16 ms·

Tell HN: SWIFT is not a payments transfer system

244 points by atdrummond 5y ago

As part of my startup's remit, I do a lot of work with clients' SWIFT payments. I feel like the media has done a very poor job explaining what SWIFT is and how exactly it works. SWIFT exists not for the purpose of providing the rail(s) upon which money moves but to be the messaging system which coordinates said transfers. When sending funds (typically done via a document called a MT103, which is a text file with specific formatting requirements) one informs the recipient institution by sending a SWIFT message. When it is time for the banks to actually move the funds (which often times occurs significantly after the funds are made available to the client in question) this will be coordinated through a payment system. In most cases in Europe, this is TARGET2. However, as Russia is not a member of the Eurozone, many of their impacted payments will likely be on the STEP2 payment network, which is the only European-wide clearing house. (However, these days, it isn't uncommon for banks to work together to use multiple clearing houses across multiple jurisdictions to most efficiently move funds.) From what I understand from banks and clients we work with who have a significant Eastern European nexus, Russia was already experiencing problems with the payment systems before the formal SWIFT bans were announced and that the effective shutdown of central bank settlements for Russia has served to bring international payments coordination for RU based institutions to a crawl. Happy to add clarification where it could be useful.

blinkos 5y ago
Thanks for this clarification. I honestly thought SWIFT was some kind of central coordination authority for all inter-bank payments. I have been bamboozled.
- atdrummond 5y ago
  I don't feel like your definition is a bad one per se - just so long as people understand: 1 - there are other ways to coordinate payments! 2 - that the actual fund movement is handled through other means than SWIFT.
albatrosstrophy 5y ago
So banks refer to SWIFT for instruction on how much to transfer where? And anyone who hacks SWIFT will be able to fake fund transfer instruction?
- atdrummond 5y ago
  One would need some inside baseball knowledge to effectively hack SWIFT. Not only do you need 1 (or more) BO or Senior BO PINs to verify the send, a hacker also needs to properly format the send without including any details that will tip the recipient off that it is fake. That said, things are changing significantly with SWIFT gpi payments and the much more automated nature of the new system may actually make techniques such as fake sends more, rather than less, effective until solid mitigation strategies are attached.
  - Tabular-Iceberg 5y ago
    > Not only do you need 1 (or more) BO or Senior BO PINs to verify the send That doesn't sound impressive at all by modern standards. At the very least they should have some kind of challenge-response scheme.
    - atdrummond 5y ago
      That would be easily implementable in a bank's SWIFT gpi software as that system gains traction. Probably doesn't add any value in the current system as the recipient as no way to confirm the challenge-response scheme was actually completed as would be implied (beyond, perhaps, coordination between sending and receiving institutions outside SWIFT proper). Although I could be simply not sufficiently creative enough. The bigger point I should have made is that most send fraud doesn't actually occur on SWIFT and is conducted using falsified documents to give the impression of a correct send, typically to get funds released before the fraud is revealed. It relies much more on social engineering than any kind of actual systems hacking skill.
  - BankThrowAwayRU 5y ago
    Plus: There are some additional hardware/special componentes one has to use to connect to SWIFT, those boxes arrive pre-configured at your datacenter.
    - ithkuil 5y ago
afiori 5y ago
I always thought that swift main feature was sorta like a DNS for banks. An hypothetical SWIFT consortium would assign unique short names to banks so to provide a baseline for authentication and identification. This only based on the swift codes you have to add sometimes next to the IBAN.
- atdrummond 5y ago
  That would make sense in the context of payments like SEPA, etc. where a unique code helps limit mistaken transactions - however, that doesn't mean SWIFT itself is actually being used beyond the identifying codes banks use on the system. Where a SWIFT MT103 would come in is typically (but not always!) much larger transactions, such as moving $100m from a corporate account in one country to another.
est 5y ago
Related https://news.ycombinator.com/item?id=24103753 https://news.ycombinator.com/item?id=24103753
- atdrummond 5y ago
  Decades after a lot of the features in the new system should have existed in the US but I'm not going to look a gift horse in the mouth. Thanks for linking!
notahacker 5y ago
Heard a finance guy making this argument on radio news. His point was that it was essentially a telecommunication system, which could be replaced by telex or or other messaging service as a less efficient way of getting payments through, or at least important, large payments with cooperating banks and clearing houses. It ruining the coordination of day to day payments seems to have had the desired effect on the Russian economy though.
- alangibson 5y ago
  There have already been a lot of new rules put in place blocking transactions with Russian banks, which I guess is meant to take care of the "cooperating banks and clearing houses"
- vishnugupta 5y ago
  > essentially a telecommunication system Indeed, as implied by the name. “ Society for Worldwide Interbank Financial Telecommunication”
- m12k 5y ago
  At the end of the day, the communication system was being used to make promises, based on an assumption that all the institutions involved in the transfer had the incentive and means to keep their promises. The latter is also being drastically undermined at the moment, making the emergence of an alternative ad-hoc "IOU" system less likely.
- Mindwipe 5y ago
  Yes, though the closure of dollar clearance services by US and UK banks also stopped the large important payments, at least via the West. There will still be some facility to do it via China, but China's largest banks are also baulking (mostly because of the rapidly imploding value of the Ruble meaning they don't trust Russian banks to actually send the requisite funds than any great moral imperative I expect by the result is the same), and any Chinese services still willing to co-operate are going to extract a very, very hefty tithe from the Russians to enable it.
  - 5y ago
miraculixx 5y ago
How does SWIFT play with ISO20022, is that the same thing but different message format? Also I get it that SWIFT filled a need in the olden days, but with internet+messaging systems in general now available ww why don't banks use something more modern and less expensive? I am not hinting at blockchain. Eg they could use sth like email, telegram, some private incarnation of that, to send their MTx messages, or whatever.
- atdrummond 5y ago
  Let me answer your second question - the recent implementation of SWIFT gpi (which is not being widely used by most Russian institutions so not relevant to the sanctions talk) is designed to increase the power of the SWIFT system, better automate payments and ease interaction between SWIFT and clearing houses/payment systems. So in that sense it would be far better than coordinating over a non-payments specific communication method. Regarding your first question - ISO20022 currently requires a parser to convert ISO20022 information into a MT message. This is automated in SWIFT gpi and compatible softwares.
- rvz 5y ago
  > Also I get it that SWIFT filled a need in the olden days, but with internet+messaging systems in general now available ww why don't banks use something more modern and less expensive? I am not hinting at blockchain. Well, I won't be surprised to see blockchains like XRPL, Stellar and Algorand to be part of the ISO 20022 standard [0] [0] https://finance.yahoo.com/news/iso-20022-cryptos-5-compliant-194204661.html https://finance.yahoo.com/news/iso-20022-cryptos-5-compliant...
  - elric 5y ago
    Given that ISO20022 (MX) contains thousands of message types already, it certainly wouldn't be surprising to see a few more appear. In addition to that, SWIFT has something called MyStandards, which basically enables financial institutions to create/share/use their own message formats. Insert XKCD-927.
