Russia- Ukraine Conflict: Some countries including Britain are preparing to cut Russia from the SWIFT network.
Russia- Ukraine Conflict: Russia may soon have to face severe economic damage due to the attack on Ukraine. The British government is pushing Russia to be taken out of the global SWIFT network. Ukrainian President Volodymyr Zelensky has urged Germany and Hungary to support the separation of Russia from SWIFT. At the same time, the Eurozone central banker says that Russia is now a guest of only a few days in the SWIFT network.
Russia’s army is continuously advancing in Ukraine and according to the Defense Minister, Russia’s army is now only 30 km away from Kiev, the capital of Ukraine. Although the Ukrainian army is constantly trying to stop Russia. At the same time, the President of Ukraine has refused to leave the country, rejecting the American offer. According to a report, so far about 1 lakh people from Ukraine have crossed the border and entered Poland. Efforts are on to stop the war and some countries including Britain are preparing to cut Russia from the SWIFT network. Let us know what this network is and what effect it can have on Russia if it is cut off.
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SWIFT is a worldwide money transaction network
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a network used by banks to securely send messages for money transactions and other types of transactions. It is used by more than 11 thousand financial institutions in about 200 countries around the world, which means that in a way it acts as a backbone for the financial transaction system at the global level. It transmits over 500 crore financial messages a year.
how does it work
SWIFT has the authority to record International Bank Account Number (IBAN) and BIC (Business Identifier Code) and connects more than 11,000 financial institutions around the world. When a client makes a transaction, it links the banks and if the two organizations are not partners, SWIFT connects them through an intermediate organization.
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who owns it
SWIFT is a cooperative company under Belgian law. According to the information given on its website, it is owned and controlled by about 3500 financial institutions (shareholders) around the world. This system is monitored by the central bank of the G-10 countries, the European Central Bank. On top of all this, it is also monitored by the National Bank of Belgium. The G10 consists of Belgium, Canada, France, Germany, Italy, Japan, Netherlands, Sweden, Switzerland, the UK and the US.
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What will be the effect on Russia if cut off from Swift?
According to the Russian National SWIFT Association, Russia is its second largest user after the US and about 300 Russian financial institutions are connected to this system. More than half of Russian financial institutions are members of SWIFT. This means that if Russia leaves this system, then it will not be able to transact with other countries. For example, if a country buys gas from Russia, it will usually pay through this system through the SWIFT system and if it is cut off from this system, then Russia will not be able to receive this payment.
(Input: Reuters, PTI, SWIFT)
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