SWIFT ban against Russian banks

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The SWIFT ban against some Russian banks is one of several international sanctions against the Russian regime imposed by the European Union and other western countries as a result of its invasion of Ukraine, aimed at weakening the country's economy to end the invasion by hindering Russian access to the SWIFT financial transaction processing system.

Contents

Background

SWIFT is used by thousands of financial institutions in more than 200 countries, previously including Russia, and provides a secure messaging system to facilitate cross-border money transfers. [1]

According to the Russian National SWIFT Association, around 300 banks use SWIFT in Russia, with more than half of Russian credit institutions represented in SWIFT. Russia has the second highest userbase after the United States. [2]

If Russia were to be excluded from SWIFT, its interbank payment transactions will become significantly more complex, and the country's ability to trade goods and exchange currencies would be significantly reduced, making payment be only possible in cash. [3] [4]

Timeline (2022)

24 February

The Ukrainian Government asked for Russia to be banned from using SWIFT upon the beginning of the invasion. [5] Ukrainian Minister of Foreign Affairs Dmytro Kuleba said: "The world must act immediately. The future of Europe and the world is at stake." [6] He proposed immediate "destructive sanctions" against Russia, including exclusion from the SWIFT banking system, complete isolation of Russia in all formats, the provision of weapons, equipment and humanitarian aid provision. [6] Later that day, Kuleba called on Ukraine's partners to sever all diplomatic relations with Russia. [6] However, other EU member states were reluctant, both because European lenders held $30 billion in foreign banks' exposure to Russia and because Russia had developed the SPFS alternative. [7]

25 February

French Minister of Finance Bruno Le Maire urged Russia to be expelled from SWIFT for its invasion of Ukraine. Le Maire described the SWIFT ban as the last resort and "the financial nuclear weapon". [8] Germany's Chancellor Olaf Scholz, said it was refraining from excluding Russia because Russian gas accounts for a large share of energy supplies to Germany and other parts of Europe. At the same time, Scholz suggested that such a step would be possible at a later stage. [7] The idea of excluding Russia was also supported by US President Joe Biden, who said the ban was possible, although that "that's not the position that the rest of Europe wishes to take." [7]

Later that day, German Federal Minister of Finance Christian Lindner reiterated that his country did not object to such a sanction. Lindner said his country was ready to exclude Russia from SWIFT, but that the consequences for the country's economy needed to be calculated first. [9] The foreign ministers of the Baltic states requested Russia be banned from SWIFT. [10]

26 February

On 26 February 2022, Cyprus, Italy, Hungary and Germany confirmed that they would not block the Russian exclusion from SWIFT. [11] US officials and their EU counterparts initially considered the involvement of individual banks and organizations, and the entire Russian economy. [12] The United States also imposed other sanctions against Russia, targeting banking, technological and aerospace sector of Moscow. [13]

1 March

The European Union, United Kingdom, Canada, and the United States finally agreed to remove seven Russian banks from the SWIFT messaging system: [14]

EU ambassadors have decided not to impose restrictions on the country's largest bank, Sberbank, which is partly owned by Russian gas giant Gazprom. [15] Gazprombank was also not sanctioned. [15]

31 May

The EU removed Sberbank from SWIFT as part of the 6th package of sanctions. [16]

See also

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References

  1. ↑ "How expelling Russia from SWIFT could impact the country. And why there's reluctance to do so | CBC News". 2022-02-26. Archived from the original on 2022-02-26. Retrieved 2022-07-28.
  2. ↑ Gollom, Mark (Feb 26, 2022). "How expelling Russia from SWIFT could impact the country. And why there's reluctance to do so". CBC News. Archived from the original on April 8, 2022. Retrieved April 13, 2022.
  3. ↑ "Що таке SWIFT і що буває, коли його немає". www.ukrinform.ua (in Ukrainian). Archived from the original on 2021-04-11. Retrieved 2022-04-13.
  4. ↑ "Росію відключать від SWIFT: вже розпочали технічну підготовку | Громадське телебачення". hromadske.ua (in Ukrainian). 26 February 2022. Archived from the original on 2022-04-08. Retrieved 2022-04-13.
  5. ↑ "Here's What the New, Tightened SWIFT Sanctions on Russian Banks Actually Do". Time. Archived from the original on 2022-04-12. Retrieved 2022-04-13.
  6. 1 2 3 AFP (24 February 2022). "Russia faces 'unprecedented isolation' over Ukraine invasion, EU says". TheJournal.ie. Archived from the original on 2022-02-24. Retrieved 2022-04-13.
  7. 1 2 3 "U.S., EU unlikely to cut Russia off SWIFT for now -Biden". MSN. Archived from the original on 2022-02-24. Retrieved 2022-04-13.
  8. ↑ "How Significant Is Russia's Partial Ban from SWIFT?". The New Yorker. 2022-03-08. Archived from the original on 2022-04-05. Retrieved 2022-04-13.
  9. ↑ "Germany open to cutting Russia off SWIFT but must weigh consequences - fin min". Financial Post. 2022-02-25. Archived from the original on 2022-02-25. Retrieved 2022-04-13.
  10. ↑ "A China-Russia SWIFT Alternative Will Not Undermine Iran Sanctions". The Washington Institute. Archived from the original on 2022-03-20. Retrieved 2022-04-13.
  11. ↑ Tayeb, Zahra. "Russia edges closer to being banned from SWIFT banking system as more EU countries support move". Business Insider. Archived from the original on 2022-03-21. Retrieved 2022-04-13.
  12. ↑ Walsh, Ben (2022-03-09). "The unprecedented American sanctions on Russia, explained". Vox. Archived from the original on 2022-04-11. Retrieved 2022-04-13.
  13. ↑ "U.S. Treasury Announces Unprecedented & Expansive Sanctions Against Russia, Imposing Swift and Severe Economic Costs". U.S. Department of the Treasury. Archived from the original on 2022-02-28. Retrieved 2022-04-13.
  14. ↑ "EU Cuts Seven Russian Banks From SWIFT, Bans RT And Sputnik". RadioFreeEurope/RadioLiberty. Archived from the original on 2022-04-12. Retrieved 2022-04-13.
  15. 1 2 "EU to Ban Seven Russian Banks From SWIFT, Spare Key Firms". Bloomberg.com. 2022-03-01. Archived from the original on 2022-04-10. Retrieved 2022-04-13.
  16. ↑ "EU authorized new sanctions against Russia". 31 October 2022. Retrieved 19 November 2022.
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