![What is SWIFT [CGTN]](https://i0.wp.com/usachinatrading.com/wp-content/uploads/2022/02/What-is-SWIFT.jpeg?resize=525%2C295&ssl=1)
U.S. President Joe Biden has unveiled several new sanctions against Russia in the wake of Moscow’s military actions in Ukraine, but one major sanction considered a “nuclear option,” could have major consequences. The U.S. and its allies could kick Russia out of the SWIFT banking system. Here’s an explanation as to why such a choice is so drastic.
The Society for Worldwide Interbank Financial Telecommunications, SWIFT, is a cooperative financial institution, headquartered in Belgium. SWIFT is overseen by National Bank of Belgium in partnership with the U.S. Federal Reserve System, the Bank of England, and the European Central Bank.
Unlike traditional banks, it does not transfer funds but is a secure messaging system that links 11,000 financial institutions when a transaction occurs globally. Cutting Russia from SWIFT could damage Russia’s economy immediately and leave a long-term effect, potentially cutting Russai from most international financial transactions. This could be a threat to profits from things like oil and gas production, which account for 40% of Russia’s revenue.
In 2014, allies floated the idea of the SWIFT option, after Russia annexed Crimea, but Russia compared that to a “declaration of war.” Biden is currently focusing on sanctions that would affect Russian banks and individuals but would still need support from European counterparts.