[en] This article explores how transaction information is a fundamental element enabling and fostering global flows of money. Financial systems, constructed around account-based money, require infrastructure, which is separated into two parts: messaging and settlement, performed via trusted agents. This separation has allowed the geographical expansion of banking, and to this day constitutes a key architecture of increasingly global networks of money. Focusing on the correspondent banking system and the Society for Worldwide Interbank Financial Telecommunication, this article demonstrates the workings of this infrastructure in cross-border payments and in enacting economic sanctions. This sociotechnical infrastructure is a crucial yet overlooked area of global banking, which makes global economic and financial activity possible in the first place. Importantly, by analysing the organizational architecture of the global payments system and including the actors and agencies within it, we elucidate the (changing) relationships between data/information, geographies and power, contributing to the formation of a literature that conceptualizes financial infrastructure.
Research center :
Luxembourg Institute of Socio-Economic Research - LISER; Ghent University
Disciplines :
Human geography & demography
Author, co-author :
Robinson, Gary ; University of Luxembourg > Faculty of Humanities, Education and Social Sciences (FHSE) ; Luxembourg Institute of Socio-Economic Research (LISER) > Department of Urban Development and Mobility ; Ghent University > Department of Geography
Dörry, Sabine ; Luxembourg Institute of Socio-Economic Research (LISER) > Department of Urban Development and Mobility
Derudder, Ben; KU Leuven > Public Governance Institute ; Ghent University > Department of Geography
External co-authors :
yes
Language :
English
Title :
Global networks of finance and information at the crossroads: correspondent banking and SWIFT
FNR11312037 - Stabilising An Unstable Industry: The Role Of Agency In Interconnecting International Financial Centres, 2016 (01/09/2017-31/12/2022) - Sabine Dörry
Name of the research project :
Stabilising an unstable industry: The role of agency in interconnecting international financial centers (FINWEBS)
Funders :
FNR - Fonds National de la Recherche [LU] Research Foundation Flanders (FWO)
Abrazhevich, D. (2001). Classification and characteristics of electronic payment systems. In K. Bauknecht, S. K. Madria, & G. Pernul (Eds.), Electronic commerce and web technologies (pp. 81–90). Springer. https://doi.org/10.1007/3-540-44700-8_8
Accuity. (2017). Derisking and the demise of correspondent banking relationships. https://accuity.com/resources/derisking-demise-correspondent-banking-relationships-research-report-accuity/
Adrian, T., & Mancini-Griffoli, T. (2019). The rise of digital money. International Monetary Fund. https://www.imf.org/en/Publications/fintech-notes/Issues/2019/07/12/The-Rise-of-Digital-Money-47097
Aldasoro, I., Cabanilla, C., Disyatat, P., Ehlers, T., McGuire, P., & von Peter, G. (2020). Central bank swap lines and cross-border bank flows (BIS Bulletin No 34). https://www.bis.org/publ/bisbull34.htm
Alt, R., & Puschmann, T. (2012). The rise of customer-oriented banking—Electronic markets are paving the way for change in the financial industry. Electronic Markets, 22(4), 203–215. https://doi.org/10.1007/s12525-012-0106-2
Appel, H., Anand, N., & Gupta, A. (2018). Introduction: Temporality, politics and the promise of infrastructure. In N. Anand, A. Gupta, & H. Appel (Eds.), The promise of infrastructure (pp. 1–38). Duke University Press.
Arner, D. W., Barberis, J. N., & Buckley, R. P. (2015). The evolution of fintech: A new post-crisis paradigm? (SSRN Scholarly Paper ID 2676553). Social Science Research Network. https://papers.ssrn.com/abstract=2676553
Auer, R., & Böhme, R. (2020). The technology of retail central bank digital currency. BIS Quarterly Review, 85–100.
