Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

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

Economy Feb 27, 2022 02:07AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © 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 2/2

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.

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."

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

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (24)
Maximus Maximus
Maximus Maximus Feb 27, 2022 7:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Enjoy the russian run on the bank next week. Nobody in their right mind will keep money in a russian bank after this
M. Turner
M. Turner Feb 27, 2022 6:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
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.
Maximus Maximus
Maximus Maximus Feb 27, 2022 6:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Nonsense, cutting russia from swift and particularly if sanctioning the central bank, will destroy their economy. Enjoy the bank run next week
Peter O Neill
Peter O Neill Feb 27, 2022 6:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
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.
Fábio MG
Fábio MG Feb 27, 2022 3:56AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
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.
Onder OZTUNALI
Onder OZTUNALI Feb 27, 2022 3:56AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
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
Onder OZTUNALI
Onder OZTUNALI Feb 27, 2022 3:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
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
Maximus Maximus
Maximus Maximus Feb 27, 2022 3:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
On the contrary, this invasion was his biggest mistake and will be the end of him
Peter O Neill
Peter O Neill Feb 27, 2022 3:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
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.
Junk Man
Junk_Man Feb 27, 2022 2:57AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This will accelerate de-dollarization as the US weaponizes its currency
kyung suk Yoo
kyung suk Yoo Feb 27, 2022 2:25AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
keep your eyes on 'RUSL'
Maximus Maximus
Maximus Maximus Feb 26, 2022 10:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Excellent! Everyone, everywhere do all you can to utterly crush the russian economy
Steffen vdm
Steffen vdm Feb 26, 2022 10:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
subsequently hoping for a Russian revolution which will overthrow Putin
Ac Tektrader
Ac Tektrader Feb 26, 2022 8:37PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
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..
Jason Crawford
Jason Crawford Feb 26, 2022 8:30PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Global Consumers will pay the price more than russia
Show previous replies (2)
Kanok The Great
Kanok The Great Feb 26, 2022 8:30PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
US inflation will go to the moon by this sanction! Thanks to Biden.
IceIce Baby
IceIceBaby Feb 26, 2022 8:30PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Not sure. Yesterday there was a news about France seized a Russian cargo ship delivering cars to Russia. If the cars planned to sell in Russia will be sold in EU then European consumers may see price drop also in some segments. Same can apply to the US.
Fábio MG
Fábio MG Feb 26, 2022 8:30PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
IceIce Baby  LOL cars are not necessary in global markets with minimum impact.  Commodities price rise have much more negative impact.
IceIce Baby
IceIceBaby Feb 26, 2022 8:30PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Fábio MG  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.
IceIce Baby
IceIceBaby Feb 26, 2022 8:30PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Oh man, this automatic moderation... The **** word was a synonym of 'absorb'.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email