Here’s what Russia’s ban on the system could mean


President Biden on Thursday announced a new round of sanctions against Russia after it invaded Ukraine hours earlier.

Biden said sanctions against the country will include a “squeeze” on Russian access to technology and financial markets, sanctions against a list of “Russian elites”, limits on certain exports and more.

But one move the president did not announce on Thursday was to kick Russia out of the SWIFT financial system, telling reporters the proposed sanctions are “perhaps bigger than SWIFT.”

Why would Russia be excluded from the SWIFT banking system? Here’s what you need to know:

What is the SWIFT financial system?

SWIFT is the abbreviation of Society for Worldwide Interbank Financial Telecommunication. It is a global messaging system connecting thousands of financial institutions around the world.

SWIFT was established in 1973 and its headquarters are in Belgium. It is overseen by the National Bank of Belgium, in addition to the US Federal Reserve System, the European Central Bank and others, NBC News reported. It connects more than 11,000 financial institutions in more than 200 countries and territories around the world, notifying banks of transactions.

Alexandra Vacroux, executive director of the Davis Center for Russian and Eurasian Studies at Harvard University, previously told NPR, “It doesn’t move money, but it does move information about money.”

SWIFT said it recorded 42 million messages per day on average in 2021. This includes currency exchanges, transactions and more, Bloomberg reported.

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How would a SWIFT removal affect Russia

Excluding Russia from SWIFT would immediately harm the country’s economy and, in the long term, cut Russia off from a swath of international financial transactions. This includes international profits from oil and gas production, more than 40% of Russia’s revenue.

Iran lost access to SWIFT in 2012 as part of sanctions over its nuclear program, although many of the country’s banks were reconnected to the system in 2016. Vacroux told NPR that when Iran was launched , “they have lost half of their oil export revenue and 30% of their foreign trade.”

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What have other leaders said about Russia’s withdrawal from SWIFT?

Ukrainian President Volodymyr Zelenskyy has urged the United States and other countries to kick Russia out of the system.

Dmytro Kuleba, Ukraine’s Foreign Minister, tweeted on Thursday: “Anyone who now doubts that Russia should be banned from SWIFT must understand that the blood of innocent Ukrainian men, women and children will also be on their hands.” .

However, Biden told reporters Thursday that the move was “still an option,” but added that “at this time, that’s not the position the rest of Europe wants to take.”

German Chancellor Olaf Scholz also told reporters that cutting Russia out of the system should not be part of the European Union’s second sanctions package against Russia, according to multiple reports.

Contributor: Associated Press


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