Insight Bureau: Russia’s invasion of Ukraine has amplified pressure for tougher economic sanctions on the entire country. Eliminating Russia from SWIFT network could hamper Russia’s ability to trade with most of the world and deal a heavy blow to its economy.
The United States and the European Union have decided to take steps to remove Russian Banks from SWIFT, which may impact the Russian Economy to a great extent.
What is SWIFT
Swift (the Society for Worldwide Interbank Financial Telecommunication) is a Belgium based messaging system that banks use to make rapid and secure cross-border payments, allowing international trade to flow smoothly. It has become the main or the principal system for financing international trade.
It was founded in the 1970s, is a cooperative of thousands of member institutions that use the service and is neutral when comes to trade disputes, being run principally as a service to its members.
According to a report, Russia has the second most users with 300 financial institutions belonging to the system after the US with more than half of Russia’s financial institutions are members of SWIFT.
Cutting off Russia from SWIFT would be a serious blow to the country, an economic expert said.
Vice speaker of the Federation Council said that the country’s ejection from the network was a possibility, while SWIFT is convenient, a decision like suspending a country would need unanimity among members.
Being removed from SWIFT results in restricting of Russian banks from make transactions or receive payments with foreign financial institutions.
But excluding such a major economical Country who is a significant oil and gas exporter, could have significant consequences for other countries, too.
According to a report, operationally it would be a real headache, the impact would be especially great for European countries which do significant trade with Russia, which supplies 41 percent of the continent’s natural gas.
Notably, earlier in 2014, Western nations threatened to exclude Russia from SWIFT following its annexation of Crimea.
Also Read:
Russia – Ukraine War: 10 Key Developments (February 27, 2022)
