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What are the Russian sanctions SWIFT banking system?

Russia’s withdrawal from the SWIFT financial system is one of the most difficult steps the United States and its allies can take.

WASHINGTON – World leaders on Thursday reacted to Russia’s occupation of Ukraine by imposing strong sanctions on the Russian economy, President Vladimir Putin’s inner circle and many of the country’s oligarchs.

One of the leaders announcing heavy sanctions was President Joe Biden, who said the United States would block the assets of major Russian banks, impose export controls on the country’s high-tech needs, and impose sanctions on business oligarchs. Ukrainian officials have called on the United States and the West to go further and cut the Russians out of the SWIFT financial system.

“We demand Russia’s secession from SWIFT, the introduction of a no-fly zone over Ukraine and other effective steps to prevent the aggressor,” Ukrainian President Vladimir Zelensky tweeted.

However, the Biden administration has shown that it does not want to cut off Russia from SWIFT, at least immediately, due to concerns about Europe and other Western economies. Responding to questions from reporters, Biden said the decision on SWIFT seemed to be pushing European allies.

“It’s always an option, but right now it’s not the position that the rest of Europe wants to take,” Biden said.

CONTACT: Biden strikes Russia with new sanctions, Putin says he “chose” war

What is SWIFT?

The World Interbank Financial Telecommunication Society, or SWIFT, is a cooperative of financial institutions based in Belgium. It is controlled by the National Bank of Belgium, along with the US Federal Reserve and other central banks.

Unlike a traditional bank, the SWIFT financial system does not hold deposits. It manages millions of messages every day and connects more than 11,000 financial institutions around the world. SWIFT recorded an average of 42.0 million messages per day in 2021, he said.

“It doesn’t transfer money, but it does move information about money,” Alexandra Vacroux, executive director of the Davis Center for Russian and Eurasian Studies at Harvard University, told NPR last month. He added that Russia’s cut-off was seen as a “nuclear option” for its broad-spectrum effects.

RELATIONS: How much can US sanctions hit Russia hard?

What will happen to Russia and other countries?

For the United States and its European allies, Russia’s withdrawal from the SWIFT financial system will be one of the most difficult financial steps they can take, and will cause immediate and long-term damage to the Russian economy. The move could deprive Russia of most international financial transactions, including international profits from oil and gas production, which account for more than 40 percent of the country’s revenue.

European officials say Russia’s loss of access to SWIFT could affect the wider global economy. Russia has equated the SWIFT ban with a declaration of war. As the system strengthens the importance of the US dollar in global finance, open bans also run the risk of encouraging countries to use alternatives through the Chinese government or blockchain-based technologies.

CONTACTS: Hundreds of Russians arrested in protest of attack on Ukraine

Has it been used in sanctions before?

In 2014, when Russia annexed Crimea and supported separatist forces in eastern Ukraine, allies on both sides of the Atlantic also considered the SWIFT option. Russia said at the time that removing it from SWIFT would be tantamount to declaring war. The allies, criticized for their weak response to Russia’s 2014 aggression, rejected the idea.

Since then, Russia has tried to develop its remittance system with limited success.

The United States has previously persuaded the SWIFT system to expel one country, Iran, over its nuclear program. However, Russia’s withdrawal from SWIFT will hurt other economies, including the United States and its main ally Germany.

What are the Russian sanctions SWIFT banking system?

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