What is the SWIFT system, expected next step to sanction Russia
The West is increasing pressure on Russia to launch a full-scale attack on Ukraine. In the latest development, Canada, the United States, Britain and the European Union said on Friday they could act to exclude Russia from the SWIFT global interbank payments system.
Such a decision could take place in the coming days, Reuters news agency reported, citing US and European officials.
What is the SWIFT banking system?
SWIFT is a secure messaging system that facilitates fast cross-border payments and is the primary mechanism for financing international trade.
It was created in 1973 in Belgium. More than 11,000 banks and institutions in more than 200 countries are connected to the system.
According to the official website of the SWIFT system, more than 40 million messages are sent every day, and trillions of dollars are transacted between governments and financial institutions during the same period.
New system implemented
“We do it every moment of every day, all over the world. No other organization can match the scale, precision, pace and confidence that it demands,” according to its official website.
He further said that a new SWIFT gpi system has been introduced which is a new framework of rules agreed by banks to increase transparency and speed.
Who controls the SWIFT system?
According to the website, SWIFT is supervised by the central banks of the G-10 (Belgium, Canada, France, Germany, Italy, Japan, Netherlands, United Kingdom, United States, Switzerland and Sweden), as well as by the European Central Bank. , led by the National Bank of Belgium.
In 2012, this framework was reviewed and a SWIFT oversight forum was created, in which the G-10 central banks were joined by other central banks of major economies: Reserve Bank of Australia, People’s Bank of China , Hong Kong Monetary Authority, Reserve Bank of India, Bank of Korea, Bank of Russia, Saudi Arabian Monetary Agency, Monetary Authority of Singapore, Reserve Bank of South Africa and Central Bank of the Republic from Turkey.
What would be the impact of the sanction on Russia?
If these sanctions are implemented, it would affect Russian trade and make it harder for Russian companies to do business.
Since Russian companies will lose access to seamless transactions, they will not be able to receive payments for energy products like gas and oil.
Russia was threatened with similar sanctions when it annexed Crimea in 2014. Moscow has developed its own cross-border money transfer system, but it is not as advanced and secure as SWIFT.
The West is so far divided on imposing the sanctions, but White House spokeswoman Jen Psaki said Russia’s withdrawal from SWIFT “remains an option on the table” and stressed President Joe Biden’s preference for taking action with allies.