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Seven Russian banks removed from SWIFT


Seven Russian banks removed from SWIFT

Seven Russian banks will be removed from the SWIFT financial system today
Seven Russian banks will be removed from the SWIFT financial system today – Photo: Geoffroy van der Hasselt/AFP/Getty Images

Seven Russian banks will be disconnected from the SWIFT financial network today.

This move, required by EU regulations, comes in response to Russia’s invasion of Ukraine in February. SWIFT is a Belgian messaging system that connects about 11,000 financial institutions around the world. Removing Russian financial institutions from SWIFT means they will lose access to a key artery of finance and consequently the integrated global economy. However, Russian banks can still use pre-SWIFT tools like engaging in bank-to-bank transactions. This method is not nearly as efficient as SWIFT, so expect Russian institutions to lose out on some international foreign trade because of this.

While de-SWIFTing these 7 Russian banks will make bank transactions more complicated, the real effect on Russian banks comes from the widespread sanctions placed on the financial institutions. De-SWIFTing does have some effects, including signaling effects. Once a bank is sanctioned, kicking these sanctioned banks off SWIFT clearly tells institutions in other countries not to work with the sanctioned bank.

Expect to see more sanctions on Russian financial institutions and Russian elites as the war continues. Specific steps could include adding more kinds of technology and new companies to blacklists or banning imports of energy from Russia.

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