Bass, T. A. (1996). The future of money. Wired. https://www.wired.com/1996/10/wriston/
Bassens, D., & van Meeteren, M. (2015). World cities under conditions of financialized globalization: Towards an augmented world city hypothesis. Progress in Human Geography, 39(6), 752–775. https://doi.org/10.1177/0309132514558441
Bátiz-Lazo, B., Maixé-Altés, J. C., & Thomes, P. (Eds.). (2011). Technological innovation in retail finance: International historical perspectives. Routledge.
Battilossi, S. (2006). The determinants of multinational banking during the first globalisation 1880–1914. European Review of Economic History, 10(3), 361–388. https://doi.org/10.1017/S1361491606001791
Bergin, T. (2016). Special report: Not so SWIFT - Bank messaging system slow to address weak points. Reuters. https://www.reuters.com/article/us-cyber-heist-warnings-specialreport-idUSKCN10S0WC
BIS Innovation Hub. (2021). Nexus: A blueprint for instant cross-border payments. https://www.bis.org/publ/othp39.htm
Boston Consulting Group & SWIFT. (2017). Global payments 2017: Deepening the customer relationship. https://www.bcg.com/publications/2017/transaction-banking-financial-institutions-global-payments-2017-deepening-customer-relationship.aspx
Brandl, B., & Dieterich, L. (2021). The exclusive nature of global payments infrastructures: The significance of major banks and the role of tech-driven companies. Review of International Political Economy. https://doi.org/10.1080/09692290.2021.2016470
Buhl-Freiherr von und zu Guttenberg, K. (2018). Agents, bills, and correspondents through the ages: An analytical reconsideration of the nature, scope, and significance of correspondent banking and its application in historical precedence and selected case studies (Doctoral thesis). University of Southampton. https://eprints.soton.ac.uk/435557/
Burn, G. (2006). The re-emergence of global finance (2006th ed.). Palgrave Macmillan.
Callon, M. (1986). Some elements of a sociology of translation: Domestication of the scallops and the fishermen of St Brieuc Bay. In J. Law (Ed.), Power, action and belief: A new sociology of knowledge (pp. 196–233). Routledge Kegan & Paul.
Campbell-Verduyn, M., & Goguen, M. (2019). Blockchains, trust and action nets: Extending the pathologies of financial globalization. Global Networks, 19(3), 308–328. https://doi.org/10.1111/glob.12214
Campbell-Verduyn, M., Goguen, M., & Porter, T. (2019). Finding fault lines in long chains of financial information. Review of International Political Economy, 26(5), 911–937. https://doi.org/10.1080/09692290.2019.1616595
Cassis, Y. (2010). Capitals of capital: The rise and fall of international financial centres 1780–2009 (2nd ed.). Cambridge University Press.
Chan, L. S.-L. (2014). Best practice of selecting strategic international agency banking. Nang Yan Business Journal, 3(1), 17–27. https://doi.org/10.1515/nybj-2015-0002
Cho, K. R. (1986). Determinants of multinational banks. Management International Review, 26(1), 10–23.
Church, R. L., Scaparra, M. P., & Middleton, R. S. (2004). Identifying critical infrastructure: The median and covering facility interdiction problems. Annals of the Association of American Geographers, 94(3), 491–502. https://doi.org/10.1111/j.1467-8306.2004.00410.x
Coelho, R., Fishman, J., Hassan, A., & Vrbaski, R. (2020). Closing the loop: AML/CFT supervision of correspondent banking (FSI Insights on Policy Implementation No. 28). Financial Stability Institute. https://www.bis.org/fsi/publ/insights28.htm
Cohen, B. J. (2013). Currency and state power. In M. Finnemore & J. Goldstein (Eds.), Back to basics: State power in a contemporary world (pp. 159–176). Oxford University Press.
