The European Union has highlighted a total of seven Russian banks that will be excluded from the SWIFT financial-messaging system.
According to a report by Bloomberg, the banks that would be affected are; VTB Bank PJSC, Bank Rossiya, Bank Otkritie, Novikombank, Promsvyazbank PJSC, Sovcombank PJSC and VEB.RF
On the other hand, the nation’s biggest lender, Sberbank PJSC and a bank part-owned by Russian gas giant Gazprom PJSC are among the banks that would not be banned from the messaging system that enables trillion dollars worth of transactions around the world.
What the EU said about cutting off Russian banks
European Union had earlier stated that it plans to cut off Russian Banks from swift international banking. Speaking on the invasion of Ukraine on Saturday, European Commission President, Ursula von der Leyen Proposed some measures to the EU leaders around cutting off some banks to restrict the economy in the country.
She said, “first, we commit to ensuring that a number of Russian Banks are removed from SWIFT. This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally. Swift is the world dominant interbank system. Cutting banks off will stop them from conducting most of their financial transaction worldwide and effectively block Russia export and imports.
“Second, we will stop Putin from using the war chest. We will paralyze the assets of the central bank. This will freeze transactions and make it impossible for the central bank to liquidate asset.
“Finally, we will work to prohibit Russian oligarchy from using their financial asset on our market. All of these measures will significantly harm Putin’s ability to finance his war and they would have a severely eroding impact on its economy.
“Putin embarked on a path aiming to destroy Ukraine but what he is also doing in fact is destroying the future of his own country.”
What you should know
- SWIFT means Society for Worldwide Interbank Financial Telecommunication and represents a messaging system that runs on a network of financial institutions.
- It is used by banks worldwide to communicate information on financial transactions in a secure and standardized way.
- Swift, which delivers secure messages among more than 11,000 financial institutions and companies, is central to the global financial system and an inability to access it could cause significant economic damage.