What is SWIFT? Why being banned could be seriously painful for Russia and Vladimir Putin

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Russia has broken international law by invading Ukraine – an act that’s drawn widespread condemnation from around the world. A series of sanctions have been aimed at Vladimir Putin, in hope of de-escalating tensions. Boris Johnson is reportedly pushing for Russia to now be ejected from SWIFT.

What is SWIFT?

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

It’s a high-security network that financial institutions use to transfer money across borders.

While SWIFT doesn’t actually work as a bank – it doesn’t hold or receive any money – it uses standardised codes for banks to process payments faster.

More than 11,000 financial businesses have used SWIFT, and about 10 billion transactions are processed each year.

SWIFT is owned by the members banks, themselves, and is governed by a board of 25 directors.

It’s overseen by the G10 central banks, including Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Great Britain, the United States, Switzerland and Sweden.

But the European Central Bank also plays a role in regulating the network.

A number of Russian companies use SWIFT to verify payments from around the world.

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Why would removing Russia from Swift affect Putin?

Russia relies on SWIFT to do business with organisations around the world.

The buying and selling of goods, including oil and gas, would temporarily cease without access to SWIFT.

Russia would likely suffer a major economic downturn if it were ejected from the network.

But, the downturn would likely only be temporary, as there are alternative ways to process payments from around the world.

However, while Russia would be hampered by being removed from SWIFT, it would also affect the rest of Europe.

Russian Vice Speaker of the Federation Council, Nikolay Zhuravlev, has previously claimed Europe won’t be able to receive gas, oil, or metals if Russia were to be disconnected from SWIFT.

He said last month: “”SWIFT is a settlement system, it is a service. Therefore, if Russia is disconnected from SWIFT, then we will not receive [foreign] currency.

“But buyers, European countries in the first place, will not receive our goods – oil, gas, metals and other important components of their imports. Do they need it? I am not sure.”

UK Prime Minister Boris Johnson is reportedly pushing for Russia to be ejected from SWIFT.

It would form part of the sanctions package already established against the Kremlin.

However, German Chancellor, Olaf Scholz, has already ruled out removing Russia from the network.

Mr Scholz also warned Mr Johnson that the European Union also wouldn’t support the measure.

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