Collinson, P. (2017). Revealed: The huge profits earned by big banks on overseas money transfers. The Guardian. https://www.theguardian.com/money/2017/apr/08/leaked-santander-international-money-transfers-transferwise
Couldry, N., & Mejias, U. A. (2019). Data colonialism: Rethinking big data's relation to the contemporary subject. Television & New Media, 20(4), 336–349. https://doi.org/10.1177/1527476418796632
de Goede, M. (2012). The SWIFT affair and the global politics of European security. JCMS: Journal of Common Market Studies, 50(2), 214–230. https://doi.org/10.1111/j.1468-5965.2011.02219.x
de Goede, M., & Westermeier, C. (2022). Infrastructural geopolitics. International Studies Quarterly, 66(3), sqac033. https://doi.org/10.1093/isq/sqac033
Derudder, B., & Taylor, P. J. (2020). Three globalizations shaping the twenty-first century: Understanding the new world geography through its cities. Annals of the American Association of Geographers, 110(6), 1831–1854. https://doi.org/10.1080/24694452.2020.1727308
Deutsche Bundesbank. (n.d.). Correspondent banking. https://www.bundesbank.de/en/tasks/payment-systems/customer-access-mechanism/correspondent-banking/correspondent-banking-626406
Dixon, A. D. (2011). The geography of finance: Form and functions. Geography Compass, 5(11), 851–862. https://doi.org/10.1111/j.1749-8198.2011.00458.x
Dörry, S. (2015). Strategic nodes in investment fund global production networks: The example of the financial centre Luxembourg. Journal of Economic Geography, 15(4), 797–814. https://doi.org/10.1093/jeg/lbu031
Dörry, S., Robinson, G., & Derudder, B. (2018). There is no alternative: SWIFT as infrastructure intermediary in global financial markets (Financial Geography Working Paper #22). FinGeo. http://www.fingeo.net/wordpress/wp-content/uploads/2019/02/FinGeoWP22_Doerry_Robinson_Derudder_SwiftGPN.pdf
Easterling, K. (2016). Extrastatecraft: The power of infrastructure space (Reprint edition). Verso.
ECB. (2017). Tenth survey on correspondent banking in euro 2016: February 2017. https://publications.europa.eu/en/publication-detail/-/publication/8828d161-28b4-11e7-ab65-01aa75ed71a1/language-en
Eichengreen, B. (2019). Globalizing capital: A history of the international monetary system (3rd ed.). Princeton University Press.
Eichengreen, B. (2022). Ukraine war accelerates the stealth erosion of dollar dominance. Financial Times. https://www.ft.com/content/5f13270f-9293-42f9-a4f0-13290109ea02
Farrell, H., & Newman, A. L. (2019). Weaponized interdependence: How global economic networks shape state coercion. International Security, 44(1), 42–79. https://doi.org/10.1162/isec_a_00351
Furlong, K. (2021). Geographies of infrastructure II: Concrete, cloud and layered (in)visibilities. Progress in Human Geography, 45(1), 190–198. https://doi.org/10.1177/0309132520923098
Fuster, G. G., Hert, P. D., & Gutwirth, S. (2008). SWIFT and the vulnerability of transatlantic data transfers. International Review of Law, Computers & Technology, 22(1–2), 191–202. https://doi.org/10.1080/13600860801925185
Gifford, K., & Cheng, J. (2016). Implementation of real-time settlement for banks using decentralised ledger technology: Policy and legal implications. Financial Stability Review, 20, 143–151.
Green, E. J. (2008). Some challenges for research in payments. In A. Haldane, S. Millard, & V. Saporta (Eds.), The future of payment systems (pp. 57–67). Routledge.
Greenspan, A. (2007). The age of turbulence: Adventures in a new world. Penguin.
Grote, M. H. (2009). Financial centers between centralization and virtualization. In P. Alessandrini, M. Fratianni, & A. Zazzaro (Eds.), The changing geography of banking and finance (pp. 277–294). Springer.
Hawser, A. (2015). Correspondent banking stronger than ever. Global Finance, 29(8), 11–11.
