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Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Financial Sanctions, SWIFT, and the Architecture of the International Payment System

  • Marco Cipriani
  • Linda S. Goldberg
  • Gabriele La Spada
Journal of Economic Perspectives
vol. 37, no. 1, Winter 2023
(pp. 31–52)
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Abstract

Financial sanctions, alongside economic sanctions, are components of the toolkit used by governments as part of international diplomacy. The use of sanctions, especially financial, has increased over the last 70 years. Financial sanctions have been particularly important whenever the goals of the sanctioning countries were related to democracy and human rights. Financial sanctions restrict entities—countries, businesses, or even individuals—from purchasing or selling financial assets, or from accessing custodial or other financial services. They can be imposed on a sanctioned entity's ability to access the infrastructures that are in place to execute international payments, irrespective of whether such payments underpin financial or real activity. This article explains how financial sanctions can be designed to limit access to the international payment system and, in particular, the SWIFT network, and provides some recent examples.

Citation

Cipriani, Marco, Linda S. Goldberg, and Gabriele La Spada. 2023. "Financial Sanctions, SWIFT, and the Architecture of the International Payment System." Journal of Economic Perspectives, 37 (1): 31–52. DOI: 10.1257/jep.37.1.31

Additional Materials

JEL Classification

  • E42 Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
  • F51 International Conflicts; Negotiations; Sanctions
  • G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
  • G28 Financial Institutions and Services: Government Policy and Regulation
  • N20 Economic History: Financial Markets and Institutions: General, International, or Comparative
  • N40 Economic History: Government, War, Law, International Relations, and Regulation: General, International, or Comparative
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