Many are calling to block Russia from SWIFT. So, what exactly is SWIFT?
U.S. and European officials are holding one key financial sanction against Russia in reserve, choosing not to boot Russia off SWIFT, the dominant system for global financial transactions.Thursday. The sanctions are meant to isolate, punish and impoverish Russia in the long term. President Joe Biden announced restrictions on exports to Russia and sanctions against Russian banks and state-controlled companies.removing Russia from the SWIFT banking system despite calls to do so from a number of U.
The name is an acronym for the Society for Worldwide Interbank Financial Telecommunications, and about half of all high-value payments that cross national borders go through its platform.
U.S. lawmakers have called on Mr. Biden to deploy every available financial sanction, with Senate Republican Leader Mitch McConnell saying Thursday that America should"ratchet the sanctions all the way up. Don't hold any back. Every single available tough sanction should be employed and should be employed now."
"It's a communications platform, not a financial payments system," said Adam Smith, a lawyer who worked in the Obama administration."If you remove Russia from SWIFT, you're removing them from a key artery of finance, but they can use pre-SWIFT tools like telephone, telex or email to engage in bank-to-bank transactions."The other risk is that countries could migrate their institutions to platforms other than SWIFT, such as a system developed by China.
"Cutting off these financial institutions from utilizing the dollar, euro, pound sterling, [that's] still a pretty significant step," Lowery said."You're really having the same impact on certain subsections of the Russian economy through sanctions."Iran was blocked from the SWIFT system in 2014 because of its nuclear program. In 2019, then-Russian Prime Minister Dmitry Medvedev said losing access to SWIFT would be akin to a declaration of war against Russia.
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