Hussain, K., & Prieto, E. (2016). Big data in the finance and insurance sectors. In J. M. Cavanillas, E. Curry, & W. Wahlster (Eds.), New horizons for a data-driven economy: A roadmap for usage and exploitation of big data in Europe (pp. 209–223). Springer.
IMF. (2017). Recent trends in correspondent banking relationships: Further considerations. https://www.imf.org/en/Publications/Policy-Papers/Issues/2017/04/21/recent-trends-in-correspondent-banking-relationships-further-considerations
James, J. A., & Weiman, D. F. (2010). From drafts to checks: The evolution of correspondent banking networks and the formation of the modern U.S. payments system, 1850–1914. Journal of Money, Credit and Banking, 42(2/3), 237–265.
Kaltenbrunner, A., & Lysandrou, P. (2017). The US dollar's continuing hegemony as an international currency: A double-matrix analysis. Development and Change, 48(4), 663–691. https://doi.org/10.1111/dech.12318
Kindleberger, C. P. (1973). The formation of financial centers: A study in comparative economic history (Working Paper No. 114). MIT Department of Economics. https://dspace.mit.edu/handle/1721.1/63624
Kitchin, R. (2014). The data revolution: Big data, open data, data infrastructures and their consequences. SAGE Publications.
Kohn, M. (1999). Early deposit banking (Working Paper No. 99–03). Department of Economics, Dartmouth College. https://cpb-us-e1.wpmucdn.com/sites.dartmouth.edu/dist/6/1163/files/2017/03/99-03.pdf
Kohn, M. (2001). Payments and the development of finance in pre-industrial Europe (Working Paper No. 01–15). Department of Economics, Dartmouth College. https://doi.org/10.2139/ssrn.291208
Langdale, J. (1985). Electronic funds transfer and the internationalisation of the banking and finance industry. Geoforum, 16(1), 1–13. https://doi.org/10.1016/0016-7185(85)90002-8
Langdale, J. (1989). The geography of international business telecommunications: The role of leased networks. Annals of the Association of American Geographers, 79(4), 501–522. https://doi.org/10.1111/j.1467-8306.1989.tb00274.x
Langley, P. (2004). (Re)politicizing global financial governance: What's ‘new’ about the ‘New International Financial Architecture’? Global Networks, 4(1), 69–87. https://doi.org/10.1111/j.1471-0374.2004.00081.x
Leibbrandt, G., & De Terán, N. (2021). The pay off: How changing the way we pay changes everything. Elliott & Thompson.
Lindley, R. (2008). Reducing foreign exchange settlement risk. BIS Quarterly Review, 53–65.
Lord, C., Bhatnagar, G., Ruetschi, J., & Power, T. (2015). Post-trade services in financial markets: Moving from backstage to center stage. https://www.strategyand.pwc.com/reports/post-trade-services-financial-markets
Lyddon, B. (2012). Correspondent banking business model: Challenges to reciprocity. Journal of Payments Strategy & Systems, 6(3), 246–259.
Maurer, B. (2012). Payment: Forms and functions of value transfer in contemporary society. The Cambridge Journal of Anthropology, 30(2), 15–35. https://doi.org/10.3167/ca.2012.300202
Maurer, B. (2014). Closed loops and private gateways: Money, technology and the public interest in payment. MoneyLab: Coining Alternatives, Session 1: Monetization of everything, Amsterdam. https://vimeo.com/90207123
McCune, E. (2014). There is no such thing as an international wire. Glenbrook. https://pv.glenbrook.com/there-is-no-such-thing-as-an-international-wire/
McKinsey & Company. (2017). Global payments 2017: Amid rapid change, an upward trajectory. https://www.mckinsey.com/industries/financial-services/our-insights/global-payments-2017-amid-rapid-change-an-upward-trajectory
McKinsey & Company. (2019). Global transaction banking: The $1 trillion question. https://www.mckinsey.com/industries/financial-services/our-insights/global-transaction-banking-the-1-trillion-dollar-question
Merrett, D. T. (1995). Global reach by Australian banks: Correspondent banking networks, 1830–1960. Business History, 37(3), 70–88. https://doi.org/10.1080/00076799500000091
Meyer, D. R. (2009). International financial centers. In N. Thrift & R. Kitchin (Eds.), International encyclopedia of human geography (pp. 146–152). Elsevier.
