SWIFT - the Society for Worldwide Interbank Financial Telecommunication - is the core of the globalized financial world. It provides high-value cross-border transfers for members of over 11,000 financial institutions in more than 200 countries and territories. While SWIFT is based in Belgium, its board includes executives from US banks with US federal law allowing the administration to act against banks and regulators across the globe.

As the US administration continues to use currency as a weapon, imposing trade sanctions against countries like China, Iran and Russia, Europe has started to create a system for money transfers that will be separate from SWIFT but just as secure.

  • Germany's Foreign Minister recently said, "We are studying proposals for payment channels and systems, more independent from SWIFT, and for creating European monetary fund."
  • Russia's EU ambassador said that "The European Union plans to invite Russia and China to join a future alternative payment circumvent the US sanctions on Iran."
  • There was a joint statement issued by the remaining signatories to the Iran nuclear deal that promised to establish a 'special purpose vehicle' to facilitate payments related to Iran's exports.

The first round of US unilateral sanctions against Iran was directed at metals trading, coal, industrial software, and the auto sector. This round (implemented November 5) targets the oil and gas industry and its energy sector as well as the transactions with the Central Bank of Iran.

Sanctions are nothing new. Neither is the dominance of the US dollar in the global economy. But now, more and more countries are questioning if their best interests are being served by the current systems and they seem more ready to consider alternatives.

Will countries be able to find ways to sidestep US sanctions without sacrificing their position in SWIFT? How far will the US go to enforce secondary sanctions against countries that choose to go around their will? What will happen to the world oil market if Iran's supply is effectively taken off the market? Will more countries get serious about demonstrating their independence from the US? What will the creation of a 'European Monetary Fund' have on globalization? Will other countries follow Russia's lead on liquidating their holdings of US Treasuries?

We love keeping our eye on activity all over the world. Questioning motives. And researching opportunities. Curiosity keeps us asking questions and looking for opportunities to spot macro trends early. If you’re as curious about the world as we are and are looking for a partner to manage your assets, we’d love to hear from you.