Why SWIFT is the financial 'nuclear option' when it comes to punishing Putin — via financialpost
“This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally,” the statement said.Article content
These alternative systems are more costly, and “clunky” when compared to SWIFT, according to Sosnow. As a result, pushing Russia off the global co-operative network would eat into profits of Russian exports, even if the country is able to cobble together an alternative to handle the bulk of transactions associated with its trade and other banking business.Article content
“For corporate or commercial purposes, SWIFT represents the most secure and verified method for international transactions because it is global and all participants undergo rigorous due diligence before becoming part of the network,” she said, adding that SWIFT must also abide by several regulatory requirements.Article content
However, it remains an indispensable part of a deeply interconnected global financial system with no easy replacement. Among G7 nations, those that do a lot of trade and financial transactions with Russia, including Germany, were understood to be among the most reluctant to fully disconnect the country’s banks from SWIFT as part of efforts to stop the incursion into Ukraine, which began in the early hours Thursday. Some in the United States were reportedly concerned that, beyond the economic impact, cutting off participation could diminish the U.S. dollar’s importance as a global currency.
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