A number of world leaders and critics have called on the United States and the European Union to remove Russia from SWIFT, the Society for Worldwide Interbank Financial Telecommunication.
- “It is always an option,” President Joe Biden told reporters at the White House on Thursday, “but right now it’s not the position that the rest of Europe wishes to take.”
- So why does this matter? What would happen if Russia was cut off from SWIFT?
What is SWIFT?
The Society for Worldwide Interbank Financial Telecommunication began in 1973 as a way to allow more than 11,000 financial institutions to send messages and payment orders in a secure way, according to CNN.
- “With no globally accepted alternative, it is essential plumbing for global finance,” CNN reports.
- SWIFT is “a high security messaging network that connects thousands of financial institutions around the world,” according to CNN.
The National Bank of Belgium has teamed with the U.S. Federal Reserve System, the Bank of England and the European Central Bank to oversee the banks, according to NBC News.
What would happen if Russia got kicked out of SWIFT?
“The move could cut Russia off from most international financial transactions, including profits from oil and gas production, which account for more than 40% of the country’s revenue,” according to NBC News.
Why didn’t Biden cut Russia from SWIFT?
Cutting Russia off of SWIFT has major consequences, according to The New York Times.
- Cutting off Russia “would not be simple and could come with its own set of costly complications for countries outside Russia, many of which are dependent on the country for energy, wheat and other commodities. That has made some nations skittish about pulling the trigger,” per The New York Times.
Per NBC News, Biden said the U.S. would still need support from his allies in Europe to cut off Russia from SWIFT.
- Russia, after all, supplies a lot of energy throughout Europe. Cutting off Russia from SWIFT would impact energy across the continent.