Digest Finance
 

The Economic Fallout of Exclusion of the Islamic Republic of Iran from the SWIFT International Payment Network

Vol. 23, Iss. 3, SEPTEMBER 2018

PDF  Article PDF Version

Received: 23 January 2018

Received in revised form: 7 February 2018

Accepted: 22 February 2018

Available online: 28 September 2018

Subject Heading: RISK, ANALYSIS AND EVALUATION

JEL Classification: F40, F51, G21, P45

Pages: 289-296

https://doi.org/10.24891/df.23.3.289

Omarov K.A. Diplomatic Academy of Ministry of Foreign Affairs of Russian Federation, Moscow, Russian Federation
omarov.k.a@yandex.ru

https://orcid.org/0000-0002-4984-367X

Importance Sanctions, which the USA and EU imposed on Iran in 2012, shattered the economic situation in the Islamic Republic of Iran. Restrictions affected not only the Central Bank of the Islamic Republic of Iran and dozens of national commercial banks but also the SWIFT network as the most crucial mechanism of global financial transactions. The article reviews the economic fallout of Iran's disconnection from the SWIFT global payment network.
Objectives The research seeks an alternative method for cross-bank settlements, which would make Iran independent from the SWIFT network.
Methods The research relies upon statistical, comparative and logic methods.
Results The sanctions against the Islamic Republic of Iran undermines GDP and export of goods, fueled the inflation nationwide and devaluation of the national currency. They also brought more than a half of the Iranian enterprises on the brink of crisis.
Conclusions and Relevance If the Central Bank of Russia modernizes and promotes its financial messaging system, it may turn up a competitive product in the global market of payment processing systems. The combination of the blockchain technology and the Russian developments may attract foreign financial institutions to seek cooperation in banking, lure new customers worldwide and in those environments, which are exposed to the risk of being disconnected from the widely spread and monopolistic payment network.

Keywords: sanctions, banking system, payment system, blockchain

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