The European Union, the U.S, the UK, and Canada have agreed to ban several Russian banks from using SWIFT, the payments system used by most banks in the world to make international transactions.
The decision will make it significantly harder for Russia to make imports or exports.
What is SWIFT?
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. It is an instant messaging system that allows rapid transfer of money around the world and between different currencies. It is jointly owned by more than 2,000 banks and used by 11,000.
The banned Russian banks will now need to find alternative ways to make international transactions.
Ukraine has been calling for a ban on SWIFT for several days. German Chancellor Olaf Scholz had opposed the ban. In response, Ukrainian Foreign Minister Dmytro Kuleba tweeted he would “not be diplomatic… everyone who now doubts whether Russia should be banned from SWIFT has to understand that the blood of innocent [people] will be on their hands too.”
Germany has now dropped its opposition and agreed to enact a SWIFT ban, but it is not yet clear which banks will be covered by the ban and whether it will apply to all payments on SWIFT or whether there will be some exceptions. In a joint statement after the ban was announced, the German Foreign Minister and Economy Minister called for a “targeted and functional restriction”. “We are urgently working on how to limit the collateral damage… [so] that it affects the right people,” they said.
Western leaders have also announced they will paralyse the assets of Russia’s central bank. Ursula von der Leyen, President of the European Commission, said this would “freeze its transactions”.
Ukrainian Prime Minister Denys Shmyhal welcomed the announcements in a Tweet yesterday.