Russia SWIFT sanctions “picked carefully” to avoid German energy crisis

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Symbiosis

As many have antic­i­pat­ed, and some feared, West­ern gov­ern­ments will be using the Soci­ety for World­wide Inter­bank Finan­cial Telecom­mu­ni­ca­tions (SWIFT) pay­ment sys­tem to tight­en sanc­tions on Rus­sia after Pres­i­dent Putin’s mil­i­tary attack on the neigh­bor­ing coun­try of Ukraine.

West­ern lead­ers agreed Sat­ur­day to impose more finan­cial sanc­tions on Rus­sia, includ­ing remov­ing “select­ed Russ­ian banks” from the SWIFT inter­na­tion­al pay­ments sys­tem, accord­ing to a report by Politico.

In a joint state­ment, the polit­i­cal lead­ers of the Unit­ed States, the Euro­pean Com­mis­sion, France, Ger­many, Italy, the Unit­ed King­dom and Cana­da vowed to “hold Rus­sia to account and col­lec­tive­ly ensure that this war is a strate­gic fail­ure” for Russ­ian Pres­i­dent Vladimir Putin.

As per the state­ment, sev­er­al Russ­ian banks will be blocked from the inter­na­tion­al pay­ments sys­tem, and the Bank of Rus­sia will also have its assets frozen, lim­it­ing its abil­i­ty to liq­ui­date its over­seas reserves. The state­ment said that the action would “fur­ther iso­late Rus­sia from the inter­na­tion­al finan­cial system.”

“As Russ­ian forces unleash their assault on Kyiv and oth­er Ukrain­ian cities, we are resolved to con­tin­ue impos­ing costs on Rus­sia that will fur­ther iso­late Rus­sia from the inter­na­tion­al finan­cial sys­tem and our economies,” the state­ment continues.

“We com­mit to ensur­ing that select­ed Russ­ian banks are removed from the SWIFT mes­sag­ing sys­tem. This will ensure that these banks are dis­con­nect­ed from the inter­na­tion­al finan­cial sys­tem and harm their abil­i­ty to oper­ate globally.”

The new mea­sure­ments could bring dif­fi­cul­ties on West­ern states as well, espe­cial­ly Ger­many which is high­ly depen­dent on nat­ur­al gas deliv­er­ies from Rus­sia. These gas exports are, of course, paid for using SWIFT.

The Ger­man gov­ern­ment said, In a sep­a­rate state­ment, that the mea­sure would apply to “Russ­ian banks that are already sanc­tioned by the inter­na­tion­al com­mu­ni­ty and, where nec­es­sary, addi­tion­al Russ­ian banks.” Ger­many has pre­vi­ous­ly resist­ed exclud­ing Rus­sia from SWIFT, cit­ing a poten­tial ener­gy cri­sis in Germany.

In an effort to min­i­mize these risks, the new sanc­tions will like­ly be aimed at cer­tain Russ­ian banks that don’t han­dle these par­tic­u­lar gas-relat­ed pay­ments. To that end, the West­ern coun­tries have been coor­di­nat­ing with SWIFT to find ways to iden­ti­fy ener­gy trans­ac­tions in the sys­tem or whether cut­ting off cer­tain banks would lim­it the poten­tial for dis­rup­tion, a senior U.S. admin­is­tra­tion offi­cial said on a brief­ing call for reporters.

“We are going to go insti­tu­tion by insti­tu­tion in terms of those that are removed from the net­work,” the offi­cial said. “And we’ll pick those very care­ful­ly to max­i­mize the impact on Rus­sia and min­i­mize the spillovers to Europe and the EU and the glob­al economy.”

In their state­ment, West­ern lead­ers also agreed to “restric­tive mea­sures that will pre­vent the Russ­ian Cen­tral Bank from deploy­ing its inter­na­tion­al reserves in ways that under­mine the impact of our sanc­tions,” Euro­pean Com­mis­sion Pres­i­dent Ursu­la von der Leyen said.

Though not explic­it­ly men­tioned by the Pres­i­dent of the Euro­pean Com­mis­sion, this could include Bit­coin pay­ments. Bit­coin pay­ments are already pour­ing into var­i­ous char­i­ties sup­port­ing the Ukrain­ian side of the conflict.

The SWIFT orga­ni­za­tion itself,  head­quar­tered in Bel­gium, does not mon­i­tor or con­trol the mes­sages that users send through its sys­tem, accord­ing to the organization’s web­site.

“All deci­sions on the legit­i­ma­cy of finan­cial trans­ac­tions under applic­a­ble reg­u­la­tions, such as sanc­tions reg­u­la­tions, rest with the finan­cial insti­tu­tions han­dling them, and their com­pe­tent inter­na­tion­al and nation­al author­i­ties. As far as finan­cial sanc­tions are con­cerned, the focus of SWIFT is to help its users in meet­ing their respon­si­bil­i­ties to com­ply with nation­al and inter­na­tion­al reg­u­la­tions,” SWIFT’s web­site reads.

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