- gruturo 5y ago
  > How does SWIFT play with ISO20022, is that the same thing but different message format? The "legacy" SWIFT standard , called MT, was (retroactively) made into an ISO standard itself - ISO15022. Currently it is expected to coexist with ISO20022 on the same SWIFT network for 5 years, no idea which % of traffic is MT and which is ISO20022 though. So anyway - The SWIFT network can carry either traffic. As to why the SWIFT is not replaced.... it's not _that_ expensive, if you're a bank, and there is a huge network effect: If all your friends (other banks) are on network X, you really want to be there too, even if you maybe don't like too much how it's run and its cost. Additionally, it provides a lot of convenience which would be really painful to reimplement - and it would be massively antieconomic to implement it unless you can spread the cost over as many participants as possible (so you're basically trying to create another SWIFT - and there are already plenty of alternatives, though none with the reach and trust SWIFT offers). Said convenience is, for example, delivery confirmations, ability to replay any message up to 2 months ago, guarantee of every participant (bank)'s identity, non-repudiation. Oh and extreme resilience, which doesn't hurt. But this misses the main value proposition, which I perceive as the trust in the institution: they've been doing exactly this job for longer than I've been alive, they're a neutral operator, simply carrying everybody's traffic and being truthful about what passes through their pipes. If you send a message through SWIFT, you won't be able to deny that, and the banking community will consider you committed to what you wrote. If you denied that you did, SWIFT would be able to replay the message (even without your consent, if coerced by authorities). And they will not agree to "lose" a message you regret sending - their entire value to the banking community would go to 0 in a moment. Finally, they're a cooperative - participating banks actually own a stake, and profits just get redistributed (more or less), so it's not like they are sucking an inordinate amount of money away from the banking system and keeping it to themselves.
alangibson 5y ago
> When it is time for the banks to actually move the funds (which often times occurs significantly after the funds are made available to the client in question) Interesting. That makes SWIFT sound like a sort of digital Hawala system.
- vmception 5y ago
  There are many more analogs to hawala, not specific to SWIFT, as many banks and financial institutions have accounts at other major financial institutions in a variety of countries, upon transfer by one of their clients, the sub-financial institution decreases their balance at the host institution by giving the host institution the money (or reducing a line of credit), and at the receiving host bank they simply increase the sub-institution's balance (or increase of a line of credit). Final settlement honestly may never occur.
  - Kinrany 5y ago
    Cryptocurrency projects should be cloning these interbank exchange mechanisms, not making a single global ledger.
    - vmception 5y ago
      This is what many banks and “enterprise” think blockchain will do for them, yes. There are many solutions and some likely in play. There are some memes about that too. Convoluted arrows between a bunch of banks, next to one arrow between two peers.
    - immibis 5y ago
      That would be called Layer 2. I wonder when cryptocurrency will evolve a SWIFT.
      - Kinrany 5y ago
        It should be layer 0, not layer 2. Full coordination is not a good default.
einpoklum 5y ago
1. Well, doesn't this make SWIFT sanctions the less important part, relative to getting "clearing houses" to ban transactions from a certain party? 2. With SWIFT in place, why do banks even need clearing houses? Is that merely to save the need for bilateral verifications that transfers have been registered? 3. At the bottom line, the "transfer" is just an agreement to decrease a fixed-with decimal value on one side and increase it on the other... we're not talking about physical movement of paper or bullion, right? 4. It's still a problem that SWIFT lets the EU (or EU+US) turn unilateral sanctions into global sanctions.
- atdrummond 5y ago
  1. Yes but for said clearing house transactions to occur you would need to get counterparty institutions to agree to another communication method for coordinating purposes. The loss of the already agreed upon oracle is problematic. 2. A number of reasons but mainly to do with how funds interact with central banks and their capital requirements. Your later point that funds don't PHYSICALLY move means that it's less about each bank recording the appropriate addition and subtraction (that's easy enough) and more about how it is recorded, so transactions can be properly audited and transfers that would cause systemic or institutional issues can be curtailed as much as possible. There's also the issue of banks being able to more easily manipulate books using off ledger funds if Central Banks/payments systems weren't involved but that's again a systemic risk issue and not really relevant to our discussion. 3. Correct. 4. I agree but I don't think that's going to improve any time soon and I've yet to see a system that doesn't trade one point of centralized failure for another. I do hope cryptocurrencies can solve the distributed exchange issue because that's actually one very attractive (potential) feature of crypto for me, as someone who has seen first hand how these systems can be abused to target people - deservedly or not.
justinc8687 5y ago
If SWIFT is the messaging system and STEP2 is the clearing house, why is SWIFT-only versus SWIFT-and-STEP2 being sanctioned?
- atdrummond 5y ago
  Really no need to sanction STEP2 or other payment networks at this point as central banks/intermediary or recipient banks themselves have also been instructed as well (either formally or informally) not to engage with Russian institutions. They're not processing payments with the vast majority of the global financial infrastructure at this point.
- pomdapi 5y ago
  You didn't actually think they would really hurt the interests of their true patrons - transnational corporations, big industry, high finance ? This SWIFT ban only really affects the usual IBAN to IBAN transfer of the plebs and SMB's. Large payment processing and gross settlement transfers will just change to accomodating intermediary banks in China within a couple days, and that'll be that. Further fund movement will be done through the Russian-Chinese CIPS. Never forget EU commissars are not elected officials, they are named by an totally informal group called "Eurogroup", to which supposedly only 15 EU presidents participate. However, as it's not formal, it's completely opaque how they get chosen.
  - kasey_junk 5y ago
    CIPS is three orders of magnitude smaller than SWIFT. Even for large institutions that reduced network size introduces tons of overhead & risk to their transfers. You don’t just pivot on a dime with bank corridors. But the other sanctions are an important part of the mix as well. No matter how you receive your payment instructions if your local government has banned the money movement it won’t go through (modulo money laundering & dodgy banks). This is we’re Chinas lack of sanctions might help. But what do you do as a large organization with the money in a Chinese bank now? You still can’t pay for EU goods with it. The sanction mesh very effectively makes “high finance” for Russian corporations and international corps doing business there slower and more risky. Will it touch the trillion dollars Putin and gang have looted & hidden? Probably not but what could? If you want to complain about something the carve out for energy financing is the big one. It shows that the EU wasn’t really ready to sacrifice to hurt Russia. Which is understandable in a real politik way.
zoobab 5y ago
"I feel like the media has done a very poor job explaining what SWIFT is and how exactly it works." Could it be replaced by Email+GPG? Or ZeroMQ with Curve crypto?
- atdrummond 5y ago
  As long as every institution that's required to make the payment happen buys in (and it is compliant with whatever regulations are involved for sender, recipient and intermediate institutions) one does not have to use SWIFT explicitly. That said, gruturo above (in our discussion about the associated ISO standards) makes a good case for why most banks default to SWIFT.
supernova87a 5y ago
