What is SWIFT?
The SWIFT system stands for the Society for Worldwide Interbank Financial
Telecommunication and is a secure platform for financial institutions to exchange information
about global monetary transactions such as money transfers.
While SWIFT does not actually move money, it operates as a middleman to verify
information of transactions by providing secure financial messaging services to more than
11,000 banks in over 200 countries. Based in Belgium, it is overseen by the central banks
from eleven industrial countries: Canada, France, Germany, Italy, Japan, the Netherlands,
Sweden, Switzerland, the United Kingdom, and the United States, besides Belgium.
Excluding Russian banks from the SWIFT platform is expected to hit the country’s economy
hard.
Moscow has been building up a cushion of foreign currency in the wake of the previous
round of sanctions in 2014, with reserves touching a record high of $630 billion in January
2022. The new measures will significantly decrease the reserves available to the country’s
central bank, according to experts.
Cutting Russian banks out of the SWIFT system – the world's main international payments
network – deals a blow to Russian trade and makes it harder for Russian companies to do
business.
signaling their joint commitment to the moves, the West is giving Putin one more chance to
back down before they unleash the full range of the economic arsenal on Russia.
