Russian Banks Excluded From SWIFT:
In a move to counter Russia’s war over Ukraine, the US and the European Commission issued a joint statement to exclude some Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging system.
- The intention behind this action is to further isolate Russia from the international financial system.
- The move against Russia is only partly implemented for now, with only some Russian banks being covered.
- The option of expanding it further to a pan-country ban is something that the US and its allies are holding back as a further escalatory move.
- SWIFT provides the trusted messaging platform that enables financial institutions to exchange information about global monetary transactions such as money transfers.
- While SWIFT does not actually move money, it operates as a middleman to verify information of transactions by providing secure financial messaging services to more than 11,000 banks in over 200 countries.
- Most of the world trade takes place with financial messaging passing through SWIFT.
- It was established in 1973 and is based in Belgium.
- It is overseen by the central banks from eleven industrial countries: Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States, besides Belgium.
- India’s financial system has access to the SWIFT.
- Prior to SWIFT, the only reliable means of message confirmation for international funds transfer was Telex.
- It was discontinued due to a range of issues such as low speed, security concerns, and a free message format.