I have always wondered, what combination of manual vs. automatic processes are happening when one makes a bank wire (actual gross settlement / instant wire transfers, not ACH for example in the US)? Because whenever I have done wires, in addition to the bank/IBAN/account numbers, there are all these manual fields like "for further credit to", "for benefit of", etc. that are clearly having to be interpreted by someone. And very often errors come up and the funds are held or in limbo on one end or another. Does anyone have a good explanation of what happens both on the initiating bank side and receiving bank side when a wire is done? Does someone have to manually review an outgoing wire to allow it to proceed? Does the receiving bank have someone to review it inbound and route it correctly? I imagine that this is why it still costs $25-40 to handle them.
- atdrummond 5y ago
  Are you talking domestic US wires or international wires?
  - supernova87a 5y ago
    Oh, not too sure how different they are, but definitely even with domestic wires, many custom/human-review-required fields seem to exist. With international wires, I am sure that even more complications exist with which currency it's to be settled in, etc. And I have no idea/am curious whether the information about ownership of the account is transmitted with the transaction, to track whether the same person owns both accounts, etc?
    - atdrummond 5y ago
      Domestic US wires are (with the exception of flagged or manual telephone Fedwire placements) automatic through the Fedwire system, which is a RTGS (real time gross settlement) system. Most Euro denominated payments (not sure I'd call them wires anymore) are also automatic, cheap and easy thanks to SEPA's wide proliferation. Most of the time the extra info not actually required for automatic processing is in case the payment doesn't go through as intended, as well as for compliance reasons. As Elric notes above, international payments (outside a common currency zone with a system like Fedwire/SEPA) is where things get tricky/manual processing often comes into play.
emilsedgh 5y ago
What you are implying here is that SWIFT ban is not that big of a deal as there are alternatives. You are probably more educated on this, but I'm an Iranian and Iran was the only country so far that was banned from SWIFT. And it was a very very big deal. The banks could not deal with anywhere in the world and it become very difficult to send or receive money. The EU tried to setup an alternative to SWIFT [0] so they could work with Iran but it didn't really work out. [0] https://en.wikipedia.org/wiki/Instrument_in_Support_of_Trade_Exchanges https://en.wikipedia.org/wiki/Instrument_in_Support_of_Trade...
- atdrummond 5y ago
  A big complicating factor there was also the concomitant sanctions by the US and some of their allies. I don't want to imply that I don't think banning SWIFT wasn't important or impactful in either of these cases (it was) - I just wanted to make clear what precisely was happening, as I don't think most reporting was very clear. I'm sorry if it came off otherwise; I appreciate you dropping this comment as I don't want anyone getting the impression that I'm flippantly suggesting that Russia could easily go on with business as usual through alternative means.
  - traceroute66 5y ago
    > I don't want anyone getting the impression that I'm flippantly suggesting that Russia could easily go on with business as usual through alternative means. One would obviously hope that the cumulative effects of the various sanctions make it difficult or impossible for Russia to continue with business as usual. However, part of me worries about the abilities of the oligarch network. I mean, if you look at the various flight tracking websites. Sure a lot of the commercial aviation traffic has been killed off, but there are still large numbers of private jets floating around in and out of Moscow. How is this possible ? Because the sanctions are only against Russian registered aircraft, and most of those private jets are registered elsewhere and/or are hidden behind charter companies registered elsewhere. Quite possibly this extends to finance ? I imagine there is potential to find alternative financing routes. It wouldn't be able to last forever, for sure, but might last longer than the West anticipates.
simonh 5y ago
I get the impression it's not so much that SWIFT itself is critical, it's that so many other banking services and activities are co-ordinated using SWIFT, and being on SWIFT is an indicator of reliability and that you or your organisation is an insider.
- SantalBlush 5y ago
  That would make sense. It's not the tech that's important here, but the network.
- dahdum 5y ago
  I’d also guess a lot of regulation, policy, insurance, and perhaps law is specific to SWIFT such that you can’t just swap over to another system or simply telephone the transactions.
Vaderv 5y ago
m4lvin 5y ago
Recommended talk by Mark van Cuijk from 2016: A world without blockchain - How (inter)national money transfers works https://media.ccc.de/v/33c3-8315-a_world_without_blockchain https://media.ccc.de/v/33c3-8315-a_world_without_blockchain
cleancoder0 5y ago
I contacted a lot of my Russian colleagues and none are affected by this SWIFT ban and are still being paid by EU companies. They receive their funds from private banks that are not under these sanctions. I guess they might be affected once Russia starts borrowing the cash from citizens to fund the war.
- peterisza 5y ago
  Why borrow cash when they can just print more money? Same effect.
  - Mindwipe 5y ago
    "Borrowing cash" is slightly less likely to lead to hyperinflation in the short term. "Slightly" and "short term" doing some heavy lifting in that sentence though. But "slightly" might be useful to the Russian government given the game plan seems to be to try and complete the invasion before the Russian people mass revolt against their own government as the price of bread goes up 10,000%.
- vp4nkov 5y ago
  This has already started to some degree, starting from today, all russian citizens are banned from sending money over to their overseas accounts, all tax resident companies (and if you are a russian citizen, the only legal way to work for a foreign emplyer from russia is via creating a legal entity which is akin to a 1-man company) must sell 80% of received foreign currencies (this applies to money that was received starting from Jan 1st).
  - immibis 5y ago
    This would be because Russia no longer has that foreign currency, since it was frozen. If 60% of a totalitarian dictatorship's foreign currency is frozen, the dictator is going to make sure that all the foreign currency which the dictatorship does have access to belongs to him.
- immibis 5y ago
belorn 5y ago
I would be interesting to hear an further explanation in how this distinction is important. Money in banks is in the end just information stored in ledges about who owns who money. If a transaction occur within a bank it just numbers of one account getting an relative change to an other account. If an transaction occur between banks, the banks has a relation and the bank own ledger get changed, in addition to the individual accounts. With a clearing house you add a middle man that takes up part of the risk if either bank would fail in their obligation to honor the ledger. The actually movement of physical funds and valuables is quite rare and don't general occur from single transactions. If you can't transfer the information then the system of transferring information stored in ledges stop working. One can go out-of-band, but that assumes the other party is also willing to do so, and that there is no law/agreement against by-passing sanctions.
- nopcode 5y ago
  > how this distinction is important It's not. At least not in the short term.
- 0xcoffee 5y ago
  So how does it work when there are multiple of these systems (CIPS). Is double spending possible?
  - kayamon 5y ago
    Of course double spending is possible -- the entire world economy currently relies on it.
  - hashimotonomora 5y ago
    Essentially trust. If your bank does not have relations with a foreign bank in a faraway country, both can use an intermediary bank that both trust and do have relations with.
- immibis 5y ago
  The distinction is which messages we are talking about. When I (a US bank) send a message to the US Federal Reserve to please transfer $1,000,000 to another US bank, and the US Federal Reserve updates their records accordingly, that is an actual transfer of money. When I send a message to the other US bank saying "Hey, I sent you $1,000,000. Of that, $10,000 is for John Doe, $10,000 for Jane Smith, $5,000 for Alice, $5,000 for Bob, ......" that's SWIFT.
