EU nations are split on whether to take this step or not. Senior EU sources have told CNN that there is a divide in the member states between countries like Poland, Estonia, Latvia and Lithuania who want SWIFT as part of the sanctions package that will be announced later today, and the likes of Germany, Italy, Hungary and Cyprus, who have stronger economic ties to Russia and do not want SWIFT included in the new sanctions.
European Union leaders have been considering what some are calling the „nuclear option” of removing Russia from SWIFT, a high security network that connect thousands of financial institutions around the world, following the invasion of Ukraine, according to CNN.
US President Joe Biden said Thursday that removing Russia from SWIFT is not the direction the rest of Europe wants to go in at this moment, but noted that taking the nation out of the network is „always an option.”
“The sanctions that we’ve proposed on all their banks are of equal consequence, maybe more consequence than SWIFT,” Biden said, referring to the latest round of sanctions he announced today.
The Foreign Minister of Ukraine Dmytro Kuleba on Thursday urged the West to ban Russia from SWIFT in a tweet. Earlier on Thursday, CNN reported that the EU was undecided as to whether to cut Russia off from SWIFT and that EU nations were split over the decision.
The European Union wants to „hit” the Moscow leadership with its package of further sanctions regardless of whether SWIFT is included, according to a senior EU diplomat. The diplomat stressed that SWIFT is “on the table” and will still be considered regardless of whether it’s included in the new package.
A senior EU diplomat said “there is a conversation happening” but believes it is „likely” the economic interests will win the argument and Brussels will not cut Russia from SWIFT.
But what is SWIFT, and what could it mean for Russia? The Society for Worldwide Interbank Financial Telecommunication was founded in 1973 to replace the telex and is now used by over 11,000 financial institutions to send secure messages and payment orders. With no globally accepted alternative, it is essential plumbing for global finance.
Removing Russia from SWIFT would make it nearly impossible for financial institutions to send money in or out of the country, delivering a sudden shock to Russian companies and their foreign customers — especially buyers of oil and gas exports denominated in US dollars.
„The cutoff would terminate all international transactions, trigger currency volatility, and cause massive capital outflows,” Maria Shagina, a visiting fellow at the Finnish Institute of International Affairs, wrote in a paper last year for Carnegie Moscow Center. Excluding Russia from SWIFT would cause its economy to shrink by 5%, former finance minister Alexei Kudrin estimated in 2014.
What happens if Russia is removed? There is precedent for removing a country from SWIFT.
SWIFT unplugged Iranian banks in 2012 after they were sanctioned by the European Union over the country’s nuclear program. Iran lost almost half of its oil export revenue and 30% of foreign trade following the disconnection, according to Shagina.
It’s not clear how much support there is among US allies for taking similar action against Russia. The United States and Germany have the most to lose if Russia is disconnected, because their banks are the most frequent SWIFT users to communicate with Russian banks, according to Shagina.
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
