Several governments of the western countries, including the United States and the European Union, have decided to cut ‘selected Russian banks’ from accessing the international payments messaging system, SWIFT. However, the names of the banks are yet to be released.
“This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally,” the joint announcement by the European Commission, France, Germany, Italy, the United Kingdom, Canada and the United States stated on Thursday.
The Backbone of International Banking
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is an inter-banking messaging network that is used to send international payment orders within the banking system. It connects more than 11,000 banks globally, out of which over 300 are Russian financial institutions.
The move to disconnect the Russian banks from SWIFT will cut them off from the international banking network, thus crippling their business.
“As Russian forces unleash their assault on Kyiv and other Ukrainian cities, we are resolved to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies,” the joint statement added.
Further, western countries have decided to impose restrictive measures on the Russian Central Bank that will prevent it from deploying international reserves to circumvent sanctions.
Russia started its Ukraine invasion last week on multiple fronts. In response, several countries have already imposed sanctions on multiple Russian financial institutions, companies and individuals, including politicians, officials and oligarchs.
Sberbank, VTB Bank, Alfa-Bank and Bank Otkritie are some of the major Russian lenders that are already facing strict financial sanctions from Europe and the United States.
But, the SWIFT ban is considered to be the last and the biggest move in terms of sanctions that the western countries can impose on Russia. Iran is the only country that is now facing restrictions on using SWIFT.
