US and Europe SWIFT for some Russian banks. will stop by

The coalition of NATO-aligned countries has committed to new measures to isolate Russia from the global financial system, the countries announced in a joint letter today. The letter, signed by the United States, Britain, Canada and European allies, lays out new measures to isolate Russia's central bank, and announces a new trans-Atlantic task force to freeze foreign assets of sanctioned individuals. Is.

In a dramatic increase, order bars see Russian banks opting from using SWIFT – the international payment system employed by banks to send money around the world.

SWIFT, which stands for Society for Worldwide Interbank Financial Telecommunication, is a co-operative based in Belgium whose owners include several of the largest banks in Europe. The organization's eponymous payment network does not actually exchange money, but is used to authenticate payment instructions between banks. Its services are used to process approximately 42 million exchanges in more than 200 countries each day.

The impact the SWIFT expulsion will have on the political and military situation in Ukraine is difficult to predict, but the move will certainly be painful for Russian banks and markets, which are already targeted by various financial sanctions.

A comment article by the Carnegie Moscow Center think tank in 2021 described the expulsion from SWIFT as a "nuclear option" that would hit Russia particularly hard, mainly because of the country's reliance on energy exports in US dollars. "The cutoff would end all international transactions, trigger currency volatility and lead to massive capital outflows," wrote author Maria Shagina.

In particular, the order does not impose a complete ban on Russian access to SWIFT, but "commits to ensuring that selected Russian banks are removed from the SWIFT messaging system."

When Iran was pulled out of SWIFT in 2012—the first time a country had been taken out of the network—it destroyed nearly half the value of the country's oil fields, reducing annual exports from $92.5 billion to $52 . Arab done. Iranian banks were reintroduced to SWIFT in 2016.

Although Russia has also been preparing for this event for years. Removal from SWIFT was suggested for the first time in response to the country's incursions into Ukraine's Donbass region in 2014, and that year, Russia established its domestic alternative to SWIFT, the System for the Transfer of Financial Messages, or SPFS. . , China also operates a rival system called the Cross-Border Interbank Payment System, or CIPS. Neither does Swift have support or international acceptance, but may provide alternatives in the long run.