Merkel cool on EU Swift alternative to keep Iran deal alive

German Chancellor Angela Merkel has poured cold water on her foreign minister's suggestion that Europe should build its own alternative to Swift as a way of salvaging the Iran nuclear deal.

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Merkel cool on EU Swift alternative to keep Iran deal alive

Editorial

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In an article for Handelsblatt, Heiko Maas - who is a member of Germany's junior coalition member party, the Social Democrats - offers a critique of America under Donald Trump's leadership and argues that the EU should take the opportunity to redefine its role in the world.

Among the issues Maas raises is America's withdrawal from the Iran nuclear agreement. In order to keep the deal alive, it is "essential that we strengthen European autonomy by establishing payment channels independent of the US, a European monetary fund and an independent Swift [payments] system," writes Maas.

In 2016, the agreement led to Swift reconnecting Iran's banks to its payments networks, ending a four year block on institutions from the country.

With the Trump administration already imposing new sanctions on Iran, Germany and other partners in the nuclear deal are working to ensure that Iran continues to see enough economic benefits to stick to its side of the agreement. An important part of this is keeping open payment channels.

Asked about Maas's article during a news conference, Merkel offered support but suggested that a Swift alternative is unlikely, saying: "On the question of independent payment systems, we have some problems in our dealings with Iran, no question, on the other hand we know that on questions of terrorist financing, for example, Swift is very important."

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Comments: (1)

Christopher Williams

Christopher Williams Chairman at RTpay

I have to agree with Maas that an alternative payment structure should be created, but it is more a case of an international alternative to the dollar. The current US administration is using dollar dominance - and its chosen bully boy trade sanctions policy - to intimidate other countries  and companies (not just EU) into actions against their governments' policies.

Of course it is not easy; it is clear that the euro is not strong enough as an alternative currency itself, but a broader base alliance of countries/ currencies should be in everyone's interest, including the vast majority of US businesses that wants a return to 'normal' diplomacy. 

Working with Japan, India, the rest of Europe etc. could generate a viable option for trade, reverting to national fiats on forward-dated settlement schedules. A world where reserves are held in dollars, yuan and the mega-blend currency could bring greater financial security for all - and a chance to counter extreme political pressure. 

The arrival of DLT, and the use of smart contracts, can resolve much of the SWIFT/ correspondent banking issues as a fundamental part of the solution. Hopefully Macron can push the EU in this direction - and Merkel does not stay as negative as her put down of Maas suggests.   

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