known 5y ago
throw0101a 5y ago
I've heard SWIFT called "the WhatsApp of the banking world". It allows for efficient communications between parties. You can use other forms of communication to arrange for the movement of money, but they're more of a hassle.
- immibis 5y ago
  And many institutions do not support them because why would they - everyone is on SWIFT except for murderous dictatorships.
300bps 5y ago
SWIFT is: 50% payment messages 43% securities messages The rest are a mix with a lot being treasury transactions. I work on the investments side and use SWIFT for security transaction settlements. For example, when we trade a security (stock, bond, derivative, etc) we send an ISO 15022 formatted message over SWIFT to the custodian telling them to expect delivery (for a buy) or to deliver (for a sell) a particular security on the settlement date. If we don’t give them this message then their settlement group will DK any securities being sent to them that don’t match a notification. (DK = Don’t Know) which means the trade will fail and you’ll have some really pissed off people that will want you to make them whole if they lost money as a result. SWIFT is used for lots and lots of things, not just payments.
smokey_circles 5y ago
> I feel like the media has done a very poor job explaining what SWIFT is and how exactly it works. Strongly disagree. The media are for laypeople. You wouldn't appreciate complex breakdowns about how proteins in SARS-CoV-2 work, too much depth. I also disagree with the implication that a SWIFT ban is meaningless. SWIFT is a notification of intent to settle. Modern banking (read: the electronic age) moves MUCH faster than money does. You can see this in ForEx. By the time the money arrives, it's worth something else. This is risk exposure and is partly why most banks like to backout into their native currency. Not always the case, but still a useful line. Banks exist to provide 2 major services. 1: Trust. Doesn't matter what so-and-so claims, their bank are the ultimate gate keepers. If the bank says it's paid, that's a legally guaranteed promise. 2: Liquidity: You actually need to have money to be able to send it. Banks will let you use "their" money while your money is still actually arriving (settlement). As you rightly pointed out: Banks make this money available to you before it actually arrives. The only way they can do that is because of #1: They trust the settlement will happen. If there's no trust, there's no releasing of funds. If there's no SWIFT message, there's no incoming settlement. TARGET2 can be used without SWIFT, but good luck finding a lot of banks that will handle CIPS in place of SWIFT. But by FLATLY removing Russia from SWIFT, they have successfully killed transactions in BOTH directions. Money can't come in, money can't go out. There are arguments to be made about the efficacy of these decisions (nobody believes the vast majority of Russians voted for Putin, right? Cuz they certainly did not so pressuring them to once again not vote for Putin seems pretty stupid, but the west can't do literally nothing. Difficult problem) but this was an effective move to further crush the ruble.
- gspetr 5y ago
  Let me address the last paragraph of your comment. Vast? No. Majority? Most likely. You do not need to take my word for it, you can look for 1st hand accounts from people who were P. election observers from the opposition. I'll at least agree that nobody believes that the party in power had the majority votes nationwide in the 2 most recent national elections. As for the current events, most recent official (official being the key word here) nationwide polling shows 68% support for the "special war operation", which I do not believe for a second, considering how many have either relatives, friends, or at the very least business contacts across the border.
jesprenj 5y ago
And what exactly is "money" and how is it "transfered" via messages?
TrapLord_Rhodo 5y ago
Time for russia to stop playing by the wests rules. This is a watershed moment for crypto and will be pointed to as a historical example of when the US started to lose influence over the world stage. what russia is doing is terrible and should be stopped. But this incident is going to show that the US and the EU can no longer control the worlds trade. technology has evolved past these financial systems mared by corruption, false data and glacially slow payment transfers. Who needs swift, clearing houses and forex exchanges when you have Terra? Side tangent, the first nationstate to adopt crypto will have the biggest benefits.
- Rooster61 5y ago
  Yes, because the administrations of authoritarian warmongers absolutely LOVE difficult to trace currencies. I'm sure Putin himself is setting up a Coinbase account as we speak...
  - TrapLord_Rhodo 5y ago
    Yes actually. China is spending alot of time rolling out its digital currency among it's populace. What is difficult to trace about it? It's literally a public ledger...? If you institute a state controlled wallet, not only can you control flow, color of money, etc. but you can perfectly see the data in real time which is a tremendous improvement over the current infrastrucure. You can actually answer questions like, how much does the average citizen spend a month on XyZ with a simple query among your wallet. > I'm sure Putin himself is setting up a Coinbase account as we speak... You are cut off from swift and other internationally accepted banking measures. How do you get foreign currency into your nation and how do you transfer payments internationally? Crypto.
- jasongill 5y ago
  yes, let's use the attempted destruction of a sovereign nation by a neighboring dictator as an opportunity to promote your favorite cryptocurrency
  - TrapLord_Rhodo 5y ago
miki123211 5y ago
Where can you learn more about this stuff? For example, I've always been curious how Swift is routed at the lowest layer. Does it go through the normal internet? The telecommunications infrastructure? Custom fiber-optic cables connecting almost every bank in the world to some kind of central office?
- nopcode 5y ago
  It's just VPN and MPLS connecting banks with SWIFT.
  - sam_lowry_ 5y ago
    Rumor is, they still keep ISDN gateways operational as well ;-)
- rowls66 5y ago
  I believe that SWIFT is now a private IP based network. That means it runs on dedicated comm channels, but uses the internet's IP.
MrYellowP 5y ago
> I feel like the media has done a very poor job explaining what SWIFT is The media, in general, does a very poor job explaining anything and everything, but due to the fact that the vast majority of people have no clue whatsoever, nobody ever really notices. That's why it's so easy for mass media to manipulate people. Nobody ever really notices that either. Except for people who actually know, of course. Like yourself. But then you, OP, you, turn the page, keep on reading and believe everything else that's written: https://effectiviology.com/knolls-law/#:~:text=Knoll%27s%20law%20of%20media%20accuracy%20is%20the%20adage%20that%20%E2%80%9Ceverything,happen%20to%20have%20firsthand%20knowledge%E2%80%9D https://effectiviology.com/knolls-law/#:~:text=Knoll%27s%20l....
nopcode 5y ago
For those wondering why there aren't any SWIFT employees chiming in: - They barely have internet access at their Office, it's a big hassle and it's all recorded. - Very strong security culture, both digital and physical. - The company actively monitors the internet for any mentions of SWIFT. Lot's of stories of people being threatened with lawsuits for breaking NDA. Even if they detail the technologies used on LinkedIn for example.
- IYasha 5y ago
  Lots of Security by obscurity, as usual. )
  - fknorangesite 5y ago
    Obscurity is of course not sufficient on its own, but it still an additional layer.
than3 5y ago
This posts comments is full of either people that don't have a clue or bots serving some agenda; a good solid 95%+ here is just noise. Why even bother reading hacker news when its like this, or even commenting with any real substance. Read some history (from multiple sources), educate yourselves, and stop feeding the noise. If you do that, you'll learn some useful things like how detente works, geopolitics, why the cuban missile crisis was such a big deal, etc. Those lessons directly inform events today.
_448 5y ago
Please could someone explain me (ELI5) how this all works with a very practical example for a layperson to understand? Say, I want to transfer £500 from the UK to India. How will this transfer work in detail behind the scene?

