By Samantha Cook & Kimmo Soramäki.
The paper, ‘The Global Network of Payment Flows‘, offers a descriptive analysis of Payment Networks created by SWIFT MT 103 messages. SWIFT MT 103 messages are the most commonly sent SWIFT message types and provide a valuable measure of global economic activity.
Within the payment network, nodes represent countries. Directed links show the flow of messages, whilst the link weight representing the number of messages between each country. The Data forms a time series of networks with a clear network for each month between January 2003 and July 2013.
Cook and Soramäki found that global political and economic events affect certain aspects of the MY 103 networks. The pair hypothesized that the reduction in messages sent after 2007 is primarily due to increased regulations resulting from the financial crisis.
Though the increasing trend in total messages sent levelled off during the financial crisis, the number of messages sent recovered at roughly the same rate, only 4.4% lower. Without the financial crisis, Cook and Soramäki stated the trend would have continued unabated.
In terms of structure, the payment networks closely follow a tiered structure with a tightly connected core. Countries classified as a ‘core’ country often exchanged messages with other ‘core’ countries and some ‘periphery’ countries. ‘Periphery’ countries, on the other hand, mainly communicated with ‘core countries. This ‘Core-Periphery’ structure is a common feature of payment networks.
This map shows the ‘Core-Periphery’ classification from the most recent network. The ‘core’ countries are in blue and the ‘periphery’ countries are in green.
Cook and Soramäki’s analysis also discovered a strong community structure. Countries within the same community were more likely to exchange messages with other countries within the same community than countries within different communities.
This map shows the community classification from the most recent network with countries, coloured by community.
A further look at exchanges between countries showed that half the total message volume came from 17 countries. Cook and Soramäki then calculated the maximum spanning tree, which retains only the essential links in the network to reveal two clusters. The first cluster formed between European countries and Germany, and the second cluster formed between American Countries and the United States. The United Kingdom linked both sets, creating a bridge between the two.
Read the full paper and Samantha Cook and Kimmo Soramäki’s full findings here: