It is commonly cited within the press that $10 trillion of monetary transactions stream over submarine cables day-after-day. However is it true?
To correctly deal with this declare, we have to take a look at two issues.
1. Do monetary establishments typically use submarine cables for transactions?
The quick reply is sure. Sadly, I can not get too particular right here as a result of quite a lot of TeleGeography’s information on this subject relies on confidential interviews with banks and monetary establishments.
However belief me on this, most monetary establishments are utilizing submarine cables similar to everybody else.
2. Are there $10 trillion per day globally in monetary transactions?
This is the trickier half: calculating the quantity per day in worldwide monetary transactions.
Let’s look at SWIFT transactions for instance. SWIFT is the worldwide community on which cross-border funds are initiated; the precise funds themselves are executed on solely separate networks.
In 2004, SWIFT cited 10 million messages a day and the common worth per message was about $500k. This got here out to about $5 trillion a day.
A couple of months in the past, SWIFT cited virtually 45 million messages a day, a 4.5x improve. So if the worth per message stayed the identical, that suggests $22.4 trillion a day.
Even when the common transaction worth on SWIFT has fallen, the mix of SWIFT plus different monetary networks’ day by day volumes would put us over the $10 trillion mark.
So I feel we are able to go forward and safely name this delusion true.
When researching this delusion, I used to be interested in how a lot $10 trillion actually is. This is my try to put it into perspective.
Alan Mauldin and I tackled this delusion and 5 others throughout our presentation at SubOptic 2023. Obtain our slides for the total breakdown.