Source: AdobeStock / GAlexS
Despite Russia launching a full-scale invasion of Ukraine, the war’s outbreak has not yet convinced the European Union to push for the aggressor to be kicked out of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) global payments network — a move that would drastically undermine Russian trade with foreign partners.
SWIFT describes itself as a global member-owned cooperative and the globe’s leading provider of secure financial messaging services. In 2021, the system recorded an average of 42m messages per day, up 11.4% compared with a year earlier. Messages can signal customer payments, financial institution transfers, collection and cash letters, treasury and securities transfers, and other types of financial activities that banks across the world process on a daily basis.
Several sources close to the EU’s decision-makers are cited as telling Reuters that, as the bloc is working on a new set of sanctions to punish Russia for its military intervention against Ukraine, steps to push Moscow out of the interbank payments system are currently not part of the discussions.
“Urgency and consensus is utmost priority at the moment,” an anonymous EU diplomat is quoted as saying.
However, at this stage, a consensus would require leaving the issue of SWIFT off the table, as removing Russia from the system would have wide-ranging consequences also for the bloc’s member states, the source claims.
Today’s emergency European Council summit is expected to pave the way for a new batch of EU sanctions against Moscow.
Ursula von der Leyen, President of the European Commission, said in a tweet that,
“The sanctions will target strategic sectors of Russia’s economy. We will freeze Russian assets in the EU and stop access of Russian banks to our financial market. This is designed to take a heavy toll on the Kremlin’s ability to finance war.”
Figures released by the Bank of International Settlements (BIS) indicate that European lenders hold the largest share of the USD 30bn of foreign banks’ exposure to the Russian market.
Meanwhile, some observers argue that a SWIFT block could be the most logical course of action for the Western allies — potentially forcing the Kremlin to embrace crypto.
On February 22, in its announcement of the first tranche of sanctions on Russia, the US government said that it was imposing blocking sanctions on two major state-owned Russian financial institutions, Vnesheconombank and Promsvyazbank.
Washington also declared that,
“[A]ny institution in the financial services sector of the Russian Federation economy is a target for further sanctions. Over 80% of Russia’s daily foreign exchange transactions globally are in U.S. dollars and roughly half of Russia’s international trade is conducted in dollars. With this action, no Russian financial institution is safe from our measures, including the largest banks.”