US, Canada, UK and EU Putting in Efforts to Ban Russian Banks from Accessing SWIFT interbank messaging system
- Published | 11 March 2022
US, Canada, UK and various EU member states have shown strong interest in agreeing to the removal of the Russian banks from the well-recognized interbank messaging system, SWIFT. It happens to be an excruciating step levied upon Russia that could end up detaching the Russian economy from the global financial system. It is being imposed so as to ensure that the Russian banks get disconnected from any sort of international payments as well as the financial system, which could hinder their capability in operating and trading across the world. With banning the SWIFT, the Russian banks won’t be capable to secure any of the trade and communicate securely with other banks outside its borders. Iran had earlier been removed from SWIFT back in 2014 due to Tehran’s nuclear program.
SWIFT happens to be an independent enterprise, which has been based out of Belgium serving as an internal messaging system for over 11,000 banks as well as financial institutions for more than 200 countries across the world. Any decision for imposing any sanctions on countries relies only on the governmental bodies as well as applicable legislators. As the systems have been incorporated under Belgian law, the company’s obligation is for complying with the EU as well as the Belgian regulations. The SWIFT group stated that it has been seeking more details on those entities that are violating the laws so that the new effort has a direct and strong impact. After the company’s announcement, the Ukrainian Prime Minister wholeheartedly welcomed the decision and tweeted that they appreciate the country's support and assistance in such a time.
In addition to this, the US and some of its allies have also announced that they are more than willing to impose much stricter measures focused at reducing the powers of Russia’s central bank that restrains Russia is deploying its international reserves, which could have altered the sanctions levied on the country. The USD 600 billion war chest comprising Russia’s foreign reserves could only become powerful if Putin uses it. One of the officials stated that the impact of sanctions levied on Russia are anticipated to be felt immediately. The country is expected to witness a chilling effect across the Russian banking sector. They stated that the countries have targeted over 10 of Russia’s largest financial institutions, which happen to hold more than 80% of the total assets possessed by the Russian banking sector.
The growing speculations for China joining Russia and assisting them financially amid painful sanctions had also been denied by the officials. China has been found at the other end of the river as it has restricted some of its banks from providing credit assistance to facilitate energy purchases across Russia. The European Commission leaders, Germany, France, the United Kingdom, Italy, Canada as well as the US have started their plans on limiting the sale of golden passports for Russian citizens. One of the officials stated that they happen to act as a loophole in the system enabling wealthy Russians to stay connected to the Kremlin and become citizens in some other countries. The official stated that they are expected to go after the oligarch’s yachts, luxury apartments, funds, and their ability to send their children in esteemed colleges across the West.
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