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After the attack from Russia in Ukraine, all western countries are imposing economic sanctions on it. The biggest setback in this would be for Russia if it were banned from the SWIFT network. It is a global interbank payment system. But according to Joe Biden, it has not been included in fresh sanctions because some European countries are not ready for it yet. But it is definitely available as an option.
Ukraine's foreign minister has expressed regret for not imposing a swift ban on Russia by European countries.
What is SWIFT Payment system?
SWIFT is the world's largest payment system, if Russia goes out of it, then all the companies and trade of Russia will come to a standstill. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication.
It is a secure messaging system used by banks around the world to make cross border payments. It makes the flow of international trade fast and smooth. More than 38 million transactions were done by it every day in 2020 alone. Swift facilitates deals on Trillion Dollars.
Starting in 1970, SWIFT is a cooperative of thousands of member institutions. It is based in Belgium, it is always neutral in terms of disputes.
According to Boris Johnson, it will destroy the Russian economy, if all its bank transactions are stopped. He will then have to pay through another system, which will take longer and cost more.
Why Western Countries Are Avoiding SWIFT Ban on Russia?
Countries that are against the Swift ban on Russia believe that it will not affect Russia much, Germany is among them. On the contrary, their economy will be in danger. After the SWIFT ban, Russia can make payments through other means such as phone, messaging apps, and email. Russia can also use payment systems from other countries that have not imposed sanctions on it. For example, China's Rival CIPS system can be useful for him. This will hurt the US dollar, which is a global reserve currency. This could also increase the use of cryptocurrencies.
The US believes that due to this, European countries themselves will suffer more than Russia. Because Russia buys a large number of manufactured goods from the Netherlands and Germany, the SWIFT ban will affect their trade. Russia is a supplier of gas, crude oil, and solid fossils to the European Union, after the ban these countries will have no other option.
SWIFT is a neutral and independent organization, but in 2012 the European Union banned Iranian companies from using SWIFT. The world has this option, but it is not possible to say how much impact it will have. Ukraine's foreign minister has expressed regret for not imposing a swift ban on Russia by European countries.
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