system would stop all trade with the West and reduce its GDP by 5 percent.
What is SWIFT and how does it work?
The
Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a
Belgium-based secure messaging system which is used to make
international cross-border payments. In 2020, it was estimated 38
million transactions a day were made by SWIFT.
“SWIFT is the global payment and transaction system. It is unique and
used by all international banks. A ban from using SWIFT cuts all
financing and payment options for international payments. Global banking
and corporate exposure to Russia is around US$100 billion. Cutting
SWIFT access would block those assets and hurt mostly industrial and
energy groups in Europe,” Daniel Lacalle, chief economist at asset
management firm Tressis Gestion, said.
He
said the impact of banning Russia would be “quite dramatic” and he said
Iran lost about 30 percent of its trade when 18 Iranian banks were
banned from SWIFT as a result of US sanctions.
But
he added that there was no consensus on ejecting Russia from SWIFT as
certain countries, for example Hungary, depended on Russia for their
energy supplies.
He said there were divisions within the EU and between Germany and the UK/US." Sputnik
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