In the latest update to sanctions on Russia, a number of the country's banks have been banned from the SWIFT banking system.
On Thursday, February 24, in response to President Vladimir Putin sending Russian troops across the border into Ukraine in what he called a 'special military operation,' US President Joe Biden revealed a series of 'severe sanctions' that the US and its allies would be imposing on the country.
However, there was initial trepidation around enforcing an expulsion from the SWIFT banking system, though the move has now been approved.
Late yesterday, February 26, members of the European Union, the US, the UK and allies agreed to exclude some Russian banks from SWIFT. The move will affect the country's banking system and financial networks, as SWIFT is a key system used by thousands of institutions to transfer money around the world.
In a statement, per BBC News, the EU, US and UK said the sanction would 'ensure that these banks are disconnected from the international financial system and harm their ability to operate globally'.
In limiting Russia's use of SWIFT, its companies payments will be disrupted, meaning the normally smooth import and export transactions will be delayed, cost more, and could cut off revenue sources for the government.
In a joint statement, per The Independent, the Western leaders said: 'We stand with the Ukrainian government and the Ukrainian people in their heroic efforts to resist Russia’s invasion. Russia’s war represents an assault on fundamental international rules and norms that have prevailed since the Second World War, which we are committed to defending.
'We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin.
'As Russian forces unleash their assault on Kyiv and other Ukrainian cities, we are resolved to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies. We will implement these measures within the coming days.'
This is the beginning of a new page in the history of our states 🇺🇦 🇮🇹. #MarioDraghi in a phone conversation supported Russia's disconnection from SWIFT, the provision of defense assistance. Ukraine must become part of the #EU.— Володимир Зеленський (@ZelenskyyUa) February 26, 2022
In a statement, the SWIFT international payments system said: 'We are engaging with European authorities to understand the details of the entities that will be subject to the new measures and we are preparing to comply upon legal instruction.'
SWIFT – the Society for Worldwide Interbank Financial Telecommunications – is a key line of communication for trading worldwide, with links to more than 200 countries and 11,000 institutions, and is a dominant system for global financial transactions, CBS reports.
While SWIFT was not previously included by in the sanctions on Russia, more and more countries showed their support for the move as the crisis in Ukraine developed.
Had a phone conversation with @BorisJohnson. Grateful to the British Prime Minister for his position, new decisions to enhance the combat capabilities of the Ukrainian army. Agreed on further joint steps to counter the aggressor.— Володимир Зеленський (@ZelenskyyUa) February 26, 2022
On the day of the invasion, Biden met with his G7 counterparts to 'hold Russia to account' with sanctions that have seen Russian's largest bank as well as four other major banks 'cut off from the US financial system'.
Biden explained that the move was made in a bit to 'limit Russia's ability to do business in dollars, pounds, euros and yen' and to prevent the country from being able to 'compete in a high-tech 21st century economy'.
In doing so, the US joined the EU, which announced its plans to impose the 'strongest, harshest package' of sanctions ever implemented on Russia.
We did it. Cyprus confirmed it will not block the decision to ban Russia from SWIFT. Ukrainian diplomacy keeps working 24/7 to achieve important decisions and protect Ukraine from Russian invaders.— Dmytro Kuleba (@DmytroKuleba) February 26, 2022
While the EU and US were initially reluctant to kick Russia off of SWIFT, with Dutch Prime Minister Mark Rutte noting the 'serious consequences' that it could have on a 'number of countries', UK prime minister Boris Johnson pushed for the move at the G7 meeting.
Biden was also called upon by lawmakers in the US to impose every financial sanction possible.
'Every single available tough sanction should be employed and should be employed now,' Senate Republican Leader Mitch McConnell stated.
If you would like to donate to the Red Cross Emergency Appeal, which will help provide food, medicines and basic medical supplies, shelter and water to those in Ukraine, click here for more information