Canada, U.S.A. and their European allies have come to a conclusion to remove the key Russian banks from the Interbank messaging system (IMS) of SWIFT. This is a very big step that will cut off the country from much of the worldwide financial system.
- The major global powers issued a joint statement announcing this significant retaliatory measure. It said, “This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally”.
- Russia’s removal from SWIFT (Society for Worldwide Interbank Financial Telecommunication) will mean that the Russian banks will not be able to communicate securely with foreign banks.
- Previously, Iran has been removed from SWIFT in 2014 following developments to its nuclear program in Tehran.
- The announcement will follow several rounds of joint sanctions that will be imposed on Russia for its unprovoked attack on Ukraine.
- After this announcement from the Major global powers backed SWIFT, Denys Shmyhal, who is the Prime Minister of Ukraine, praised the measure in a tweet he wrote, “Appreciate your support and real help in this dark time. Ukrainian people will never forget this! Keep holding the line! We are on our land.”
- In addition to this statement, the U.S.A. and its allies announced that they will impose restrictive measures to prevent the central bank of Russia from deploying its international reserves in ways that may undermine the sanctions imposed on them.
What is SWIFT?
SWIFT stands for Society for Worldwide Interbank Financial Telecommunications and is an independent enterprise, which is based in Belgium. SWIFT serves as an internal communication mechanism between around 11,000 banks and financial institutions for more than 200 countries and territories.