PARIS — Exclusion from
SWIFT, a very
discreet but important cog in the machinery of international finance, is one of
the most disruptive sanctions the West has deployed against Russia for its
invasion of Ukraine.
اضافة اعلان
The move had been threatened in recent weeks by the
United States, the
European Union and other Western allies as a means of
escalating punishment of Russia for its aggressions against its ex-Soviet
neighbor.
On Saturday, as the Russian military stepped up its
assault on
Ukrainian cities, Western allies sought to cripple the country’s
banking sector and currency by cutting selected banks from the international
system used to transfer money, severely hamstringing Russia’s ability to trade
with most of the world.
The measures were backed by the United States,
Canada, the
European Commission, Britain, France, Germany and Italy. The group
of world powers said in a statement it was “resolved to continue imposing costs
on Russia that will further isolate Russia from the international financial
system and our economies”.
What is SWIFT? Founded in 1973, the Society for
Worldwide Interbank Financial Telecommunication, or SWIFT, actually does not
handle any transfers of funds itself.
But its messaging system, developed in the 1970s to
replace relying upon Telex machines, provides banks the means to communicate
rapidly, securely and inexpensively.
The non-listed, Belgium-based firm is actually a
cooperative of banks and proclaims to remain neutral.
What does SWIFT do? Banks use the SWIFT system to
send standardized messages about transfers of sums between themselves,
transfers of sums for clients, and buy and sell orders for assets.
More than 11,000 financial institutions in over 200
countries use SWIFT, making it the backbone of the international financial
transfer system.
Who represents SWIFT in Russia? According to the
national association Rosswift,
Russia is the second-largest country following
the United States in terms of the number of users, with some 300 Russian
financial institutions belonging to the system.
More than half of Russia’s financial institutions
are members of SWIFT, it added. Russia does have its own domestic financial
infrastructure, including the SPFS system for bank transfers and the Mir system
for card payments, similar to the Visa and Mastercard systems.
Are there precedents for excluding countries? In
November 2019, SWIFT “suspended” access to its network by certain Iranian
banks.
The move followed the imposition of sanctions on
Iran by the United States and threats by then-Treasury Secretary Steven Mnuchin
that SWIFT would be targeted by US sanctions if it did not comply.
Is it a credible threat? Tactically, “the advantages
and disadvantages are debatable,” Guntram Wolff, director of the Brussels-based
Bruegel think tank, told AFP.
In practical terms, being removed from SWIFT means
Russian banks can’t use it to make or receive payments with foreign financial
institutions for trade transactions.
But excluding such a major country – Russia is also
a major oil exporter – could spur Moscow to accelerate the development of an
alternative transfer system, with China for example.
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