A coalition of NATO-aligned countries has committed to new steps aimed at disassociating Russia from the global financial system, the countries stated today in a joint letter. The letter, signed by the US, the United Kingdom, Canada, and European allies, outlines fresh measures to isolate Russia’s central bank and establishes a new trans-Atlantic task team to freeze sanctioned individuals’ foreign assets.
The injunction also prohibits certain Russian banks from accessing SWIFT — the international payment system that banks use to transmit money around the world.
SWIFT is an acronym for The Society for Worldwide Interbank Financial Telecommunications. It is a cooperative established in Belgium that is owned by a number of Europe’s leading banks. The organization’s eponymous payments network does not exchange money but rather serves as a means of authenticating payment instructions between institutions. Each day, its services are utilized to handle around 42 million transactions in more than 200 countries.
Russia, on the other hand, has been prepared for this possibility for years. Expulsion from SWIFT was originally proposed in 2014 in response to Russia’s incursions into Ukraine’s Donbas region, and the following year, Russia established its own local SWIFT counterpart, the System for Transfer of Financial Messages, or SPFS. China also has a competing system known as CIPS or Cross-Border Interbank Payment System. Neither of these technologies has the backing or international acceptability of SWIFT, but they may provide viable alternatives in the long run.
