WHAT IS SWIFT TECHNOLOGY?

SWIFT is short form of 'The Society for Worldwide Interbank Financial Telecommunication'. In simple terms, Swift is a payment system based on a messaging service.

It connects banks and financial institutions around the world. In 1973, banks and financial institutions around the world began secretly sending secure messages and payment orders to each other. Behind the easy transfer of money to abroad, there is a Swift system. It is a huge messaging network, used to exchange information between banks and other financial institutions, such as instructions on how to transfer money quickly and securely.

Under this system, financial institutions securely transmit payment information and orders using electronic codes.

How does it work?

Swift assigns each financial institution an eight- or 11-digit special code. Also known as Bank Identifier Code (BIC), Swift Code, Swift ID or ISO 9362 code. For example, Everest, headquartered in Kathmandu, has been given the eight-digit Swift code 'EVBLNPKA'. The first four letters (EVBL) are taken from the name of the bank while the next two letters (NP) are drawn from the name of the country i.e. Nepal. The other two letters 'KA' are from the city's postal code. Now if someone has to send money from US bank to Everest Bank, they have to give the same code.

Bank of America sends a message to the bank of Nepal to pay the money to the person concerned with that code and the person concerned receives the money based on this code. Today, 11,000 banks and financial institutions around the world are connected to Swift. Banks and financial institutions around the world use Swift to provide instruction on how to transfer money to each other, rather than transacting money from one place to another.

Swift was launched to keep the global financial market moving. This means that depriving a country of this system is an alternative to restricting economic activity. This is because no bank can conduct its financial transactions as soon as Swift is banned. Not only are they unable to send money to restricted banks but their customers are also unable to do business.