Just three months after Russia’s invasion of Ukraine, economic sanctions are getting tougher.
The latest news is imminent exclusion of three Russian banks from the Swift interbank system. In the list is the giant Sberbankthe largest bank in Russia.
The measure is part of new sanctions packages that were announced by the president of the European Commission, Ursula von der Leyen.
Von der Leyen spoke this Wednesday in the parliament of the European Union and said that the idea is to “affect the Russian financial system” with the aim of achieving what he described as a “complete isolation” from the country of Vladimir Putin.
It seeks to weaken its financial capacity and, with it, force the withdrawal of Ukraine.
The European Union also wants to exclude two other Russian banks: Credit Bank of Moscow and Russian Agricultural Bank.
“This is going to solidify the total isolation of the Russian financial sector from the global system,” said von der Leyen.
The European Union was slower to sanction Sberbank than the UK and the US for fear of consequences in relation to payments for Russian oil and gas.
However, political pressure overcame these fears and led the EU to decisively analyze the suspension of Sberbank from the Swift system.
A calculation by analysts at Bruegel and the Peterson Institute for International Economics estimates that the European Union has hit only 25 percent of the Russian banking sector with sanctions.
They take out Sberbank: what is it and how does the Swift banking system work
The Society for World Interbank Financial Telecommunication (SWIFT) is a cooperative of financial companies, mainly banks, which allows international transactions to take place.
Swift is known to be a international code that provides its members with an encrypted messaging service that allows the international transfer of funds automatically.
In addition, Swift determines bank codes, known as BICs, which are necessary to make or receive transfers from other countries.
The tool is key and can be very useful for European governments in the idea of economically isolating Russia if it does not stop its attacks in Ukraine.
Pulling Russian banks out of Swift entirely would leave the country, its companies, organizations and banks without the ability to transact internationally.
Now read:
Exxon doubles profits: don’t write off fossil fuels
The business of fashion: the conflict in Ukraine hits the big brands
Wimbledon plans to ban the participation of Russian and Belarusian tennis players