244 points by atdrummond 5y ago

blinkos 5y ago

Thanks for this clarification. I honestly thought SWIFT was some kind of central coordination authority for all inter-bank payments. I have been bamboozled.

atdrummond 5y ago
I don't feel like your definition is a bad one per se - just so long as people understand: 1 - there are other ways to coordinate payments! 2 - that the actual fund movement is handled through other means than SWIFT.

albatrosstrophy 5y ago

So banks refer to SWIFT for instruction on how much to transfer where? And anyone who hacks SWIFT will be able to fake fund transfer instruction?

atdrummond 5y ago
One would need some inside baseball knowledge to effectively hack SWIFT. Not only do you need 1 (or more) BO or Senior BO PINs to verify the send, a hacker also needs to properly format the send without including any details that will tip the recipient off that it is fake. That said, things are changing significantly with SWIFT gpi payments and the much more automated nature of the new system may actually make techniques such as fake sends more, rather than less, effective until solid mitigation strategies are attached.
- Tabular-Iceberg 5y ago
  > Not only do you need 1 (or more) BO or Senior BO PINs to verify the send That doesn't sound impressive at all by modern standards. At the very least they should have some kind of challenge-response scheme.
  - atdrummond 5y ago
    That would be easily implementable in a bank's SWIFT gpi software as that system gains traction. Probably doesn't add any value in the current system as the recipient as no way to confirm the challenge-response scheme was actually completed as would be implied (beyond, perhaps, coordination between sending and receiving institutions outside SWIFT proper). Although I could be simply not sufficiently creative enough. The bigger point I should have made is that most send fraud doesn't actually occur on SWIFT and is conducted using falsified documents to give the impression of a correct send, typically to get funds released before the fraud is revealed. It relies much more on social engineering than any kind of actual systems hacking skill.
- BankThrowAwayRU 5y ago
  Plus: There are some additional hardware/special componentes one has to use to connect to SWIFT, those boxes arrive pre-configured at your datacenter.
  - ithkuil 5y ago

afiori 5y ago

I always thought that swift main feature was sorta like a DNS for banks. An hypothetical SWIFT consortium would assign unique short names to banks so to provide a baseline for authentication and identification. This only based on the swift codes you have to add sometimes next to the IBAN.

atdrummond 5y ago
That would make sense in the context of payments like SEPA, etc. where a unique code helps limit mistaken transactions - however, that doesn't mean SWIFT itself is actually being used beyond the identifying codes banks use on the system. Where a SWIFT MT103 would come in is typically (but not always!) much larger transactions, such as moving $100m from a corporate account in one country to another.

est 5y ago

Related https://news.ycombinator.com/item?id=24103753 https://news.ycombinator.com/item?id=24103753

atdrummond 5y ago
Decades after a lot of the features in the new system should have existed in the US but I'm not going to look a gift horse in the mouth. Thanks for linking!

notahacker 5y ago

Heard a finance guy making this argument on radio news. His point was that it was essentially a telecommunication system, which could be replaced by telex or or other messaging service as a less efficient way of getting payments through, or at least important, large payments with cooperating banks and clearing houses. It ruining the coordination of day to day payments seems to have had the desired effect on the Russian economy though.

alangibson 5y ago
There have already been a lot of new rules put in place blocking transactions with Russian banks, which I guess is meant to take care of the "cooperating banks and clearing houses"
vishnugupta 5y ago
> essentially a telecommunication system Indeed, as implied by the name. “ Society for Worldwide Interbank Financial Telecommunication”
m12k 5y ago
At the end of the day, the communication system was being used to make promises, based on an assumption that all the institutions involved in the transfer had the incentive and means to keep their promises. The latter is also being drastically undermined at the moment, making the emergence of an alternative ad-hoc "IOU" system less likely.
Mindwipe 5y ago
Yes, though the closure of dollar clearance services by US and UK banks also stopped the large important payments, at least via the West. There will still be some facility to do it via China, but China's largest banks are also baulking (mostly because of the rapidly imploding value of the Ruble meaning they don't trust Russian banks to actually send the requisite funds than any great moral imperative I expect by the result is the same), and any Chinese services still willing to co-operate are going to extract a very, very hefty tithe from the Russians to enable it.
- 5y ago

miraculixx 5y ago

How does SWIFT play with ISO20022, is that the same thing but different message format? Also I get it that SWIFT filled a need in the olden days, but with internet+messaging systems in general now available ww why don't banks use something more modern and less expensive? I am not hinting at blockchain. Eg they could use sth like email, telegram, some private incarnation of that, to send their MTx messages, or whatever.

atdrummond 5y ago
Let me answer your second question - the recent implementation of SWIFT gpi (which is not being widely used by most Russian institutions so not relevant to the sanctions talk) is designed to increase the power of the SWIFT system, better automate payments and ease interaction between SWIFT and clearing houses/payment systems. So in that sense it would be far better than coordinating over a non-payments specific communication method. Regarding your first question - ISO20022 currently requires a parser to convert ISO20022 information into a MT message. This is automated in SWIFT gpi and compatible softwares.
rvz 5y ago
> Also I get it that SWIFT filled a need in the olden days, but with internet+messaging systems in general now available ww why don't banks use something more modern and less expensive? I am not hinting at blockchain. Well, I won't be surprised to see blockchains like XRPL, Stellar and Algorand to be part of the ISO 20022 standard [0] [0] https://finance.yahoo.com/news/iso-20022-cryptos-5-compliant-194204661.html https://finance.yahoo.com/news/iso-20022-cryptos-5-compliant...
- elric 5y ago
  Given that ISO20022 (MX) contains thousands of message types already, it certainly wouldn't be surprising to see a few more appear. In addition to that, SWIFT has something called MyStandards, which basically enables financial institutions to create/share/use their own message formats. Insert XKCD-927.
gruturo 5y ago
> How does SWIFT play with ISO20022, is that the same thing but different message format? The "legacy" SWIFT standard , called MT, was (retroactively) made into an ISO standard itself - ISO15022. Currently it is expected to coexist with ISO20022 on the same SWIFT network for 5 years, no idea which % of traffic is MT and which is ISO20022 though. So anyway - The SWIFT network can carry either traffic. As to why the SWIFT is not replaced.... it's not _that_ expensive, if you're a bank, and there is a huge network effect: If all your friends (other banks) are on network X, you really want to be there too, even if you maybe don't like too much how it's run and its cost. Additionally, it provides a lot of convenience which would be really painful to reimplement - and it would be massively antieconomic to implement it unless you can spread the cost over as many participants as possible (so you're basically trying to create another SWIFT - and there are already plenty of alternatives, though none with the reach and trust SWIFT offers). Said convenience is, for example, delivery confirmations, ability to replay any message up to 2 months ago, guarantee of every participant (bank)'s identity, non-repudiation. Oh and extreme resilience, which doesn't hurt. But this misses the main value proposition, which I perceive as the trust in the institution: they've been doing exactly this job for longer than I've been alive, they're a neutral operator, simply carrying everybody's traffic and being truthful about what passes through their pipes. If you send a message through SWIFT, you won't be able to deny that, and the banking community will consider you committed to what you wrote. If you denied that you did, SWIFT would be able to replay the message (even without your consent, if coerced by authorities). And they will not agree to "lose" a message you regret sending - their entire value to the banking community would go to 0 in a moment. Finally, they're a cooperative - participating banks actually own a stake, and profits just get redistributed (more or less), so it's not like they are sucking an inordinate amount of money away from the banking system and keeping it to themselves.

