The European Union is unlikely to remove Russia from the SWIFT global interbank payments system, despite mounting political pressure from the international community amid the ongoing invasion of Ukraine.
Speaking to CNBC, Chris Weafer, CEO of Macro-Advisory, emphasised just how quickly the situation in Ukraine is changing, predicting that stronger sanctions are ‘dependent on what Russia does next’.
He added that if Russia were to be cut from SWIFT, the impact on the country’s economy would be ‘very severe and long lasting’. That being said, he added that the Kremlin may well be relying on the consequences for Europe being enough of a deterrent to stopping European nations from taking this ‘damning’ step.
Drawing attention to the fact that Russia’s oil and energy exports are paid for through the SWIFT network, Weafer explained that the ‘very extreme action’ of removing Russia from SWIFT – which he doesn’t believe will be the next response – could have far-reaching consequences across the globe.
This view was echoed in a similar story published by Reuters, which highlighted that removing Russia from the payments system would be deeply impactful. However, the decision would also have negative consequences for European creditors.
Nonetheless, pressure is increasing from Baltic states within NATO to involve SWIFT in any sanctions imposed on Russia as the crisis deepens.
Earlier in the week, both Boris Johnson and Joe Biden warned that removing Russia from SWIFT would be an avenue that they’d explore in response to the rising tensions.
SWIFT, which is overseen by the European Central Bank and the G-10 central banks (Belgium, Canada, France, Germany, Italy, Japan, The Netherlands, United Kingdom, United States, Switzerland, and Sweden), imposed similar sanctions to those imposed on Iran in 2012.
The removal from SWIFT is being seen as somewhat of a ‘nuclear’ option when it comes to economic sanctions. Furthermore, it’s a move that would likely see Russia forced to explore alternative networks in Asia.
Lithuanian fintech Paysera has also taken the stance of stopping transfers to, and closing the accounts of, Russian clients.
Gintautas Mežetis, CEO of Paysera, emphasised: “While we understand that we are not a giant in the financial market, we do want to send the message that we can all have an impact through the choices we make. While we refuse to transfer money, someone else might refuse to insure, produce, advise, invest, or provide transport.”