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SWIFT banking system: What Is it and How Does it Work?

S.W.I.F.T. – The Society for Worldwide Interbank Financial Telecommunication.


SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. It is a global network that enables financial institutions to send and receive information about financial transactions in a secure and standardized format.

SWIFT operates as a cooperative society owned by its member financial institutions. These institutions use SWIFT to securely exchange electronic messages and financial transaction information, such as money transfer instructions.

SWIFT uses a standardized system of codes, called BIC (Bank Identifier Code), to identify and route financial transactions between institutions. Each financial institution that participates in the SWIFT network is assigned a unique BIC code. When a financial institution initiates a transaction, it uses the BIC code of the receiving institution to route the transaction to the correct destination.

The SWIFT system does not actually move money, it only facilitates the exchange of information about financial transactions between institutions. The actual transfer of funds takes place through correspondent banking relationships or other methods such as real-time gross settlement systems.

SWIFT is widely used in international banking and finance and has become a global standard for financial messaging. It enables financial institutions to conduct business quickly and securely, reducing the need for paper-based correspondence and minimizing the risk of errors and fraud.

The SWIFT system is controlled by the SWIFT organization, which is a cooperative society owned by its member financial institutions. SWIFT is governed by a Board of Directors that is elected by its member institutions. The Board sets the strategic direction of the organization and oversees the management of its operations.


SWIFT also has a management team that is responsible for the day-to-day management of the organization. The management team is led by a Chief Executive Officer (CEO) who is appointed by the Board.


The management team is responsible for implementing the strategic direction set by the Board and managing the various departments and functions of the organization.

Each SWIFT member has the right to vote on important issues that may affect the organization, such as changes to the bylaws, the budget, and the appointment of the Board of Directors. The voting power of each member is proportional to the size and importance of their business on the SWIFT network.

SWIFT is also subject to regulatory oversight by the central banks of the countries in which it operates. These regulators ensure that SWIFT adheres to relevant laws and regulations and that it maintains the integrity and stability of the financial system.

Summing up, the connection to the SWIFT system plays a big role for financial institutions. Despite the criticism, it remains a functional tool to work around the world with almost no restrictions.

Financial institutions connected to SWIFT have wider opportunities than competitors. They attract more clients because they can send payments all over the world and in almost all scopes and currencies.


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