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U.S., allies target 'fortress Russia' with new sanctions, including SWIFT ban

Published 02/26/2022, 05:14 PM
Updated 02/27/2022, 02:07 AM
© Reuters. FILE PHOTO: European Commission President Ursula von der Leyen speaks during a statement on Russia's attack on Ukraine, in Brussels, Belgium February 24, 2022 ahead of an EU special summit called today to "discuss the crisis and further restrictive measur

© Reuters. FILE PHOTO: European Commission President Ursula von der Leyen speaks during a statement on Russia's attack on Ukraine, in Brussels, Belgium February 24, 2022 ahead of an EU special summit called today to "discuss the crisis and further restrictive measur

By Steve Holland, John Chalmers and Daphne Psaledakis

BRUSSELS/WASHINGTON (Reuters) - The United States and its allies on Saturday moved to block certain Russian banks' access to the SWIFT international payment system in further punishment of Moscow as it continues its military assault against Ukraine.

The measures, which will include restrictions on the Russian central bank's international reserves, will be implemented in the coming days, the nations said in a joint statement https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/26/joint-statement-on-further-restrictive-economic-measures that also vowed further action to come.

"We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin," the leaders of the European Commission, France, Germany, Italy, Great Britain, Canada and the United States wrote.

"Even beyond the measures we are announcing today, we are prepared to take further measures to hold Russia to account for its attack on Ukraine."

The move comes after the United States and its allies slapped sanctions this week on major Russian banks as well as on President Vladimir Putin, among others, as Moscow's forces pushed into the heart of Ukraine toward Kyiv.

"As Russian forces unleash their assault on Kyiv and other Ukrainian cities, we are resolved to continue imposing massive costs on Russia. Costs that will further isolate Russia from the international financial system and our economies," said Ursula von der Leyen, president of the European Commission, the European Union's executive.

The actions are aimed at preventing Putin from using $630 billion in central bank foreign currency reserves in the invasion of Ukraine and to defend a plunging rouble.

Cutting Russian banks out of the SWIFT system - the world's main international payments network - deals a blow to Russian trade and makes it harder for Russian companies to do business.

"Putin's government is getting kicked off the international financial system," a senior U.S. administration official said.

SWIFT, or the "Society for Worldwide Interbank Financial Telecommunication", is a secure messaging system that facilitates rapid cross-border payments, making international trade flow smoothly and transferring trillions of dollars each year in what has become the principal mechanism for financing international trade.

"We are engaging with European authorities to understand the details of the entities that will be subject to the new measures and we are preparing to comply upon legal instruction," SWIFT said in a statement.

The U.S. official told reporters that if one of the banks cut off from SWIFT wants to make a payment with a bank outside of Russia, it will likely need to use a phone or fax machine. But the official said most banks worldwide would likely stop all transactions with Russian banks removed from the network.

The United States and its allies will finalize the list of banks that will by cut off from SWIFT, the official said, adding that banks already under U.S. and European sanctions would be the first ones considered.

'WAR CHEST'

U.S. President Joe Biden announced sanctions on Thursday that were aimed at limiting Russia's ability to do business in dollars, euros, pounds and yen. Among the targets were five major Russian banks including state-backed Sberbank and VTB, the country's two largest lenders.

At the time, Biden said there was no agreement to take action on SWIFT - suggesting that the view of allies who were holdouts had since turned heavily against Putin.

The new measures will stop Russia from "using its war chest," von der Leyen said, paralyzing the assets of its central bank, freezing its transactions and making it impossible for the central bank to liquidate its assets.

"We're disarming fortress Russia by taking this action," the U.S. official said, adding that other actions targeting the central bank could be finalized over the weekend.

The United States slapped sanctions on Iran's central bank in 2019 following attacks on oil facilities in Saudi Arabia that were claimed by the Iran-aligned Houthi movement in Yemen.

At the time, then-U.S. President Donald Trump said the moves, aimed at cutting off Iran's remaining funding sources, were "the highest sanctions ever imposed on a country."

"Sanctioning the central bank - that has got to be the biggest hammer left in the tool shed," said Paul Marquardt, a lawyer with Davis Polk in Washington where he advises clients on U.S. sanctions.

The allies on Saturday also pledged to limit the sale of citizenship via so-called golden passports used by some wealthy Russians to gain residency in Western nations and access to their financial systems.

The partners will also launch a task force to "identify, hunt down and freeze the assets of sanctioned Russian companies and oligarchs, their yachts, their mansions, and any ill-gotten gains that we can find and freeze."

EU foreign ministers will discuss the sanctions package at a virtual meeting on Sunday evening, the fourth time they come together in a week.

© Reuters. FILE PHOTO: European Commission President Ursula von der Leyen speaks during a statement on Russia's attack on Ukraine, in Brussels, Belgium February 24, 2022 ahead of an EU special summit called today to

Edward Fishman, an Atlantic Council fellow who worked on Russia sanctions at the State Department during the Obama administration, said the measures announced on Saturday are a significant escalation.

By signaling their joint commitment to the moves, Fishman said, the West was "giving Putin one more chance to back down before they unleash the full range of the economic arsenal on Russia."