alangibson 5y ago

> When it is time for the banks to actually move the funds (which often times occurs significantly after the funds are made available to the client in question) Interesting. That makes SWIFT sound like a sort of digital Hawala system.

vmception 5y ago
There are many more analogs to hawala, not specific to SWIFT, as many banks and financial institutions have accounts at other major financial institutions in a variety of countries, upon transfer by one of their clients, the sub-financial institution decreases their balance at the host institution by giving the host institution the money (or reducing a line of credit), and at the receiving host bank they simply increase the sub-institution's balance (or increase of a line of credit). Final settlement honestly may never occur.
- Kinrany 5y ago
  Cryptocurrency projects should be cloning these interbank exchange mechanisms, not making a single global ledger.
  - vmception 5y ago
    This is what many banks and “enterprise” think blockchain will do for them, yes. There are many solutions and some likely in play. There are some memes about that too. Convoluted arrows between a bunch of banks, next to one arrow between two peers.
  - immibis 5y ago
    That would be called Layer 2. I wonder when cryptocurrency will evolve a SWIFT.
    - Kinrany 5y ago
      It should be layer 0, not layer 2. Full coordination is not a good default.

einpoklum 5y ago

1. Well, doesn't this make SWIFT sanctions the less important part, relative to getting "clearing houses" to ban transactions from a certain party? 2. With SWIFT in place, why do banks even need clearing houses? Is that merely to save the need for bilateral verifications that transfers have been registered? 3. At the bottom line, the "transfer" is just an agreement to decrease a fixed-with decimal value on one side and increase it on the other... we're not talking about physical movement of paper or bullion, right? 4. It's still a problem that SWIFT lets the EU (or EU+US) turn unilateral sanctions into global sanctions.

atdrummond 5y ago
1. Yes but for said clearing house transactions to occur you would need to get counterparty institutions to agree to another communication method for coordinating purposes. The loss of the already agreed upon oracle is problematic. 2. A number of reasons but mainly to do with how funds interact with central banks and their capital requirements. Your later point that funds don't PHYSICALLY move means that it's less about each bank recording the appropriate addition and subtraction (that's easy enough) and more about how it is recorded, so transactions can be properly audited and transfers that would cause systemic or institutional issues can be curtailed as much as possible. There's also the issue of banks being able to more easily manipulate books using off ledger funds if Central Banks/payments systems weren't involved but that's again a systemic risk issue and not really relevant to our discussion. 3. Correct. 4. I agree but I don't think that's going to improve any time soon and I've yet to see a system that doesn't trade one point of centralized failure for another. I do hope cryptocurrencies can solve the distributed exchange issue because that's actually one very attractive (potential) feature of crypto for me, as someone who has seen first hand how these systems can be abused to target people - deservedly or not.

justinc8687 5y ago

If SWIFT is the messaging system and STEP2 is the clearing house, why is SWIFT-only versus SWIFT-and-STEP2 being sanctioned?

atdrummond 5y ago
Really no need to sanction STEP2 or other payment networks at this point as central banks/intermediary or recipient banks themselves have also been instructed as well (either formally or informally) not to engage with Russian institutions. They're not processing payments with the vast majority of the global financial infrastructure at this point.
pomdapi 5y ago
You didn't actually think they would really hurt the interests of their true patrons - transnational corporations, big industry, high finance ? This SWIFT ban only really affects the usual IBAN to IBAN transfer of the plebs and SMB's. Large payment processing and gross settlement transfers will just change to accomodating intermediary banks in China within a couple days, and that'll be that. Further fund movement will be done through the Russian-Chinese CIPS. Never forget EU commissars are not elected officials, they are named by an totally informal group called "Eurogroup", to which supposedly only 15 EU presidents participate. However, as it's not formal, it's completely opaque how they get chosen.
- kasey_junk 5y ago
  CIPS is three orders of magnitude smaller than SWIFT. Even for large institutions that reduced network size introduces tons of overhead & risk to their transfers. You don’t just pivot on a dime with bank corridors. But the other sanctions are an important part of the mix as well. No matter how you receive your payment instructions if your local government has banned the money movement it won’t go through (modulo money laundering & dodgy banks). This is we’re Chinas lack of sanctions might help. But what do you do as a large organization with the money in a Chinese bank now? You still can’t pay for EU goods with it. The sanction mesh very effectively makes “high finance” for Russian corporations and international corps doing business there slower and more risky. Will it touch the trillion dollars Putin and gang have looted & hidden? Probably not but what could? If you want to complain about something the carve out for energy financing is the big one. It shows that the EU wasn’t really ready to sacrifice to hurt Russia. Which is understandable in a real politik way.

zoobab 5y ago

"I feel like the media has done a very poor job explaining what SWIFT is and how exactly it works." Could it be replaced by Email+GPG? Or ZeroMQ with Curve crypto?

atdrummond 5y ago
As long as every institution that's required to make the payment happen buys in (and it is compliant with whatever regulations are involved for sender, recipient and intermediate institutions) one does not have to use SWIFT explicitly. That said, gruturo above (in our discussion about the associated ISO standards) makes a good case for why most banks default to SWIFT.

supernova87a 5y ago

I have always wondered, what combination of manual vs. automatic processes are happening when one makes a bank wire (actual gross settlement / instant wire transfers, not ACH for example in the US)? Because whenever I have done wires, in addition to the bank/IBAN/account numbers, there are all these manual fields like "for further credit to", "for benefit of", etc. that are clearly having to be interpreted by someone. And very often errors come up and the funds are held or in limbo on one end or another. Does anyone have a good explanation of what happens both on the initiating bank side and receiving bank side when a wire is done? Does someone have to manually review an outgoing wire to allow it to proceed? Does the receiving bank have someone to review it inbound and route it correctly? I imagine that this is why it still costs $25-40 to handle them.

