"Tidbits From TNT" Sunday 6-5-2022

TNT:

Tishwash:  Lawmaker launches 'Love Rupiah Movement' on remote island

Jakarta (ANTARA) - Member of Commission XI of the House of Representatives (DPR) Mukhamad Misbakhun and Bank Indonesia (BI) have launched the "Love Rupiah Movement" on the remote island of Gili Ketapang, Probolinggo district, East Java.

"Rupiah, as a symbol of state sovereignty and a manifestation of our love for the homeland, must be maintained properly. In all parts of this country, all transactions use rupiah. That is the symbol of our sovereignty," Misbakhun said in a written statement received in Jakarta on Saturday.

The Currency Law mandates the use of rupiah for all transactions conducted on Indonesian territory, he noted.

Gili Ketapang is a small island off the northern coast of Probolinggo city. To reach the island, which is under the jurisdiction of the Sumberasih sub-district administration, Misbakhum and the chief of the BI Office in Malang, Samsun Hadi, used a patrol boat owned by the water and air police of the Probolinggo district police.

"Bank Indonesia is my work partner in my capacity as your representative at the House Commission XI," Misbakhum told residents of Gili Ketapang, who are mostly members of the Nahdlatul Ulama (NU) Islamic organization.

Meanwhile, Hadi said BI is a central bank that has been assigned to print and circulate rupiah.

"As Mr. Misbakhum has stated, rupiah is a symbol of state sovereignty," he added.

In addition, BI has also been tasked with controlling inflation, he said.

He then said he was thankful to God that inflation in Indonesia could be brought under control during the COVID-19 pandemic. link

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Tishwash:  How Swift became a tool for conflict

The Society for International Interbank Financial Communications, known for its acronym “SWIFT” in English, was established in 1973, and it does not undertake practically any transfers or exchanges of financial assets.

However, its messaging system, which was developed in the seventies of the last century for solutions instead of "Telex" devices, provides banks with the means to communicate quickly, securely, and at low cost.

This Belgium-based company is practically a cooperative of banks, and it underlines its neutral position.
Sources use SWIFT to send messages about money transfers between them, money transfers for customers, and orders to buy and sell assets.

More than 11,000 financial institutions in 200 countries use the SWIFT system, making it the backbone of the world's remittance system.

However, its leading role in the financial sector also means that the company has to deal with the authorities to prevent illegal financing operations, especially terrorist financing.

"Swift" has recently emerged at the center of the conflict between the West and Russia. Far from the battlefield in Ukraine, Western countries led by the United States of America adopt financial and economic embargo packages on Russia, and by excluding more Russian banks from the Swift banking system, Western countries are depriving these banks of The most prominent tools of the global remittance system.

The European Union countries agreed to exclude Russian banks from Swift, including the country's largest, Sberbank, as part of "war sanctions", in an effort to "paralyze the banking sector and the national currency."

According to the National Assembly ("Rosswift"), Russia is the second largest country within "Swift" in terms of the number of users after the United States, with about 300 financial institutions.
According to the association, these members constitute more than half of the country's financial institutions.

According to estimates, the volume of financial transactions linked to Russia through "SWIFT" amount to hundreds of billions of dollars annually.

In addition, Russia has its own financial infrastructure, including the "SBFS" system for bank transfers, and the "Mir" card payment system similar to the "Visa" and "MasterCard" systems.

exclude countries

In November 2019, the access of some Iranian banks to the “Swift” system was “suspended”, following the announcement by the United States to re-impose sanctions on Tehran and warnings from then-Treasury Secretary Steven Mnuchin that “Swift” may be subject to sanctions unless it adheres to what is required. set by Washington.

Iran had disconnected from the Swift system from 2012 with the imposition of US sanctions on it, until 2016 when the sanctions were lifted after the conclusion of the nuclear agreement between Tehran and the major powers.

Seven Russian banks were suspended in March.

Sberbank was not on the list of banks originally excluded with the aim of allowing EU countries to pay for Russian oil and gas supplies.

Gazprom Bank, the financial arm of the Russian energy giant Gazprom, remains in the system. The majority of EU payments for Russian gas and oil supplies pass through it.

In practice, the exclusion of Russian banks from the SWIFT system means that these banks cannot use the system to transfer or receive funds with foreign financial institutions in exchange for commercial transactions.

alternatives

Following the West's threats of isolation from Moscow over the annexation of Crimea in 2014, Russia established its own system, SBFS, to conduct cross-border transactions.

On December 15, 2021, following talks between Russian President Vladimir Putin and Chinese President Xi Jinping, the Kremlin announced plans to develop a joint financial messaging and clearing system with China. The goal of this system is to attract several international banks, that is, enough participants to deter the threat of Western economic sanctions.

Russian leaders describe the SPFS system as part of the "fortress economy", which constitutes a defensive economic strategy adopted eight years ago to isolate the country from foreign pressures.
Although hundreds of Russian banks have adopted the SBFS system, only a few international banks have done so, and many do not use the system effectively, so far. The Bank of China is among the international institutions that have joined the SBFS system.

On the Chinese front, since 2015 Beijing has designed the "Cross-Border Payments System between Banks" (CIPS) with the main goal of strengthening the central government's control over the domestic economy and settling international claims to the yuan. But so far the majority of China's global transactions are settled in other currencies, so the country continues to rely heavily on the SWIFT system, which allows transactions to be settled in a variety of currencies.

If only dozens of international banks are members of the RMB-based “System of Cross-Border Payments between Banks” based on the yuan, the possibilities for the expansion of this system and for the accession of more countries and institutions is only a matter of time, though given that most Chinese transactions abroad are conducted in US dollars, it will not be It is in Beijing's interest to undermine the SWIFT system.

Establishing an alternative system to the “Swift” system with the support of Russia, China and other countries may be a far-fetched issue, but the presence of a multiplicity of payment systems may be a more realistic issue, and thus the journey of reducing the political influence of the “Swift” system begins, as is the case at the present time.   link 

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