Latest comments

Enjoy the russian run on the bank next week. Nobody in their right mind will keep money in a russian bank after this
The west is weak and obsessed with being politically correct. Putin knows this.  Sanctions do nothing to an old fox.  He sells his oil and gas to China; he does his banking through China and Hong Kong. The US would be nowhere without the USD as the king of the printing presses. I suspect China will invade Taiwan soon as Joe doesn't have the guts to do anything substantial.
Nonsense, cutting russia from swift and particularly if sanctioning the central bank, will destroy their economy. Enjoy the bank run next week
Is that why Putin is crying?? He honestly is starting to sound like he has gone insane. Russian economy is going to crippled for a decade and Putin is running out of options.
The ban affects all countries that do business with Russia. Commodities will up... Petroleum, gas, food, etc. Inflation will quickly rise in Europe. Interest rates rise will be necessary.  The high risk markets like the stock market will be hit hard by the rise in commodities.
In this world anything you heard, saw or read is not the TRUTH but something THEY want you to believe in. If wanted, the USA could completely avoid this. But it did not why?...because of the TRUTH, but not because of what they told you....SO atleast we should know that what we all don't know what exactly is happening behind the scenes....we are all social/media chickens fed with their mix daily
I am no supporter of Putin. But anyone who undermines Putin's mind will soon find out any measures taken by West were already thought off beforehand and prepared for already
On the contrary, this invasion was his biggest mistake and will be the end of him
Nope Putin thought the west would do nothing as too scared of starting ww3. He is now learning the west will stand up to him any way it can bar putting boots on the ground.
keep your eyes on 'RUSL'
Excellent! Everyone, everywhere do all you can to utterly crush the russian economy
subsequently hoping for a Russian revolution which will overthrow Putin
Jason higher consumer prices are one thing but the inability to trade in a national economy based on national resources is another.it will be a catstrophy for Russia..
Global Consumers will pay the price more than russia
 LOL cars are not necessary in global markets with minimum impact.  Commodities price rise have much more negative impact.
 But there is car shortage in EU right now pushing new and used car prices higher. More supply can lower inflation of cars. Just go and check what goods can not be supplied to Russia, plenty of electronical stuff what EU is short in currently and would happily ****up the stock planned to deliver to Russia.
Oh man, this automatic moderation... The **** word was a synonym of 'absorb'.
john locke ...no one is using digital yuan the gold market is to small to be used as a major way to pay for a countries trading operations. your full of Russian bS...
How will this impact Russian exports of aluminum, steel, copper, wheat...
new jazenevd... the Nato allies are shipping portable anti tank and anti-aircraft weapons and supplying vital surveillance and and intelligence...and they just ****over 100 billion of his personal fortune. and now seizing Russian cargo ships, and according to the Norwegian press, personal super yachts of his supporters. I'd say that's something.....
don I was just looking at what's possible knowing who the Chinese are when it comes to taking advantage of a "situation". From past imbargos, that 20-30% looks like a good guess.
I'm thinking about trading nichel futures...volitility and open interest might get interesting....
with this sanction, Putin's days are numbered. the Russian elites will be "Retiring "Putin soon......
it is Not toothless.banning Russia from the swift system is a major catastrophe for the Russian banking system and the Russian economy. it could destroy their capacity to conduct business with any trading partner world-wide.
they've already been preparing for this for years
 expecting to get a regime change in two days is one thing - get locked out of the entire global economy something very different - I'm sure there were lots of parties where people were talking up how they would divide the spoils of the Ukraine - that just isn't going to happen and Poutine/Russia have a very finite window to walk this back - it would not surprise me to see all occupied areas returned to the Ukraine including Crimea, it also would surprise me to see a regime change in Belarus over this as well - Lushenko - isn't going to walk away from this unscathed either!
 yeahp but will be a major trouble for other countryes that dependent from Russian commodities.
this is irrelevant. Russia has already bypassed the swift system with digital yuan and gold. Sanctions are less and less meaningful to them
Oh yeah? They dont use swift at all? Totally clueless
yes i'm trusting china with my money - LMAO - the chinese people were some of the earliest adopters of crypto - because they don't trust their own gov. and lets face it - do you really trust Xi with your wealth - he can turn on you in a second - just look at the big Chinese companies that are getting hobbled week after week
Total BS. Plus even if they switch to the digital Yuan how will their citizens buy items on the street in digital Yuan?? Gold?? Already seeing major runs on russian banks
parroting hugo wants a cracker.......maybe he can get one from from Russia's FSB(Russian civilian intelligence services).
What's that code in article: [nL1N2V10UH].What signal is that indicate
markets not going to like this, a defacto trade embargo besides oil and gass russia is major exporter rare metals and ukraine is major exportor of grains. thats why this war is different than others besides the human suffering and potential security risks there is a major economical impact
Eff ‘em bank by bank. Make the destruction as slow methodical and as painful as possible.
with Russia laying at their feet, can you blame china for taking advantage of Russia's stupidity.
Yeah Let's push Putin further down the road of suicidal nuklear war
ya putin is nuts ya never know.... hopefully the Russian elites will take care of the problem....
Putin only knows one thing and that is strength. He only attacked as he thought other countries would do nothing at all. Do nothing at all now and he would be looking at Moldova, Georgia, Estonia, Latvia etc next. Crippling the Russian economy will turn the population against him - when you add on top the body bags of Russian soldiers, civilian deaths and international isolation.
now it's official China will be financial colonizing Russia.. the theft and extraction of Russia's natural wealth by China is now beginning.
Congratulations, now it's official Russia and China are going to take over the world and it's the end of the US empire!
Russia is crippled. Its economy is about 7% of the USA GDP and has been in decline since the 2014 sanctions (countries like Spain and Canada now have larger economies than Russia). Apart from energy exports/mineral exports and military hardware it literally has no industry. Its tech and infrastructure outside of Moscow is largely 3rd world. Plus China has its own worries including a defaulting property sector and covid restrictions lowering economic activity - so doesn't want to get involved - hence why it abstained rather then voting with Russia in the UN.
 Exactly, Russia will have nothing to lose anymore...it's just a matter of time for the nukes to hit Germany and the US. Mark my words
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