Project Overview

In this project, you will step into the shoes of a consultant to analyse the impact of the SWIFT ban on the Russian market. SWIFT is a cross$-$border transactions communication system used by countries worldwide.

Assessment Criteria

Skill Weightage Components of a Satisfactory Answer

Analyse the impact of SWIFT as the communication platform used for cross$-$border transactions worldwide $5$ Marks The reasoning on SWIFT's dominance should be relevant to the facts stated in the case study

Analyse the impact on the cross$-$border transaction platform market by the rising alternatives to SWIFT $15$ Marks The different analyses suggested should be relevant to each of the rising global cross$-$border transaction platforms

Analyse the challenges the Indian transaction system may face while competing with SWIFT $10$ Marks The challenges suggested for the Indian system should be relevant to the cross$-$border transaction system market

Analyse the impact of alternate cross$-$border transaction platforms on the U$.$S dollar $10$ Marks The effect on U$.$S$.$ dollar stated should be relevant to the consequences of alternate cross$-$border transaction platforms implemented

Business Problem

Problem Context

The European Union, the US$,$ and numerous other Western countries have decided to forbid some Russian institutions from using the US dollar$-$based SWIFT in retaliation to the invasion of Ukraine. The majority of transactions between Russian entities and Russian banks are prohibited by these sanctions, as are the use of SWIFT $($the Society for Worldwide Interbank Financial Telecommunications$)$ to facilitate international payments and the freezing of treasury securities and bank deposits held by the Central Bank of Russia abroad.

The decision by the United States, United Kingdom, and European Union to deny some Russian institutions access to SWIFT presents a chance for other competitors, such as China, to promote their payment systems in international trade and finance, weakening the global influence of the dollar. To circumvent the restrictions, the Cross$-$Border Interbank Payment System $($CIPS$)$ could cooperate with Russia's SPFS$,$ which functions similarly to SWIFT.

Focus Areas of the Case Study

Defining the functioning of cross$-$border transactions platforms like SWIFT and CHIPS

Impact of the ban on Russian trade and economy to use SWIFT

Rising competition in cross$-$border transactions and its implications for global business and the U$.$S$.$ dollar

The Case Study for this project has been attached below for reference

Case Context

The European Union, the US$,$ and numerous other Western countries have decided to forbid

some Russian institutions from using the US dollar$-$based SWIFT in retaliation for the invasion

of Ukraine. The majority of transactions between Russian entities and Russian banks are

prohibited by these sanctions, as are the use of SWIFT $($the Society for Worldwide Interbank

Financial Telecommunications$)$ to facilitate international payments and the freezing of

treasury securities and bank deposits held by the Central Bank of Russia abroad.

The decision by the United States, United Kingdom, and European Union to deny some

Russian institutions access to SWIFT presents a chance for other competitors, such as China,

to promote their payment systems in international trade and finance, weakening the global

influence of the dollar. To circumvent the restrictions, the Cross$-$Border Interbank Payment

System $($CIPS$)$ could cooperate with Russia's SPFS$,$ which functions similarly to SWIFT.

What are SWIFT and CHIPS?

The Society for Worldwide Interbank Financial Telecommunication is a system for sending

messages between banks throughout the world. SWIFT, which has its headquarters in

Belgium and is governed by the central banks of a group of ten nations, was founded in $1973$

and currently links roughly $11,000$ financial institutions worldwide. It is not a payment system

per se but rather a safe channel for banks to share instructions for international payments.

Currently, $200$ nations and territories use SWIFT.

The Clearing House Interbank Payments System, known as CHIPS, is an exclusive group of

financial institutions. Its $43$ members use a pre$-$funded account at the Federal Reserve to

settle $$1\mathrm{.}8$ trillion in claims per day. Since they all have offices in the United States and are

governed by American law, it is simpler for law enforcement to apprehend and prosecute

them. The over $$13$ billion in fines that CHIPS members like BNP Paribas SA$,$ Standard

Chartered Plc$,$ and others have paid over nearly two decades of Iran$-$related sanction

violations are not worth millions in fees.

Since $2010,$ SWIFT, the primary means of cross$-$border communication for international

financial institutions, has steadily evolved into a tool used by Western governments to inflict

sanctions on other nations. The EU's $2012$ sanctions against Iran over its nuclear programme,