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NUCLEAR OPTION: Cutting Off Russia From Swift Banking System


February 26, 2022

I have to admit I’ve never looked into the SWIFT Banking System, but now it’s at the forefront with Putin’s invasion of Ukraine. So I decided to look into it. For the last couple of days I’ve been very impressed with a lady named Hagar Chemali who appeared in the Rachel Maddow Show.

First, what is SWIFT?

“It is always an option,” Biden told reporters at the White House, “but right now it’s not the position that the rest of Europe wishes to take.”

The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a cooperative of financial institutions formed in 1973 overseen by the National Bank of Belgium in partnership with other major central banks, including the U.S. Federal Reserve System, the Bank of England and the European Central Bank.

It acts as a secure messaging system that links more than 11,000 financial institutions in over 200 countries and territories, alerting banks when transactions are going to occur. (For instance, U.S. banks have unique SWIFT codes that customers use for incoming wire transfers in U.S. dollars.)

SWIFT said it recorded an average of 42 million messages per day last year, an 11 percent increase from 2020, when Russia accounted for 1.5 percent of transactions.

Cutting Russia out of the SWIFT would be devastating, damaging Russia’s economy immediately and in the long term. The move could cut Russia off from most international financial transactions, including profits from oil and gas production, which account for more than 40 percent of the country’s revenue.

But kicking Russia out of SWIFT would also hurt other economies, including those of the U.S. and a key ally, Germany.

Russia remains a key energy supplier to Europe, blocking SWIFT in Russia could actually hurt some European countries, particularly Germany and Italy. Without SWIFT, it would be harder for these countries to buy much-needed Russian oil and gas