Following the invasion of Ukraine: Some of the banks in Russia were removed last night (Saturday) from the global payment system SWIFT.
Reuters
It is a secure payment system that enables payments from more than 200 countries, and is considered the world's leading payment system that connects 11,000 financial institutions around the world.
Russia's disengagement from this system will be a first and foremost step in excluding Russia from the world trade system.
Against this background, French President Emmanuel Macron defined it as a "financial nuclear weapon."
Although Russia prepared for sanctions and developed its own payment system called MIR, it was not very successful.
The measures, which will include restrictions on the international reserves of the Russian central bank, will be implemented in the coming days, European and Western representatives said in a joint statement.
"We will work together to ensure that this war is a strategic failure for Putin," EU leaders France, Germany and Italy, along with Britain, Canada and the United States, wrote. On Ukraine. "
SWIFT logo against the background of the Russian flag, Photo: Reuters
"When Russian forces attack Kiev and other cities in Ukraine, we are determined to continue to impose massive costs on Russia. Costs that will further isolate Russia from our international financial system and economies," said Ursula von der Lane, President of the European Commission and EU Executive.
$ 630 billion hit
The move is aimed at preventing Putin from using $ 630 billion from the Russian central bank's foreign exchange reserves.
As mentioned, this is a secure communication system between the banks, which in many cases is the only secure way to transfer funds.
For the sake of illustration, transfer between two banks in Israel also often goes through the system.
Most banks around the world will probably stop all transactions with the Russian banks that will be removed from the network.
As mentioned, the Russians have tried in recent years to create a parallel system called MIR, but currently the only countries connected to MIR are: the United Arab Emirates, Uzbekistan, Bulgaria, Turkey and Thailand.
The immediate effect of disconnecting from SWIFT
Considerable devaluation of the Russian ruble
Acceleration in inflation, which is already high in Russia
Raising interest rates by the Central Bank of Russia to double-digit levels
Russia's disconnection from most international financial transactions
Fatal damage to revenues from oil and gas production, which constitute more than 40% of state revenues
"The new measures will prevent Russia from funding its war," von der Lane said.
"It will paralyze its central bank assets and freeze its transactions. We will dismantle the Russian financial fortress by taking this action."
The move will close the gas tap for export of the large Russian gas company GAZPROM,
EU foreign ministers will discuss tonight (Sunday) Zoom in imposing further sanctions on Russia.
Edward Fishman, a fellow at the Atlantic Council who was involved in creating sanctions against Russia in the State Department in the Obama administration, said the measures announced Saturday are a significant escalation.
"The West is giving Putin another chance to retreat before they release the entire range of the economic arsenal on Russia," Fishman said.
The reason for the West's delay so far in taking this step, is the EU's energy dependence on Russia - about 40% of the gas in EU countries is supplied by Russian Gazprom.
Italy and Germany are among the countries with the greatest exposure to Russian gas, and the fear is that disconnection from the clearing system will lead to a halt in the supply of natural gas from Russia.
However, Europe will be able to find alternative energy sources from countries like the UAE and Saudi Arabia, but this is a process that will take time.
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