Pakistani-American Banker Heads SWIFT, World’s Biggest Interbank Payments System
By Riaz Haq
CA
Pakistani-American banker Yawar Shah is the Chairman of the SWIFT Board of Directors. SWIFT stands for The Society For Inter-Bank Financial Telecommunications. SWIFT has been in the news recently for cutting off Russian banks to punish Russia's invasion of Ukraine. Russia is now disconnected from the global financial system used to settle the vast majority of payments in international trade.
In addition to his role as the Chairman of the SWIFT Board of Directors, Yawar is also a Managing Director in the Institutional Clients Group at Citigroup. Before joining Citigroup, Yawar was at JPMorgan for over 20 years. Positions there have included Global Operations Executive for Worldwide Securities Services, Retail Service and Operations Executive, Chief Operating Officer of the Global Private Bank, and General Manager of the Treasury Management Services business.
He received his BA from Harvard College and his MBA from Harvard Business School.
Another Pakistani-American, a woman named Saira Malik , has recently been appointed the chief investment officer (CIO) of a $1.3 trillion Nuveen fund. Saira held a variety of positions since joining Nuveen in 2003. Prior to being named CIO, she was head of global equities portfolio management, and before that, head of global equities research. Previously, Saira was with JP Morgan Asset Management, where her roles included vice president/small cap growth portfolio manager and equity research analyst.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) was founded in 1973 to replace the telex system. It is now used by over 11,000 financial institutions to send secure messages and payment orders. Disconnecting an entire country from SWIFT is considered the nuclear option of economic sanctions, according to South China Morning Post (SCMP) . But even limited action can have a big impact. Any bank disconnected from SWIFT will have a very difficult time sending money to other financial institutions, and its customers will struggle to conduct their business.
The only alternative to SWIFT is China's CIPS, the Cross-border Interbank Payment System. CIPS was launched in October 2015 to boost international use of China’s currency in global trade settlements. The use of the yuan has increased since its inclusion in the International Monetary Fund’s Special Drawing Rights basket in 2015. In January this year, CIPS had 1,280 users across 103 countries, including 75 directly participating banks and 1,205 indirect participants. The operator said last year overseas indirect participants account for 54.5 per cent of the total.
Chinese analysts see the SWIFT sanctions on Russian banks as a wake-up call for Beijing.
“As seen from Russia’s Swift exclusion and the China-US trade friction in recent years, it is necessary to reduce reliance on Swift to ensure financial security,” Dongguan Securities analysts Chen Weiguang, Luo Weibin and Liu Menglin wrote on Monday, according to SCMP. The move to ban certain Russian banks from Swift is likely to accelerate expansion of CIPS, Beijing’s cross-border payment and settlement system, analysts say.
Pakistan's State Bank and National Bank are members of both SWIFT and CIPS. CIPS has been used by Chinese and Pakistani banks for trade settlements in Chinese Yuan. In 2018, the China-Pakistan currency swap agreement was extended for three years, and the size was doubled to 20 billion yuan or 351 billion Pakistani rupees, as China became the largest trading partner, and the bilateral trade increased on yearly basis, according to China Economic Net .
(Riaz Haq is a Silicon Valley-based Pakistani-American analyst and writer. He blogs at www.riazhaq.com )
