Ukrainian President Volodymyr Zelenskyy on Thursday, 24 February, pushed for Russia's exclusion from Society for Worldwide Interbank Financial Telecommunication (SWIFT) – the international finance system that allows Russia to move its money around the world – after Russian President Vladimir Putin announced a military campaign against Ukraine.
With western nations deliberating over additional sanctions to impose upon Russia, exclusion from SWIFT is being debated as one of the most disruptive of moves that can be made against Moscow.
The elimination would effectively stop the country's banks from engaging in monetary and trade transactions with foreign financial institutions, making payments arduous and more time-consuming.
What is SWIFT?
Founded in 1973, SWIFT is a Belgium-based cooperative of banks that provides the means to communicate rapidly, securely, and inexpensively, AFP reported.
These banks send out standardised messages related to transfers of sums among themselves, transfers of sums for clients, and trade in orders for assets.
"SWIFT is a neutral global co-operative set up and operated for the collective benefit of its community," the group has indicated in a statement.
It is used by more than 11,000 institutions, across 200 countries globally, and transmits over 5 billion financial messages annually.
However, the firm has had to cooperate with authorities in the past, as it holds the power to effectively finance terrorism.
What Western Countries Have Said
The head of the European Parliament, Roberta Metsola, indicated on Thursday that EU sanctions need to include Russia's disbarment from the system, even as several EU leaders continued to be unconvinced.
Meanwhile, UK Defence Secretary Ben Wallace also expressed that the UK wants Russia booted from the system.
On Thursday, 24 February, US President Joe Biden indicated that the US has opted against cutting Russia off from SWIFT, but the matter would be reconsidered.
Meanwhile, in an interaction among G7 member states, British Prime Minister Boris Johnson reportedly rallied "very hard" to remove Russia, but later admitted that it was "vital that we have unity" among western alliance members.
Another G7 official reportedly said some members were reluctant because it would render payment for Russian energy impossible, indirectly causing mounting international energy prices – a concern shared by Biden.
How is Russia Involved in SWIFT?
According to Russia's SWIFT association Rosswift, after US, Russia is the second-largest country in terms of the number of users, constituting of around 300 financial firms lodged in the system, AFP reported.
Over 50% of Russia's financial institutions are members of SWIFT, it added.
Will it be Effective to Cut Russia?
Speaking to AFP, Guntram Wolff, director of the Brussels-based Bruegel think tank expressed that the matter was debatable.
"Operationally it would be a real headache," he said, pointing that European countries have major trade relations with Russia, which is a major oil exporter.
However, Dmytro Kuleba, Ukraine’s minister of foreign affairs tweeted on Thursday, "Everyone who now doubts whether Russia should be banned from SWIFT has to understand that the blood of innocent Ukrainian men, women and children will be on their hands too."
(With inputs from AFP and Financial Times)