Milne, A. (2022). Iran's experience signals banning Swift will not work as expected. Financial Times. https://www.ft.com/content/e8705d48-bfea-4f95-af3b-af13c1e4305d
National Bank of Belgium. (2017). Financial market infrastructures and payment services report 2017. https://www.nbb.be/en/articles/financial-market-infrastructures-and-payment-services-report-2017-0
Naughton, T., & Chan, L. S. (1998). Strategic dimensions of correspondent banking. International Journal of Bank Marketing, 16(4), 153–160. https://doi.org/10.1108/02652329810220701
Nölke, A. (2022). Geoeconomic infrastructures: Building Chinese-Russian alternatives to SWIFT. https://www.academia.edu/70400681/Geoeconomic_infrastructures_Building_Chinese_Russian_alternatives_to_SWIFT
O'Dwyer, R. (2019). Cache society: Transactional records, electronic money, and cultural resistance. Journal of Cultural Economy, 12(2), 133–153. https://doi.org/10.1080/17530350.2018.1545243
Omarini, A. (2020). FinTech: A new hedge for a financial re-intermediation. Strategy and risk perspectives. Frontiers in Artificial Intelligence, 3, 63. https://doi.org/10.3389/frai.2020.00063
Osterberg, W. P., & Thomson, J. B. (1999). Banking consolidation and correspondent banking. Economic Review, Federal Reserve Bank of Cleveland, 35(1), 9–20.
Panza, L., & Merrett, D. (2019). Hidden in plain sight: Correspondent banking in the 1930s. Business History, 61(8), 1300–1325. https://doi.org/10.1080/00076791.2017.1418858
Petry, J. (2021). From national marketplaces to global providers of financial infrastructures: Exchanges, infrastructures and structural power in global finance. New Political Economy, 26(4), 574–597. https://doi.org/10.1080/13563467.2020.1782368
Pickren, G. (2018). ‘The global assemblage of digital flow’: Critical data studies and the infrastructures of computing. Progress in Human Geography, 42(2), 225–243. https://doi.org/10.1177/0309132516673241
Rambure, D., & Nacamuli, A. (2008). Payment systems: From the salt mines to the board room (2008 ed.). Palgrave Macmillan.
Rice, T., von Peter, G., & Boar, C. (2020). On the global retreat of correspondent banks. BIS Quarterly Review, 37–52.
Robertson, J. (2021). Global networks on the way up and the way down: Lessons from the rise and fall of the Seychelles as an offshore financial centre. Global Networks, 21(4), 631–652. https://doi.org/10.1111/glob.12283
Robinson, G. (2021). Capturing a moving target: Interviewing fintech experts via LinkedIn. Area, 53(4), 671–678. https://doi.org/10.1111/area.12726
Sadowski, J. (2019). When data is capital: Datafication, accumulation, and extraction. Big Data & Society, 6(1), 2053951718820549. https://doi.org/10.1177/2053951718820549
Scott, S. V., & Zachariadis, M. (2014). The Society for Worldwide Interbank Financial Telecommunication: Cooperative governance for network innovation, standards, and community (1st ed.). Routledge. https://doi.org/10.4324/9781315849324
Shagina, M. (2021). How disastrous would disconnection from SWIFT be for Russia? Carnegie Moscow Center. https://carnegiemoscow.org/commentary/84634
Stiglitz, J. E., & Weiss, A. (1988). Banks as social accountants and screening devices for the allocation of credit (Working Paper No. 2710; Working Paper Series). NBER. https://doi.org/10.3386/w2710
SWIFT. (n.d.-a). SWIFT platform evolution. SWIFT. https://www.swift.com/about-us/our-future/swift-platform-evolution
SWIFT. (n.d.-b). SWIFT and data. SWIFT. https://www.swift.com/about-us/swift-and-data
SWIFT. (2016). SWIFT: The global financial messaging provider. https://www.swift.com/sites/default/files/resources/swift_corporate_brochure.pdf
Sylla, R. (1976). Forgotten men of money: Private bankers in early U.S. history. The Journal of Economic History, 36(1), 173–188.