atdrummond 5y ago
Are you talking domestic US wires or international wires?
- supernova87a 5y ago
  Oh, not too sure how different they are, but definitely even with domestic wires, many custom/human-review-required fields seem to exist. With international wires, I am sure that even more complications exist with which currency it's to be settled in, etc. And I have no idea/am curious whether the information about ownership of the account is transmitted with the transaction, to track whether the same person owns both accounts, etc?
  - atdrummond 5y ago
    Domestic US wires are (with the exception of flagged or manual telephone Fedwire placements) automatic through the Fedwire system, which is a RTGS (real time gross settlement) system. Most Euro denominated payments (not sure I'd call them wires anymore) are also automatic, cheap and easy thanks to SEPA's wide proliferation. Most of the time the extra info not actually required for automatic processing is in case the payment doesn't go through as intended, as well as for compliance reasons. As Elric notes above, international payments (outside a common currency zone with a system like Fedwire/SEPA) is where things get tricky/manual processing often comes into play.

emilsedgh 5y ago

What you are implying here is that SWIFT ban is not that big of a deal as there are alternatives. You are probably more educated on this, but I'm an Iranian and Iran was the only country so far that was banned from SWIFT. And it was a very very big deal. The banks could not deal with anywhere in the world and it become very difficult to send or receive money. The EU tried to setup an alternative to SWIFT [0] so they could work with Iran but it didn't really work out. [0] https://en.wikipedia.org/wiki/Instrument_in_Support_of_Trade_Exchanges https://en.wikipedia.org/wiki/Instrument_in_Support_of_Trade...

atdrummond 5y ago
A big complicating factor there was also the concomitant sanctions by the US and some of their allies. I don't want to imply that I don't think banning SWIFT wasn't important or impactful in either of these cases (it was) - I just wanted to make clear what precisely was happening, as I don't think most reporting was very clear. I'm sorry if it came off otherwise; I appreciate you dropping this comment as I don't want anyone getting the impression that I'm flippantly suggesting that Russia could easily go on with business as usual through alternative means.
- traceroute66 5y ago
  > I don't want anyone getting the impression that I'm flippantly suggesting that Russia could easily go on with business as usual through alternative means. One would obviously hope that the cumulative effects of the various sanctions make it difficult or impossible for Russia to continue with business as usual. However, part of me worries about the abilities of the oligarch network. I mean, if you look at the various flight tracking websites. Sure a lot of the commercial aviation traffic has been killed off, but there are still large numbers of private jets floating around in and out of Moscow. How is this possible ? Because the sanctions are only against Russian registered aircraft, and most of those private jets are registered elsewhere and/or are hidden behind charter companies registered elsewhere. Quite possibly this extends to finance ? I imagine there is potential to find alternative financing routes. It wouldn't be able to last forever, for sure, but might last longer than the West anticipates.

simonh 5y ago

I get the impression it's not so much that SWIFT itself is critical, it's that so many other banking services and activities are co-ordinated using SWIFT, and being on SWIFT is an indicator of reliability and that you or your organisation is an insider.

SantalBlush 5y ago
That would make sense. It's not the tech that's important here, but the network.
dahdum 5y ago
I’d also guess a lot of regulation, policy, insurance, and perhaps law is specific to SWIFT such that you can’t just swap over to another system or simply telephone the transactions.

Vaderv 5y ago

m4lvin 5y ago

Recommended talk by Mark van Cuijk from 2016: A world without blockchain - How (inter)national money transfers works https://media.ccc.de/v/33c3-8315-a_world_without_blockchain https://media.ccc.de/v/33c3-8315-a_world_without_blockchain

cleancoder0 5y ago

I contacted a lot of my Russian colleagues and none are affected by this SWIFT ban and are still being paid by EU companies. They receive their funds from private banks that are not under these sanctions. I guess they might be affected once Russia starts borrowing the cash from citizens to fund the war.

peterisza 5y ago
Why borrow cash when they can just print more money? Same effect.
- Mindwipe 5y ago
  "Borrowing cash" is slightly less likely to lead to hyperinflation in the short term. "Slightly" and "short term" doing some heavy lifting in that sentence though. But "slightly" might be useful to the Russian government given the game plan seems to be to try and complete the invasion before the Russian people mass revolt against their own government as the price of bread goes up 10,000%.
vp4nkov 5y ago
This has already started to some degree, starting from today, all russian citizens are banned from sending money over to their overseas accounts, all tax resident companies (and if you are a russian citizen, the only legal way to work for a foreign emplyer from russia is via creating a legal entity which is akin to a 1-man company) must sell 80% of received foreign currencies (this applies to money that was received starting from Jan 1st).
- immibis 5y ago
  This would be because Russia no longer has that foreign currency, since it was frozen. If 60% of a totalitarian dictatorship's foreign currency is frozen, the dictator is going to make sure that all the foreign currency which the dictatorship does have access to belongs to him.
immibis 5y ago

belorn 5y ago

I would be interesting to hear an further explanation in how this distinction is important. Money in banks is in the end just information stored in ledges about who owns who money. If a transaction occur within a bank it just numbers of one account getting an relative change to an other account. If an transaction occur between banks, the banks has a relation and the bank own ledger get changed, in addition to the individual accounts. With a clearing house you add a middle man that takes up part of the risk if either bank would fail in their obligation to honor the ledger. The actually movement of physical funds and valuables is quite rare and don't general occur from single transactions. If you can't transfer the information then the system of transferring information stored in ledges stop working. One can go out-of-band, but that assumes the other party is also willing to do so, and that there is no law/agreement against by-passing sanctions.

nopcode 5y ago
> how this distinction is important It's not. At least not in the short term.
0xcoffee 5y ago
So how does it work when there are multiple of these systems (CIPS). Is double spending possible?
- kayamon 5y ago
  Of course double spending is possible -- the entire world economy currently relies on it.
- hashimotonomora 5y ago
  Essentially trust. If your bank does not have relations with a foreign bank in a faraway country, both can use an intermediary bank that both trust and do have relations with.
immibis 5y ago
The distinction is which messages we are talking about. When I (a US bank) send a message to the US Federal Reserve to please transfer $1,000,000 to another US bank, and the US Federal Reserve updates their records accordingly, that is an actual transfer of money. When I send a message to the other US bank saying "Hey, I sent you $1,000,000. Of that, $10,000 is for John Doe, $10,000 for Jane Smith, $5,000 for Alice, $5,000 for Bob, ......" that's SWIFT.

known 5y ago

throw0101a 5y ago

I've heard SWIFT called "the WhatsApp of the banking world". It allows for efficient communications between parties. You can use other forms of communication to arrange for the movement of money, but they're more of a hassle.

immibis 5y ago
And many institutions do not support them because why would they - everyone is on SWIFT except for murderous dictatorships.

