US & European allies to ban Russian banks from SWIFT banking system

Washington / London – A select few Russian banks could be expelled from the international system SWIFT, which is used to make mutual transactions across major banks worldwide. The decision taken was announced by the United States, the United Kingdom and their European allies. Following that, there have been indications of sanctions being imposed on Russia’s central bank transactions. It has been claimed that the new sanctions imposed by the West may shake the Russian economy.

Last week, the US, the EU and Japan had imposed sanctions on Russia after it recognised two Ukrainian provinces as independent states. Western countries have again announced sanctions after Russian forces intruded on Ukraine on Thursday after that. The US, the UK, Canada, Australia and the European Union (EU) had imposed sanctions on all other sectors and related things except the Russian fuel sector. But criticism had surfaced internationally that the restrictions were ineffective. Against this backdrop, using SWIFT, known as the nuclear option by the US and its allies, draws attention.

‘स्विफ्ट’ The system named Society for Worldwide Interbank Financial Telecommunication (SWIFT) is considered the backbone of financial transactions around the world. In 1973, over 11,000 banks and financial institutions in more than 200 countries were linked in this system. In the international economy, instant and smooth exchange of money are accomplished through SWIFT. Besides, more than trillions of dollars are transacted through SWIFT every day through over four crore messages. Russia’s share is said to be more than one per cent in it.

Moreover, almost all major banks in Russia are connected to SWIFT. Therefore, the decision taken by the US and its allies could be a terrific hit to Russia’s banking system. However, Saturday’s decision did not include all the Russian banks, but some have been excluded. Therefore, the real scope of the decision against Russia may come to light after the names of the banks expelled from SWIFT come to light. In the context of using the SWIFT option, it is said that it would deliver a financial blow to Russian citizens and investors. However, at the same time, Russian analysts are making aware that Russia has developed a system called SPFS, which would be an alternative to SWIFT.

Furthermore, hints have been issued to target the Russian central bank, following this decision to exclude from SWIFT. It has been conveyed that the bank would ban the transactions at the international level if that happens. Besides, Russia’s central bank will not make full use of its foreign exchange reserves. It is claimed that this would jolt the Russian government.

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