In March 2022, the West deployed what many called the financial nuclear option—cutting major Russian banks from SWIFT, the messaging system that underpins global finance. Within days, Russia found itself struggling to process international payments, its economy suddenly semi-isolated from the world.

This wasn't military force. It wasn't even traditional economic sanctions like tariffs or export controls. It was something more subtle and arguably more powerful: leveraging control over financial infrastructure itself. The pipes through which money flows had become weapons.

The SWIFT episode revealed a fundamental truth about modern geopolitics. Financial networks aren't just technical utilities—they're strategic assets. Whoever controls the architecture of global finance holds coercive capabilities that rival conventional military power. Understanding how this works matters for anyone trying to make sense of contemporary great power competition.

Global finance runs on a surprisingly concentrated set of systems. SWIFT—the Society for Worldwide Interbank Financial Telecommunication—handles messaging for over 11,000 financial institutions across 200 countries. The Clearing House Interbank Payments System processes $1.8 trillion daily in dollar transactions. Correspondent banking relationships create networks where smaller banks depend on larger ones for access to foreign currencies.

Each of these systems creates what strategists call chokepoints. They're nodes in the network where traffic must pass through, and whoever controls them can observe, delay, or block transactions entirely. It's analogous to controlling the Suez Canal or the Strait of Hormuz—except for money instead of ships.

The United States holds a particularly privileged position. Because the dollar dominates international trade and reserves, most significant cross-border transactions eventually touch American financial infrastructure. This gives Washington visibility into global money flows and, crucially, the ability to exclude actors from dollar-based commerce.

European institutions matter too. SWIFT is headquartered in Belgium and operates under Belgian and EU law. This makes financial infrastructure governance a transatlantic affair—but one where American preferences have historically carried enormous weight, given the dollar's centrality to the system.

Takeaway

Control over financial infrastructure provides coercive power not through what you can do, but through what you can deny others access to.

SWIFT exclusion was once considered an extreme measure reserved for the most severe violations of international norms. Iran was the first major test case, disconnected in 2012 as part of nuclear-related sanctions. The impact was immediate and devastating—Iranian banks couldn't communicate with foreign counterparts, and international trade became extraordinarily difficult.

What changed is how normalized this tool has become. The 2022 Russia sanctions showed that major economies—not just isolated states like Iran or North Korea—could face this treatment. Seven Russian banks were initially cut off, with more added later. The message was clear: even large, integrated economies aren't immune.

The effectiveness is real but complicated. SWIFT exclusion doesn't make transactions impossible—just much harder. Russia has found workarounds through third countries, cryptocurrency, and bilateral arrangements with willing partners like China. But harder still means significant costs. Russian companies face delays, higher transaction fees, and reduced access to global markets.

There's also a question of diminishing returns. Each use of financial sanctions makes the tool more predictable—and gives targeted countries more incentive to build alternatives. The weapon works best when it's a credible threat, not a routine punishment. Overuse risks undermining the very infrastructure dominance that makes it powerful.

Takeaway

Financial sanctions work through friction, not total exclusion—but each deployment teaches adversaries how to reduce that friction.

Russia launched SPFS (System for Transfer of Financial Messages) in 2014, after the first round of Ukraine-related sanctions made clear that SWIFT access couldn't be taken for granted. China developed CIPS (Cross-Border Interbank Payment System) around the same time, explicitly designed to reduce dependence on dollar-based infrastructure.

Europe has its own concerns. INSTEX, created in 2019, was meant to facilitate trade with Iran despite American sanctions—a recognition that European commercial interests sometimes diverge from Washington's geopolitical priorities. The system has been largely ineffective, but the impulse behind it matters.

None of these alternatives yet rival SWIFT's reach or efficiency. SPFS connects around 550 financial institutions, mostly within Russia and former Soviet states. CIPS has grown faster but still processes a fraction of global transactions. Network effects are powerful—banks use SWIFT because other banks use SWIFT.

Yet the trajectory matters more than current market share. China is actively promoting CIPS usage along Belt and Road corridors. Russia is deepening financial ties with countries willing to bypass Western systems. Even if these alternatives remain secondary, they're creating redundancy that reduces Western leverage. The financial system is gradually fragmenting into spheres of influence.

Takeaway

Alternative financial systems don't need to replace SWIFT entirely—they just need to provide enough redundancy to blunt the coercive edge of exclusion.

Financial infrastructure has become a domain of great power competition as significant as military positioning or technology rivalry. The ability to include or exclude actors from global payment systems represents a form of structural power that doesn't require a single soldier or weapon.

But this power isn't unlimited or permanent. Every time financial tools are weaponized, they accelerate the search for alternatives. The very effectiveness of SWIFT exclusion is driving the fragmentation it was designed to prevent.

The coming decades will likely see a more multipolar financial architecture—not one where Western systems disappear, but one where they coexist with Chinese, Russian, and possibly regional alternatives. The age of unchallenged financial hegemony may be ending, reshaped by the very tools used to defend it.