Home Web system Russia Swift: Western allies to kick major Russian banks out of SWIFT payment system; Ukraine continues to fight

Russia Swift: Western allies to kick major Russian banks out of SWIFT payment system; Ukraine continues to fight

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The United States and its allies moved on Saturday to block some Russian banks’ access to the international payment system SWIFT, further punishing Moscow as it continues its military assault on Ukraine.

The measures, which will also include restrictions on the international reserves of the Russian central bank, will be implemented in the coming days, the nations said in a joint statement which also promised further measures to come.

“We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin,” wrote the leaders of the European Commission, France, Germany, Italy, Great Britain. Britain, Canada and the United States.

“Even beyond the measures we are announcing today, we are ready to take further action to hold Russia accountable for its attack on Ukraine,” they added.

The move comes after the United States and its allies this week imposed sanctions on major Russian banks as well as Russian President Vladimir Putin himself, among others, as Moscow’s forces pushed into the heart of Ukraine. towards Kyiv.

“As Russian forces launch their assault on Kyiv and other Ukrainian cities, we are determined to continue to impose enormous costs on Russia. Costs that will further isolate Russia from the international financial system and our economies,” said Ursula von der Leyen, President of the European Commission, the executive of the European Union.

The actions are aimed at preventing Putin from using $630 billion in central bank foreign exchange reserves during the invasion of Ukraine and defending a plummeting rouble.

The exclusion of Russian banks from the SWIFT system – the world’s main international payment network – is hurting Russian trade and making it harder for Russian companies to do business.

“Putin’s government is being kicked out of the international financial system,” a senior US administration official said.

SWIFT, or the “Society for Worldwide Interbank Financial Telecommunication”, is a secure messaging system that facilitates fast cross-border payments, thereby facilitating the flow of international trade.

It has become the main financing mechanism for international trade. Every year, trillions of dollars are transferred using the system.

The US official told reporters that if any of the banks cut off from SWIFT wanted to make a payment with a bank outside Russia, they would likely have to use a phone or fax. But the official said most banks around the world would likely stop all transactions with Russian banks removed from the network.

The United States and its allies will finalize the list of banks that will be cut off from SWIFT, the official said, adding that banks already under US and European sanctions would be considered first.

US President Joe Biden on Thursday announced sanctions aimed at limiting Russia’s ability to do business in dollars, euros, pounds and yen. Among the targets were five major Russian banks, including Sberbank and VTB, the country’s two largest lenders.

Responding to questions at the time, Biden said there was no agreement to take the SWIFT action – suggesting that the views of allies who were resistant had since turned sharply against Putin.

‘WAR CHEST’

The new measures announced on Saturday will also prevent Russia “from using its war chest”, von der Leyen said, crippling its central bank assets, freezing its transactions and preventing the central bank from liquidating its assets.

“We are disarming the Russian fortress by taking this step,” the US official said, adding that further actions targeting the central bank could be finalized over the weekend.

The United States imposed sanctions on Iran’s central bank in 2019 following attacks on oil facilities in Saudi Arabia claimed by the Iran-aligned Houthi movement in Yemen.

At the time, then-US President Donald Trump said the measures, aimed at cutting off Iran’s remaining sources of funding, were “the toughest sanctions ever imposed on any country.”

“Sanctioning the central bank – this has got to be the biggest hammer left in the tool shed,” said Paul Marquardt, an attorney at Davis Polk in Washington, where he advises clients on US sanctions.

The allies also pledged on Saturday to limit the sale of citizenship via so-called golden passports used by some wealthy Russians to gain residency in Western countries and access their financial systems.

The partners will also launch a task force to “identify, track and freeze the assets of sanctioned Russian companies and oligarchs, their yachts, mansions and any ill-gotten gains we can find and freeze.”

EU foreign ministers will discuss the sanctions package in a virtual meeting on Sunday evening, the fourth time they have met in a week.

Edward Fishman, an Atlantic Council member who worked on Russia sanctions at the State Department during the Obama administration, said the measures announced Saturday were a significant escalation.

By signaling their joint commitment to the measures, Fishman said, the West was “giving Putin one more chance to back down before unleashing the full range of economic arsenal against Russia.”