Africa-Press – Botswana. The leaders of the main governments of the European Union and the United States approved the withdrawal of the Government of Russia from the Swift financial system.
This is, initially, the West’s toughest retaliatory measure against Russia after the military offensive against Ukraine, which is believed to affect only some of the Russian banking institutions, given the intention to weaken President Vladimir Putin’s country, mainly the local currency.
Understand Swift
Acronym for Society for Worldwide Financial Telecommunication among Banks (in the English translation), Swift is the main mechanism of the type adopted by the institutions of the international financial market. Established by Americans and Europeans in 1973 and managed by Belgium, the system connects more than 11,000 banks in 200 countries. Blocking the participation of countries, therefore, means harming their companies’ transactions in business abroad.
Swift is responsible for providing quick communication and security of banking transaction information. Each institution has an acronym BIC (International Banking Code, in translation), which identifies the origin and destination of transactions in different currencies. The system moves trillions of dollars.
Iran suffered from the Swift embargo between 2012 and 2016 because of its nuclear program, which directly affected the country’s main commodity: oil trading.
According to the Russian Swift Association, the country has the second highest number of users of the system, behind only the United States.
Measure affects Russia, but may have indirect consequences for other countries. With the completion of the move away from the Swift system, Russia would find it difficult to carry out large financial transactions, as direct communication between banks outside this system is much more time consuming. Russia had already been threatened with being removed from Swift in 2014, at the time of the annexation of Crimea, which was part of Ukraine. Therefore, it started to develop its own system of financial transfers between countries, but which is still little used. In addition, Russia’s proximity to the Chinese government made the two countries develop their own system for their trade relations.
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