(Swift) sanctions and the rise of parallel payment systems: A qualitative study of financial infrastructure and power dynamics in times of FinTech

Abstract: In 2022, the West imposed sanctions of unprecedented scale on Russia following the war in Ukraine, including severing Moscow from the main global financial message provider, Swift, with the objective to harm the ability of Russian banks to operate globally. As the global financial system is centralised, being severed from Swift significantly complicates the process of conducting cross border payments. As payments are the heart of global finance, states have developed parallel payment systems able to circumvent sanctions by using financial technology. The purpose of this study is to uncover the significance of weaponising financial infrastructure in correlation to payment systems and power dynamics, through a theoretical framework of infrastructure, global networks and weaponised interdependence. The study is based on two research questions regarding sanctions in relation to power and technology and based on two documents published by actors on different sides of the sanctioned spectrum, Russia and the IMF. The study is conducted through the analytical framework of thematic analysis, where themes of independent infrastructure, fragmentation, settlement and crypto assets were identified. The results and analysis points at global geopolitical changes of fragmentation and the emergence of blocs following sanctions, vulnerability and asymmetrical power dynamics in financial networks where centralised actors use “chokepoint” effects on interdependent actors, and both financial infrastructure and the financial technology facilitating it being the most important tools of power. Results further point at development of domestic financial infrastructure having a wide range of global implications.