Germany, the United States, France, Canada, Italy and Great Britain announced a new package of economic sanctions on Russia that imposes measures to prevent the country’s Central Bank from using international reserves of around US$ 630 billion (R$ 3.2 billion). trillions).
“We pledge to impose restrictive measures that will prevent the Central Bank of Russia from using its international reserves in a way that minimizes the impact of our sanctions,” reads a statement released by the White House.
The countries also agreed to cut some Russian banks from the Swift global payments system, a German government spokesman said on Saturday, in a third package of sanctions aimed at getting Russia to halt attacks on Ukraine. .
The sanctions also include measures to limit Russia’s central bank’s ability to support the ruble, the country’s official currency.​
“We took decisive action tonight with our international partners to exclude Russia from the global financial system, including the important first step of kicking Russian banks out of Swift,” UK Prime Minister Boris Johnson wrote in a Twitter post.
“We will continue to work together to ensure that Putin pays the price for his aggression,” the politician wrote.
In addition, the agreement calls for an end to “golden passports” for wealthy Russians and their families, and will seek to identify individuals and institutions in Russia and elsewhere that support the war against Ukraine, the spokesman said.
“The countries emphasized their willingness to take further action if Russia does not end its attack on Ukraine,” the spokesman said.
The measures will be implemented in the coming days, the nations said in a joint statement.
“We are committed to ensuring that a certain number of Russian banks are removed from Swift,” Ursula von der Leyen, president of the European Commission, said in a media statement.
“This will ensure that these banks are disconnected from the international financial system and undermine their ability to operate globally.”
She said cutting Russian banks from the system will prevent them from carrying out most of their financial transactions around the world and effectively block Russian exports and imports.
The move is a blow to Russian trade and makes it harder for Russian companies to do business. SWIFT, or the “Society for Worldwide Interbank Financial Telecommunications”, is a secure messaging network that facilitates fast cross-border payments, making it a crucial mechanism for international trade.
The announcement marked an escalation of the West’s punitive economic response.
“We will work to ban Russian oligarchs from using their financial assets in our markets. Putin has embarked on a path aimed at destroying Ukraine. But what he is also actually doing is destroying the future of his own country.” said the President of the European Commission.
WHAT IS SWIFT?
Founded in 1973, the Society for Interbank Financial Telecommunications (Swift) does not handle any transfers or funds, but its messaging system, developed in the 1970s to replace reliance on Telex machines, provides banks with a way to communicate quickly, safe and cheap.
The company, based in Belgium, is a cooperative of banks and intends to remain neutral.
WHAT DOES SWIFT DO?
Banks use the Swift system to send standardized messages about money transfers between each other, money transfers to customers, and asset purchase and sale orders. More than 11,000 financial institutions in more than 200 countries use Swift, making it the backbone of the international financial transfer system.
Its pre-eminent role in finance also meant that the company had to cooperate with authorities to prevent terrorist financing.
WHO REPRESENTS SWIFT IN RUSSIA?
According to the national association RosSwift, Russia is the second largest country after the United States in number of users, with around 300 financial institutions belonging to the system. More than half of Russia’s financial institutions are Swift members.
Russia has a domestic financial infrastructure, which includes the SPFS system for bank transfers and the Mir system for card payments, similar to the Visa and Mastercard systems.
ARE THERE COUNTRIES EXCLUSION PRECEDENTS?
In November 2019, Swift “suspended” access of some Iranian banks to its network. The move followed the imposition of sanctions on Iran by the United States and threats made by then-US Treasury Secretary Steven Mnuchin that the Swift would be targeted by US sanctions if it did not agree.
Iran had previously been disconnected from the Swift network between 2012 and 2016.
ARE THERE COUNTRIES EXCLUSION PRECEDENTS?
In practical terms, being removed from Swift means that Russian banks cannot use it to make or receive payments with foreign financial institutions for business transactions.
Western nations threatened to exclude Russia from Swift in 2014 after the annexation of Crimea. But discarding such an important country — Russia is also a major oil exporter — could spur Moscow to accelerate the development of an alternative transfer system, with China, for example.
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