Taylor, P. J., & Derudder, B. (2022). NY-LON 2020: The changing relations between London and New York in corporate globalisation. Transactions of the Institute of British Geographers, 47(1), 257–270. https://doi.org/10.1111/tran.12498
TechCrunch. (2012). Payment data is more valuable than payment fees. http://social.techcrunch.com/2012/08/18/payment-data-is-more-valuable-than-payment-fees/
Thrift, N. (2005). Knowing capitalism (1st ed.). SAGE Publications UK.
Tooze, A. (2022). Chartbook #86: About those sanctions: SWIFT, correspondent banking, and the GL 8 energy carve-out. Chartbook. https://adamtooze.substack.com/p/chartbook-86-about-those-sanctions
Villeroy de Galhau, F. (2018). Europe in a disruptive world. Paris Europlace International Financial Forum. https://www.bis.org/review/r180724h.htm
Wandhöfer, R., & Casu, B. (2018). The future of correspondent banking cross-border payments (No. 2017–001; SWIFT Institute Working Paper). SWIFT Institute. https://swiftinstitute.org/research/the-future-of-correspondent-banking/
Wenzlhuemer, R. (2007). The dematerialization of telecommunication: Communication centres and peripheries in Europe and the world, 1850–1920. Journal of Global History, 2(3), 345–372. https://doi.org/10.1017/S174002280700232X
Westermeier, C. (2020). Money is data – The platformization of financial transactions. Information, Communication & Society, 23(14), 2047–2063. https://doi.org/10.1080/1369118X.2020.1770833
Wójcik, D. (2021). Geographies of finance I: Exploring FinTech – Maps and concepts. Progress in Human Geography, 45(3), 566–576. https://doi.org/10.1177/0309132520952865
Wong, L., & Nelson, R. M. (2021). International financial messaging systems (No. R46843). Congressional Research Service. https://crsreports.congress.gov/product/pdf/R/R46843
World Bank Group. (2018). The decline in access to correspondent banking services in emerging markets: Trends, impacts, and solutions - Lessons learned from eight country case studies (Working Paper No. 125422). World Bank. https://openknowledge.worldbank.org/handle/10986/29778
Yeung, K. (2021). China's SWIFT joint venture a ‘defensive move’ in US financial war. South China Morning Post. https://www.scmp.com/economy/china-economy/article/3126780/chinas-swift-joint-venture-defensive-move-us-financial-war
Zarate, J. C. (2013). Treasury's war: The unleashing of a new era of financial warfare. PublicAffairs.
Zelizer, V. A. (1989). The social meaning of money: “Special monies.” American Journal of Sociology, 95(2), 342–377. https://doi.org/10.1086/229272
Zook, M. (2018). Information flows, global finance, and new digital spaces. In G. L. Clark, M. P. Feldman, M. S. Gertler, & D. Wójcik (Eds.), The new Oxford handbook of economic geography (pp. 575–590). Oxford University Press. https://doi.org/10.1093/oxfordhb/9780198755609.013.35
Zook, M., & Grote, M. H. (2017). The microgeographies of global finance: High-frequency trading and the construction of information inequality. Environment and Planning A: Economy and Space, 49(1), 121–140. https://doi.org/10.1177/0308518X16667298
Zschieschang, K. (2018). KYC – Why not come together? Know your customer. The Banker, 115–116.
