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.
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.
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.
SWIFT is based in Belgium and governed by a board consisting…
Source : cnn
