Plumbing

Some thoughts after reading an article in The Economist last week, about the pros and cons of using SWIFT in enforcing international sanctions (http://www.economist.com/news/international/21633830-blocking-rogue-states-access-worlds-financial-messaging-network-potent-measure).  An interesting article, basically highlighting the dangers in ‘cutting off’ whole states or nations from international payment infrastructures, under political pressure.

The article describes that polital pressure is exactly that: political. And what is politically correct for the US (isolating Russia for its intervention in the Ukraine) is not for others. The other way around: what’s politically correct for China (excluding Taiwan from SWIFT access) would not be for other countries. Targeting individual banks or financial institutions which have committed crimes is of course different, that’s directly related to terrorism prevention. Although even in that field there are differences of opinion, to just name 1 example: what is terrorism to Israel is a freedomfight for Hamas….

It points out as well that shutting out nations by using SWIFT in that way could lead to the creation of a rival. What the article doesn’t touch on is the fact a rival already exists…… it’s called bitcoin.

If bitcoin is here to stay, is left to be seen, but fact is that it has found a place in the international payments industry. Bitcoin is still used as an instrument of speculation by many, but focusing on that alone is ignoring the fact that actual transactions take place in bitcoin. Half of which are linked to China. No doubt that there will be legitimate transactions in bitcoin but it would have been worthwhile to understand more about the nature, beneficiaries etc. of (certain) bitcoin transactions.

Unfortunately, unlike SWIFT which can give legislators and enforcement agencies access to transaction details, bitcoin cannot. Creating that access would greatly help the standing and acceptability of bitcoin as a transaction currency.

My view: infrastructure is neutral and should stay that way. Don’t shut down the highway for all white cars just because OJ Simpson drove one…