Money makes the world go round. And SWIFT is a key player in ensuring money gets where it needs to go, across borders, languages and currencies. removing Russia SWIFT can be a powerful tool the US and its allies use to quell President Vladimir Putin’s aggression, but using it would come at a cost.
Backup. SWIFT… like in Taylor?
No. SWIFT, as in the Society for Worldwide Interbank Financial Telecommunications. Based in Belgium, it is a network that connects more than 11,000 financial institutions from all over the world. Think of it like your Venmo feed: SWIFT doesn’t move money per se, but it securely alerts everyone to money coming in and going out – with an average of 42 million messages sent across its network every day.
This is a busy group chat. Why would anyone want to be a part of this?
SWIFT is an important tool that helps keep the global economy running smoothly. Access to it means easier access to the profits of international trade. So countries that make a lot of money exporting goods to other nations would like to stay in the loop.
I understood. So what does this have to do with Russia and Ukraine?
Both countries are major exporters of commodities such as oil, natural gas and wheat. Therefore, removing Russia from SWIFT could threaten the country’s financial stability and force an end to the war.
Looks good. Why don’t they do this?
They are starting. Seven Russian banks have already been removed from SWIFT. Most notably VTB and VEB, both big names in Russia’s banking system. The West has kept cutting all banks in the country, including major players Sberbank and Gazprombank, as a last resort. Allowing them to remain in the system allows countries like Germany to continue paying for Russian energy. AND Economist Megan Greene told Skimm which also allows the world to track transactions in and out of Russia.
How about cutting out Russia entirely?
They still can. But some are calling it a “nuclear option”. Because the consequences would reach much further than Putin’s backyard – with the US and Germany likely to lose the most, given their frequent SWIFT communications with Russia. And whether that would be enough to deter Putin is debatable. Especially since the country has been preparing for the removal of SWIFT since 2014, aka when the US and allies discussed its removal from SWIFT after Putin annexed Crimea. In the end, that didn’t happen.
Who decides whether or not to kick Russia out of group chat?
SWIFT has described itself as a “neutral global cooperative”. That is, it will leave the decision to the applicable government bodies and legislators. Read: President Joe Biden and our European allies, among others, would have to be on board to remove Russia from SWIFT.
Since Russia invaded Ukraine, the US and European allies have imposed heavy sanctions on the Russian economy to try to ease tensions. Cutting Russia out of the global economy by removing it from SWIFT remains an option, but one that could come with significant collateral damage.
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Updated March 4th to include the latest SWIFT removals.
Skimm’d by Kamaron McNair, Liz Knueven, Dae Cason, Marie Schulte-Bockum, Megan Beauchamp and Stacy Rapacon