300bps 5y ago

SWIFT is: 50% payment messages 43% securities messages The rest are a mix with a lot being treasury transactions. I work on the investments side and use SWIFT for security transaction settlements. For example, when we trade a security (stock, bond, derivative, etc) we send an ISO 15022 formatted message over SWIFT to the custodian telling them to expect delivery (for a buy) or to deliver (for a sell) a particular security on the settlement date. If we don’t give them this message then their settlement group will DK any securities being sent to them that don’t match a notification. (DK = Don’t Know) which means the trade will fail and you’ll have some really pissed off people that will want you to make them whole if they lost money as a result. SWIFT is used for lots and lots of things, not just payments.

smokey_circles 5y ago

> I feel like the media has done a very poor job explaining what SWIFT is and how exactly it works. Strongly disagree. The media are for laypeople. You wouldn't appreciate complex breakdowns about how proteins in SARS-CoV-2 work, too much depth. I also disagree with the implication that a SWIFT ban is meaningless. SWIFT is a notification of intent to settle. Modern banking (read: the electronic age) moves MUCH faster than money does. You can see this in ForEx. By the time the money arrives, it's worth something else. This is risk exposure and is partly why most banks like to backout into their native currency. Not always the case, but still a useful line. Banks exist to provide 2 major services. 1: Trust. Doesn't matter what so-and-so claims, their bank are the ultimate gate keepers. If the bank says it's paid, that's a legally guaranteed promise. 2: Liquidity: You actually need to have money to be able to send it. Banks will let you use "their" money while your money is still actually arriving (settlement). As you rightly pointed out: Banks make this money available to you before it actually arrives. The only way they can do that is because of #1: They trust the settlement will happen. If there's no trust, there's no releasing of funds. If there's no SWIFT message, there's no incoming settlement. TARGET2 can be used without SWIFT, but good luck finding a lot of banks that will handle CIPS in place of SWIFT. But by FLATLY removing Russia from SWIFT, they have successfully killed transactions in BOTH directions. Money can't come in, money can't go out. There are arguments to be made about the efficacy of these decisions (nobody believes the vast majority of Russians voted for Putin, right? Cuz they certainly did not so pressuring them to once again not vote for Putin seems pretty stupid, but the west can't do literally nothing. Difficult problem) but this was an effective move to further crush the ruble.

gspetr 5y ago
Let me address the last paragraph of your comment. Vast? No. Majority? Most likely. You do not need to take my word for it, you can look for 1st hand accounts from people who were P. election observers from the opposition. I'll at least agree that nobody believes that the party in power had the majority votes nationwide in the 2 most recent national elections. As for the current events, most recent official (official being the key word here) nationwide polling shows 68% support for the "special war operation", which I do not believe for a second, considering how many have either relatives, friends, or at the very least business contacts across the border.

jesprenj 5y ago

And what exactly is "money" and how is it "transfered" via messages?

TrapLord_Rhodo 5y ago

Time for russia to stop playing by the wests rules. This is a watershed moment for crypto and will be pointed to as a historical example of when the US started to lose influence over the world stage. what russia is doing is terrible and should be stopped. But this incident is going to show that the US and the EU can no longer control the worlds trade. technology has evolved past these financial systems mared by corruption, false data and glacially slow payment transfers. Who needs swift, clearing houses and forex exchanges when you have Terra? Side tangent, the first nationstate to adopt crypto will have the biggest benefits.

Rooster61 5y ago
Yes, because the administrations of authoritarian warmongers absolutely LOVE difficult to trace currencies. I'm sure Putin himself is setting up a Coinbase account as we speak...
- TrapLord_Rhodo 5y ago
  Yes actually. China is spending alot of time rolling out its digital currency among it's populace. What is difficult to trace about it? It's literally a public ledger...? If you institute a state controlled wallet, not only can you control flow, color of money, etc. but you can perfectly see the data in real time which is a tremendous improvement over the current infrastrucure. You can actually answer questions like, how much does the average citizen spend a month on XyZ with a simple query among your wallet. > I'm sure Putin himself is setting up a Coinbase account as we speak... You are cut off from swift and other internationally accepted banking measures. How do you get foreign currency into your nation and how do you transfer payments internationally? Crypto.
jasongill 5y ago
yes, let's use the attempted destruction of a sovereign nation by a neighboring dictator as an opportunity to promote your favorite cryptocurrency
- TrapLord_Rhodo 5y ago

miki123211 5y ago

Where can you learn more about this stuff? For example, I've always been curious how Swift is routed at the lowest layer. Does it go through the normal internet? The telecommunications infrastructure? Custom fiber-optic cables connecting almost every bank in the world to some kind of central office?

nopcode 5y ago
It's just VPN and MPLS connecting banks with SWIFT.
- sam_lowry_ 5y ago
  Rumor is, they still keep ISDN gateways operational as well ;-)
rowls66 5y ago
I believe that SWIFT is now a private IP based network. That means it runs on dedicated comm channels, but uses the internet's IP.

MrYellowP 5y ago

> I feel like the media has done a very poor job explaining what SWIFT is The media, in general, does a very poor job explaining anything and everything, but due to the fact that the vast majority of people have no clue whatsoever, nobody ever really notices. That's why it's so easy for mass media to manipulate people. Nobody ever really notices that either. Except for people who actually know, of course. Like yourself. But then you, OP, you, turn the page, keep on reading and believe everything else that's written: https://effectiviology.com/knolls-law/#:~:text=Knoll%27s%20law%20of%20media%20accuracy%20is%20the%20adage%20that%20%E2%80%9Ceverything,happen%20to%20have%20firsthand%20knowledge%E2%80%9D https://effectiviology.com/knolls-law/#:~:text=Knoll%27s%20l....

nopcode 5y ago

For those wondering why there aren't any SWIFT employees chiming in: - They barely have internet access at their Office, it's a big hassle and it's all recorded. - Very strong security culture, both digital and physical. - The company actively monitors the internet for any mentions of SWIFT. Lot's of stories of people being threatened with lawsuits for breaking NDA. Even if they detail the technologies used on LinkedIn for example.

IYasha 5y ago
Lots of Security by obscurity, as usual. )
- fknorangesite 5y ago
  Obscurity is of course not sufficient on its own, but it still an additional layer.

than3 5y ago

This posts comments is full of either people that don't have a clue or bots serving some agenda; a good solid 95%+ here is just noise. Why even bother reading hacker news when its like this, or even commenting with any real substance. Read some history (from multiple sources), educate yourselves, and stop feeding the noise. If you do that, you'll learn some useful things like how detente works, geopolitics, why the cuban missile crisis was such a big deal, etc. Those lessons directly inform events today.

_448 5y ago

Please could someone explain me (ELI5) how this all works with a very practical example for a layperson to understand? Say, I want to transfer £500 from the UK to India. How will this transfer work in detail behind the scene?