Thread by @punk6529

1/ SWIFT decision taken and I am going to take a "predicting the nuances" victory lap on this one that the media mostly did not get in advance.

Sanctioned banks disconnected, other Russian banks left on the system to allow for oil/gas payments.

https://twitter.com/punk6529/status/1497550173597093894

2/ According to the Wall Street Journal, the main concerns were:

1) Allowing for oil/gas payments
2) Allowing for repayment of Russian debt
3) Discouraging use of alternative systems

3/ SWIFT disconnections are inconvenient but there are work arounds

4/ There is a background concern that this will push Russia and China to deepen their own messaging systems (this is obviously going to happen now)

5/ I think we can assume the SWIFT topic is basically done now.

You may not have expected that following 6529 will give you an advance heads-up on how financial system sanctions will play out, but here we are 😉

6/ The bigger issue, more serious are the sanctions against the Central Bank of Russia.

Russia has been reducing its dollar exposure but might have not moved enough exposure off the USD/EUR system.

This will hurt much more than SWIFT.

7/ It will also have second order effects, in that China is going to be re-evaluating its reserves position this morning.

I find it interesting that the US/EU are throwing all their financial tools at Ukraine.

It will be powerful in the short-term, but expensive long-term

8/ It will be expensive because all non US, non EU powers will start reducing reliance on the USD/EUR system over time.

So I dunno, maybe it is worth it to give up this tool in the future, but maybe it is not.

Difficult decisions, shades of grey decisions.