The US sanctions on Iran are coming to bear. In particular, the sanctions came into effect on November 10. As a result, SWIFT disconnected Iranian banks from its network in an effort to stay in good relationship with the US. However, critics contend that SWIFT’s actions make it look like an extension of America’s federal law enforcement agency.
Earlier this month, President Donald Trump announced via his twitter account that the US would reinstate sanctions against Iran. Initially, the former President, Barack Obama, had struck a deal with the Middle Eastern giant to lessen the sanctions.
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However, analysts say that the country and its trading partners will find alternative ways to skirt the sanctions.
Dan Wager, a global sanctions expert at the consulting firm LexisNexis Risk Solutions says, “There will always be both overt and covert activities to work around sanctions, to dodge sanctions or evade them.”
Interestingly, the country is already in the process of adopting cryptocurrency as a means of financial transactions. Forbes reported that the country is now pursuing a national cryptocurrency that will help skirt sanctions.
Normally, cryptocurrencies run on decentralized blockchain platforms which ensures that no one can prohibit their use. Relying on peer-to-peer interactions also ensures that there are no middle parties like in the traditional financial system.
SWIFT Disconnects Iranian Banks, Regrettably
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is one apt example of a central financial system. As witnessed, SWIFT disconnects Iranian banks because it has the central powers to do so. However, with cryptocurrency, such actions are impossible to accomplish.
Interestingly, SWIFT chief executive, Gottfried Leibbrandt, says that the move to alienate Iranian banks is “regrettable.” In particular, the financial messaging service will suspend Iranian banks’ access to its services for the period of the sanctions.
However, some analysts see the reinstatement of the US sanctions on Iran as a blessing. In particular, the suspension of the Iranian banks from SWIFT will expedite a global de-dollarization. According to an analyst, the pushing of Iran will only force its trading partners to find alternatives. In essence, this includes cutting down on the reliance on the dollar for transactions.
“In pushing a hard line on Iran, the US will only force other countries to come up with alternatives, and stockpile gold to lessen their dependence on the almighty US dollar,” the analyst said.
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