Amid Russia's invasion of Ukraine, Ukrainian President Volodymyr Zelensky on Saturday urged Germany and Hungary to support cutting Russia from the worldwide SWIFT banking network. According to Zelensky, an ban should be immediate will tighten the screw on Moscow.
In Europe, meanwhile, the United Kingdom government is leading the charge to exclude Russia from SWIFT, as part of tough sanctions designed to deliver a financial blow to President Vladimir Putin.
Canada and the United States are in line with the UK on this, however, there is reluctance within the European Union (EU) over what is seen as a last resort move that will impact oil and gas payments.
"The Prime Minister urged leaders to take immediate action against SWIFT to inflict maximum pain on President Putin and his regime," Downing Street said with reference to British Prime Minister Boris Johnson's meeting with NATO leaders on Friday.
This was followed up during a phone call with Canadian Prime Minister Justin Trudeau soon after, when Johnson reiterated the same message.
"The Prime Minister said allies needed to take immediate action on SWIFT, and the leaders discussed further options to increase coordinated economic pressure on Russia," noted the Downing Street readout of the call.
UK Foreign Secretary Liz Truss is believed to be on a diplomatic mission in Europe to convince allies to exclude Russia from this key banking system, which had last collectively sanctioned Iran in 2012.
"Britain wants the SWIFT system to be turned off for Russia. But unfortunately the SWIFT system is not in our control - it's not a unilateral decision," UK Defence Secretary Ben Wallace told the BBC.
He noted: "When you pay Russia for its gas, it probably goes through the SWIFT system, for example. It is based in Belgium. It has a number of partners that control it, or nation states."
"We want it switched off. Other countries do not. We only have so many options. We are going to work all day to try and get it (switched off for Russia)," he added.
The focus on SWIFT comes as Prime Minister Johnson told the leaders of NATO, the western military alliance which stands for the North Atlantic Treaty Organisation, that the UK would "imminently" impose direct sanctions on Russian President Putin and Foreign Minister Sergei Lavrov over Russia's aggression which threatened all of Europe.
"The Prime Minister told the group that a catastrophe was engulfing Ukraine, and President Putin was engaging in a revanchist mission to over-turn post-Cold War order. He warned the group that the Russian President's ambitions might not stop there and that this was a Euro-Atlantic crisis with global consequences," Downing Street said after the meeting on Friday.
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the global financial artery that allows smooth and rapid transfer of money across borders. More than 11,000 financial institutions in nearly 200 countries use SWIFT, making it the backbone of the international financial transfer system.
Founded in the 1970s, it is based on an ambitious and innovative vision of creating a global financial messaging service, and a common language for international financial messaging.
Based in Belgium, SWIFT is overseen by the National Bank of Belgium, in partnership with major central banks around the world, including the US Federal Reserve and the Bank of England. Under Belgian law, it is a cooperative company. “It’s owned and controlled by its shareholders (financial institutions) representing approximately 3,500 firms from across the world," reads on its website.
Reportedly, SWIFT sends more than 40 million messages a day, as trillions of dollars change hands between companies and governments. And more than 1% of those messages are involve Russian payments. According to the Russian National SWIFT Association, Russia has the second-most users after the US, with some 300 Russian financial institutions belonging to the system. Also, more than half of Russia’s financial institutions are members of SWIFT.
Hence, banning Russia from SWIFT could cripple Russia’s ability to trade with most of the world and will inturn deal a heavy blow to its economy. However, a few European countries are divided over banning Russia as it would hurt companies that supply goods to and buy from the country, particularly Germany.
