWIFT works by assigning each financial organization a unique code with either eight or 11 characters, known as a bank identifier code, or BIC.
• By standardizing communication protocols, SWIFT ensures that financial institutions can reliably conduct cross-border transactions, reducing the risks and inefficiencies associated with international banking.
• Although SWIFT is crucial to global financial infrastructure, it’s not a financial institution.
• SWIFT does not hold or transfer assets but facilitates secure, efficient communication between member institutions. It transmits essential details such as the recipient’s account information and transfer amount. 
• Headquartered in La Hulpe, Belgium, the system is overseen by the central banks of the G10 countries, the European Central Bank, and the National Bank of Belgium. 
  • Its shareholders represent around 3,500 member organisations.
  • SWIFT shareholders elect a board of 25 directors who govern the organisation and oversee management of the SWIFT system.
• Because membership in SWIFT allows countries to easily conduct international financial transactions, exclusion from SWIFT is an economic sanction that can be used against countries whose actions are condemned by the global community. 

Q1: What are G10 countries?

The Group of Ten (G10) consists of 11 industrialized nations that meet on an annual basis or more to consult, debate, and cooperate on international finance. The member countries are Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States.

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