23 September 2014

The Global Network of Payment Flows

Measuring global economic activity through study of SWIFT MT103 network of messaging transactions.

In an attempt to develop a useful measure of global economic activity, the paper titled “The Global Network of Payment Flows” focuses on studying the entire SWIFT MT103 network of transactions between countries. MT 103 (Single Customer Credit Transfer) is the most commonly-sent SWIFT message type and aggregation of these messages have already been shown to be a good proxy for economic activity, for example, the SWIFT Index (SWIFT, 2012) uses country-level message counts to nowcast and forecast GDP aggregated worldwide and for OECD countries and the European Union, as well as for the United States, United Kingdom, and Germany.

The authors find that certain aspects of the MT103 networks are notably affected by global political and economic events; for example, there is a large reduction in links beginning in 2007 likely due to increased financial regulation, and there is a lasting effect of the financial crisis of 2007-2009 demonstrated by a reduction in the number of messages sent. At the same time, however, the underlying structure of the MT103 network remains quite stable during the period of study.

by Kimmo Soramäki, Samantha Cook

  • Financial Network Analytics