System for Transmitting Financial Messages (SPFS)

BRICS messaging system up and running apparently:

A massive powerplay by the rest of the world.

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Yeah, wow, “massive”. This addition brings, uh, almost nothing to the table.

Africa! Woo-hoo! That’s gonna shake up, what?

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The building blocks are slowly being put into place

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Would you trust any of those countries with your money? Would you be willing to invest your whole net worth in any of those countries? That is where the rubber hits the road. If they can’t get the world to trust them how can they get a system like that to work?

Andy

You would not have to trust these countries if you didn’t want to. They are not replacing the dollar based system, just offering an alternative.

The reason that this is happening is that countries do not trust The US led West which has a habit of bullying and confiscating other countries assets.

Why so much hostility? I thought that competition was good for the consumer!

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Thank you for posting this story. I can’t understand the extremely negative responses. The highest population and probably growth rates in the future will be in Africa and other countries that are currently low to middle income.
Wendy

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You thought I was being hostile? That was a simple question Divitias. Now read it again and tell me why you would think it was hostile?

Andy

Correct me if I am wrong but the BRICS transfer system is a replacement for SWIFT, correct? The US can’t confiscate funds via SWIFT so a country choosing to use BRICS does not gain any protection from such.

And yes, there is definitely a trust factor as it pertains to both SWIFT and BRICS. When money is wired internationally via SWIFT, it is guaranteed. There is no way I would trust a new system that is not heavily regulated to ensure that money I received isn’t fake or otherwise somehow clawed back by the 3rd party.

The question wasn’t particularly aimed at you.

I’ve posted before on the subject and it invariably gets ridiculed. I suppose that is because the site is US based that it seems to upset people so much.

I have gone from being mildly amused by BRICS ten years or more ago to seeing how it is developing now. As one time university lecturer in monetary economics I find the creation of the BRICS system somewhat fascinating. Other major currencies and payments systems are derivatives of money (silver/gold). I’m not too sure if BRICS will be. There is plenty of talk about this, but that is all it is. Linking the BRICS system to gold would complicate things a bit too much IMHO, but we shall see.

BRICS is here and it’s not going away so get used to it!

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You are not going to be forced to use the new system!

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I think it is to early to believe that. Mostly because who is involved with Brics. If I had to give it a chance of succeeding it would have to be around 10 to 20 percent. Now if those countries wanted to start their own economic system, and put themselves completely outside of the rest of the world, I could see them operating like North Korea. While they would have their system, they wouldn’t be very prosperous.

But then I don’t have any degree or knowledge of economics but sometimes common sense goes a long way.

Andy

The answer is very simple: Do any of the countries in the group offer something someone else (outside the bloc) really needs? If so, then the buyer pays for what they want to buy as the seller chooses. So “buy in” really depends on factors we do not yet know.

That’s about 3.6 billion of the world’s population. You may not like the countries involved, but guess what? They don’t like The West that much either.

BRICS has never been about putting ‘themselves outside the rest of the world’. They want a payments system that is not dominated by The West:

If BRICS doesn’t come up with the goods it will wither and die.

In economics isn’t a bit of competition supposed to be good for the final consumer?

“Doing business with” vs “liking” a country (etc) are not the same thing. If business wants to do business there, they will do what is needed to be able to do business.

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You are trusting 100% of whatever you might put through this system. It’s not “an alternative”, it’s “everything” you choose to give them.

Look to the words “massive powerplay”. That’s the kind of hyperbole that the guy who invented the word “hyperbole” would be proud of.

Maybe. Or maybe it will continue to be a corpse of a continent, filled with war, pestilence, and corruption for the foreseeable future, possibly forever. It’s GDP - the whole continent, a land area big enough to fit all of the US, Europe, Russia, China, Australia, South America, and more - is smaller than France.

The only significant member of BRICS is China and maybe, someday India if it ever gets its act together (I doubt anytime in the near future.) So yeah, China’s a biggie, but if I’m going to trust a monetary system, I think I’m gonna go with the other one. The one that’s been running for years. Doesn’t mean political feelings aren’t going to intrude, but usually if it’s between money and politics, money wins.

Sometimes. Not always. Having two discrete telephone systems is objectively bad. Having monopolist railroads is bad, but having multiple ones laying tracks everywhere is also bad. Adroit regulation and “public good” considerations enter in to it, and as SWIFT in a not for profit collective of central banks and governments, it likely falls into this sphere. That doesn’t mean there shouldn’t be others, just that their utility is suspect and the chances for success are thin.

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The population has nothing to do with it if the Countries do not promote and sustain economic growth. The only country that has been able to do that in the list you provided is China.

Sure in a Capitalistic society but the only country that does that is Brazil. The rest are Dictators, Monarchies, and Communists. Now which of those are going to promote competition?

Andy

This explains BRICS. If this is correct them I’m impressed by how quickly things are moving:

That has a lot of competition. Wise does the same thing as does DLO. There are many companies doing the same thing and none of them are linked with any of those are not linked to any country.

Andy

Who cares about growth in this case? SWIFT is not a bank. It does not hold funds or manage accounts. SWIFT is a network which banks and other institutions (like stock brokers) use to send messages in standardized format about financial transactions. SWIFT itself doesn’t actually move any money. All SWIFT does it run the messaging network. That’s it.

Every bank in Africa that makes international transactions already uses SWIFT along with many of them that don’t. Banks don’t need SWIFT to make international transactions, but it is faster and easier so that’s what they use.

There is also a network effect here. Each new bank that joins SWIFT makes the network more valuable and useful, which encourages more banks to use SWIFT.

So if you are a bank considering which network to use, you could use SWIFT because that is what everybody else uses. Or you could use the new BRICS system, which nobody else uses and you’d have to use SWIFT anyway.

By the way, the network effect is why there are only about 2.5 global credit cards, Visa, Mastercard, and Discover, just barely (American Express is a charge card, but same thing applies). If you invented a faster, cheaper credit card network tomorrow, no one would use it because everyone already has Visa and everyone already accepts Visa. You’d have to go around and sign up all the issuing banks and all the merchant banks and all merchants, and all the new users. Can’t be done from scratch. The existing card payment networks are too powerful.

So, I think it is a wee bit inaccurate to say a different payment network could result in a “new geoeconomics landscape.” It is like saying What’s Ap resulted in a new geocommunications landscape. Nope. You get messages on your phone, just like SMS.

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And that is why I don’t understand the utility and power of SWIFT – it’s just secure instant messaging for banks and that appears all it is. Like you said, it does not hold or move money.