US dollar payment system debate continues, can America cut China off from SWIFT?
- Analysts and officials continue to say it is highly unlikely United States will cut off China or Hong Kong from US dollar payment system SWIFT
- The issue is seen as a major threat to not only China’s future economic development, but also to world peace
Debates continue among Chinese officials and analysts as to whether the United States has the ability and willingness to reduce or even completely cut off China’s access to the US dollar system, reflecting a sense of uneasiness in Beijing about the potential ramifications of a financial war with Washington.
The general consensus, according to published reports and views, is that Washington will not go to this extreme, as it has with Iran and North Korea, because of the risks that such a drastic move would pose to the US itself and to the global economy.
Washington has already announced that it will penalise individuals involved in undermining Hong Kong’s autonomy and punish Chinese financial institutions that continue to do business with them – a relatively targeted approach to financial sanctions. A big question is whether these sanctions could escalate.
Kicking Hong Kong out of SWIFT would not only harm Chinese financial institutions in the city
Wang Yongli, a former vice-president at Bank of China and a former member of the board of SWIFT – the international financial payments system – wrote in a note over the weekend that it would be “highly complicated and impractical” for the US to exclude all Chinese and Hong Kong financial institutions from the US dollar payments system.