This list of seven banks blocked from SWIFT may just be a starting point. Read More: Why Sanctions on Russia Aren’t Targeting Oil and Gas Why stop there? The ban also extends to any entities for which the seven banks hold more than 50% ownership. As a consequence, the SWIFT removal may frustrate state officials’ dealings with other countries. sanctioned last week, but since EU countries are still buying Russian oil and gas, the current SWIFT ban does not specifically affect that.ĮU officials chose the specific seven banks because of their Kremlin connections, Reuters reported. President Joe Biden included Sberbank in the list of banks the U.S. Notably missing from that list are main banks that handle Russian oil and gas transactions, such as the country’s largest bank, Sberbank, or Gazprombank. They have 10 days to cease sending SWIFT messages before they are fully blocked from the system. In addition to VTB, the EU said the other affected banks are Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank and VEB. The seven banks the EU specified give insight into what the coalition of countries does, and does not, hope to affect with the sanctions. Read More: The Vital Missing Link in the U.S.
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But CIPS is much smaller, with roughly 1,300 financial institutions participating, most of them indirectly. China also has an alternative to SWIFT called the Cross-Border Interbank Payment System (CIPS).
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But those transactions likely won’t be as secure, and could end up being slower and costing more. There are workarounds-the banks could use other messaging systems, such as apps or email. That means individuals and companies using those banks will have a harder time borrowing or investing money across national borders, receiving cash for exports and paying for imports. So access to the system is all but necessary for conducting business overseas, and the seven Russian banks banned from SWIFT will therefore not have access to international markets. More than 11,000 financial institutions worldwide use SWIFT and they send around 38 million SWIFT messages daily, according to 2020 data. When a bank is a member of SWIFT, their instruction messages are cleared as secure immediately, so the transactions happen quickly. Since it began in 1973, SWIFT has become an integral part of the flow of global trade.
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It doesn’t shuttle any money itself, but provides instruction messages for just how to give and receive specific funds. SWIFT, formally known as the Society for Worldwide Interbank Financial Telecommunication, is a messaging system for banks and other financial institutions around the world. Here’s what those blocks mean for Russia and the rest of the world. So on Wednesday, the EU released the list of seven financial institutions that won’t be able to use SWIFT, including VTB, the country’s second-largest bank. and Canada said in a joint statement announcing the initial SWIFT ban over the weekend.Īt the time of that statement, the country leaders were not specific about how broad the ban would be and what types of financial institutions it would target.
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“We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin,” leaders of the EU, U.K., U.S.