Western nations have agreed to disassociate some Russian banks from the Swift Payment Network, an international financial transaction messaging company. The BBC has shown how much Russia will be harmed by this move of the West.
Belgium-based international organization Society for Worldwide Interbank Financial Telecommunication or Swift is the main mechanism for fast and secure international transactions. Swift is affiliated with 11,000 banks and financial institutions in more than 200 countries around the world.
The European Union, the United States and its allies have agreed to cut off some Russian banks from Swift as part of a crackdown on Moscow over its military operations in Ukraine.
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In a joint statement, the West said the move was aimed at further isolating Russia from the international financial system.
Russia relies heavily on the Swift system for its oil and gas exports. The BBC says the move to exclude Russian banks from Swift will have an impact on the country’s banking network. This is because the Russian banks that transact under this system will face major obstacles. As a result, the country’s economy will be severely damaged.
According to the White House, the move would force the country to resort to alternative systems for money transactions.
In the past, only one country was excluded from Swift. That country is Iran. As a result, Iran lost 30 percent of its foreign trade.
By selecting certain Russian banks, the West seeks to maximize the impact of sanctions on Moscow. On the other hand, they want to ensure that the impact on Europe is minimal.
The effect of separating Russian banks from Swift will not be limited to Russia. Other countries will also suffer. Countries that buy oil or gas from Russia will be at risk. Russia is the main oil and energy supplier to the European Union.
According to Alexei Kudrin, Russia’s former finance minister, a ban on Swift could reduce Russia’s economy by 5 percent.