Jamie Dimon: SWIFT Sanctions May Bring Unintended Consequences

Picture of Jamie Dimon

Zero Hedge: Just hours after western leaders slapped Russia with unprecedented sanctions the likes of which the world has never seen, including a targeted SWIFT expulsion of key Russia banks as well as an asset and transaction freeze of the Russia central bank, JPMorgan CEO Jamie Dimon explained not only why this harsh escalation may be futile but why it could backfire spectacularly in the years to come.

The CEO of the world’s largest bank said that “there are a lot of workarounds for SWIFT, so there are different tools we use for different reasons.

: A man using a mobile phone passes the logo of global secure financial messaging services cooperative SWIFT at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017 - Sputnik International, 1920, 27.02.2022

While SWIFT sanctions mean companies can’t use the messaging system to do business with the Russian entities affected, they can still do business with them, Dimon said. In fact it’s as simple as sending an email with payment instructions, because what SWIFT really is, is a messaging remnant from a bygone era, before emails, even before the fax machine.

Dimon also said that disconnecting Russian banks from the SWIFT messaging system may bring “unintended consequences” that include third parties finding ways around the penalty. Read More …

Opinion: Hmmm, and what could the unintended consequences be? Did Russia, China and Iran have this all planned?

From the article: “unlike his brutally wrong bitcoin predictions, Dimon will be right about SWIFT.  In a rhetorical Q&A about the consequences of Russian SWIFT expulsions, Goldman asked whether there is concern this would undermine the reserve currency status of the Dollar (and Euro) and responded:

The US is in a unique position of having the global reserve currency, which underpins a substantial portion of international trade and foreign exchange transactions, while also granting the Executive fairly broad discretion through IEEPA to restrict US capital flows by invoking security concerns. The widespread use of the Dollar in international markets, for instance, allows the United States to affect foreign policy goals through financial market channels (hard power) and may also confer certain reputational benefits (soft power). However, overuse of these powers could compel other actors to try to replace Dollar transactions, as Russia already did to some extent following earlier sanctions.

From Bloomberg: Aside from the immediate collateral damage, excluding Russian banks from SWIFT risks longer-term consequences for international finance. As with any network (think Facebook), the value of SWIFT depends on the number of banks that use it. To that end, the cooperative seeks to encourage the broadest possible participation by maintaining neutrality. Only Iran, which was already isolated financially, has ever been cut off. The example of Russia could prompt others — such as China — to turn to alternatives, fragmenting the payments system and potentially even undermining the U.S. dollar’s dominance as the global reserve currency. One could even imagine a future in which rival nations turned similar financial weapons against the U.S.

The Russia/China alliance we have been writing about since January 1 is sounding alarm bells all over the world. It is no coincidence that both Russia and China have programable central bank digital currencies and if Jamie Dimon is right about ‘third parties’ finding ways around the dollar, Xi Jinping and Vladimir Putin are holding the key to a new economic axis of evil.

Questions abound:

What nations will stand with Joe Biden and the United States dollar as world reserve currency?

What will happen if more ‘third party’ nations join with Russia and China in avoiding the dollar in international transactions?

Where is the United States in prophecy?