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Ripple vs SWIFT: The New Game Of The American Political Elites


Oleg Koldayev

The sequence of steps and opinions is not a strong point of modern geopolitics and geo-economy. Speaking at one of the discussion panels of the Singapore festival Fintech 2018, the Deputy General Legal Counsel of the International Monetary Fund (IMF) Ross LECOW stated that his current research and experiments with the blockchain would become “an anchor” for the organization's policy in the future. What discoveries in the digital economy have international officials made for themselves, if a month ago a report of the IMF was published, in which virtual currencies and associated technologies were called a threat to global financial stability? What forced the IMF to shift its ground?

At first glance, there is no logic in the statements and actions of the IMF, as if there are two opposite trends in the policy of supranational financial institutions. On the one hand, the head of the foundation, Christine LAGARDE, speaking shortly before the annual summit, said that the rapid development of cryptocurrencies could plunge the world into a new great depression. On the other hand, one of the leading experts of the global financial organization sees the future of the global financial system in them.

“We pay great attention to the study of various types of trading, including the blockchain,” LECOW says. “But we also find it difficult to talk about the blockchain in isolation from other new technologies that are part of the FinTech debate.” By technologies he means both artificial intelligence, DLT, and the creation of various kinds of digital financial instruments. In addition, the expert specially noted that taking into account the high demand for consulting in the field of FinTech, the IMF and the World Bank had launched a joint information project Bali Fintech Agenda, which should be the first comprehensive service to receive advice on the development and state regulation of the digital market. This project was presented at the same event as the report on the danger of cryptocurrencies.

And there is no contradiction here if we consider the rapid change in global trends on the digital market. We have already written more than once that big players are entering it. Moreover, the players in the broad sense of the word, because the games are not only financial but also political. The words of international experts and the actions of the IMF become understandable when you consider who is next to them. For example, Ross LECOW turned into a crypto enthusiast, speaking at the discussion panel led by Ripple CEO Brad GARLINGHAUS. Previously, this man was one of the top managers of Yahoo. MasterCard Executive Vice President Colin TAYLOR also supported the digital company. By the way, both Yahoo and MasterCard are closely related to the American political elite. In addition, the board of directors of Ripple included Donald TRUMP’s personal friend and speechwriter Ken CURSON and the former economic adviser in the administrations of Bill CLINTON and Barack OBAMAJean SPERLING.

Obviously, the invasion of influential and close to power people in the world of digital assets was only a matter of time. Too many projects and intentions have emerged in recent months that have not as much economic as geopolitical background: Petro of Nicolas MADURO, Iran’s statements about using digital assets to circumvent the sanctions regime and similar intentions of the Turkish authorities; actual control of Bitcoin by Chinese investors. On the surface, it may seem that opinion leaders are snowballing the trend of cryptocurrencies popularity, however, we see a different relationship: it is the increase in the social importance of virtual currencies and, as a result, the appeal of large investors to them and the entry of more and more users into the market that forces the political elite to ride the wave, in order not to miss the future voter or client.

The United States and international organizations affiliated to it are facing the prospect of losing control over the global financial system. Well, the easiest way to keep it is to create new transactional communications, similar to the interbank exchange of payments and SWIFT information system, the importance of which can be described by only one fact: the chairman of the Russian VTB Bank Andrei KOSTIN equated the disconnection of the country from SWIFT with the declaration of war.

But the geopolitical significance is not a cure for time. SWIFT is inevitably getting out of date technically. Many users, including transnational financial conglomerates and central banks of 209 countries, are dissatisfied with the speed of transactions (money can go 3-5 days) and the quality of electronic transfers (approximately 5% of transactions do not pass through the system for unknown reasons).

Effective implementation of global interests requires updating tools. This time it seems like the US administration has chosen Ripple since there is no escape from a new financial and technological era. You can try to feed your American blockchain-dragon. More precisely, using the political and economic levers of pressure on the global market, you can try to bring an ordinary digital company to the level of a real transactional monster. At the same time, unlike SWIFT, whose founders are 248 banks from 19 countries, Ripple is formally an American company that lives not under the Belgian (SWIFT headquarters is located in Brussels) but under the American laws and, therefore, is even more controlled by the authorities.

With the overall set of benefits for the White House from using Ripple as a new global transactional service, there is one condition that company must comply with: it must gain the necessary weight on the market.

But no matter how many political heavyweights are involved in creating a new global transactional monopolist, no matter how many speeches in support of the “right” blockchain are said, the popularity of the Ripple ecosystem is not growing. The company's market capitalization on the wave of the fall in the value of virtual assets declined almost 7 times: from $140 billion to $20.7 billion. And cooperation with banks is going smoothly; loud statements have not yet brought tangible results. Ripple has to reach the height of the existing interbank payment system. SWIFT has 9,000 connected credit institutions and 4 billion payment orders per day; the daily number of transactions in the Ripple ecosystem is less than half a billion.

According to rumors, Washington has spent from a few dozens to several hundred billion dollars on the promotion of the SWIFT service. The exact figure is sacred knowledge and can only be known, for example, by members of the Beidelberg club. But, of course, no less will be spent on creating a new system of the similar manner. The snag is that the very nature of the digital market resists centralization, and any projects or assets affiliated with the government do not gain the necessary popularity. For example, NEO tokens, once supported by the Chinese nearby establishment, had not become a cryptocurrency mainstream for a year and a half, after which the elite refused to support it, but it was too late.

The new economy gained its weight precisely on the wave of the rejection of the adopted conventions, and not on their adaptation to the new economic reality. Washington has been the “author” of many such conventions. So, can it now put up with the fact that it will not dictate the rules of the game in the digital part of the global economy?


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