Western allies have agreed to remove selected Russian banks from the SWIFT global financial messaging system.
In a joint statement, leaders of Europe, UK, US, and Canada, said the move was in response to Vladimir Putin’s decision to invade Ukraine late last week.
The group said: “We stand with the Ukrainian government and the Ukrainian people in their heroic efforts to resist Russia’s invasion.
Russian advance ‘slows’ due to ‘strong resistance’ – live updates
“Russia’s war represents an assault on fundamental international rules and norms that have prevailed since the Second World War, which we are committed to defending.
Advertisement 1:24 Western allies vow to cut Russia from SWIFT“We will hold Russia to account and collectively ensure that this way is a strategic failure for Putin.”
The statement listed a number of financial sanctions which it said would be implemented “within the coming days”.
More on Russia Related Topics: RussiaUkraineOther measures include:
• “Restrictive measures” preventing the Russian Central Bank from “deploying its international reserves in ways that undermine the impact of our sanctions”
• Acting against the people and entities who facilitate the war in Ukraine and the “harmful activities of the Russian government”. This includes limiting the sale of citizenship “golden passports” which let wealthy Russians connected to the Russian government become citizens of Western countries with consequent access to financial systems
• Launching a trans-Atlantic taskforce to make sure the sanctions are effective
• Stepping up coordination against disinformation and other forms of hybrid warfare
5:11 PM warns of ‘grim days ahead’Writing on Twitter, UK Prime Minister Boris Johnson said: “We have taken decisive action tonight with our international partners to shut Russia out of the global financial system, including the important first step of ejecting Russian banks from SWIFT.
“We will keep working together to ensure Putin pays the price for his aggression.”
Key developments:
• Among the places attacked overnight were an oil depot in Vasylkiv and a gas pipeline in Kharkiv, Ukraine’s second-largest city• The UK Ministry of Defence has said that the speed of Russian advance has “temporarily slowed” probably due to “logistical difficulties and strong Ukrainian resistance”• Almost 200 Ukrainians were said to have been killed by Saturday, while more than 150,000 have fled for Poland, Moldova, and other neighbouring safe countries• Ukraine’s president Volodomyr Zelenskyy insists he is staying in the country, replying to a US offer of safety with: “The fight is here – I need ammunition, not a ride”
2:50 Thousands of refugees leave UkraineCutting Russian banks from SWIFT will stop them from conducting most of their financial transactions worldwide and effectively block Russian exports and imports, according to European Commission President Ursula von der Leyen.
SWIFT – the Belgium-based Society for Worldwide Interbank Financial Telecommunication – moves many billions of dollars around more than 11,000 banks and other financial institutions around the world every day.
Allies had considered throwing Russia out of the system after Russia invaded and annexed Crime in 2014 – something Russia said would be seen as a declaration of war.
The allies shelved the idea and Russia has, since then, tried to develop its own financial transfer system, with limited success.
Among Western countries, the US and Germany would stand to lose the most from such a move, as their banks are the most frequent SWIFT users with Russian banks, according to Maria Shagina at the Carnegie Moscow Center, a think tank.
Bank of England governor Andrew Bailey told MPs last week that British banks had very limited exposure to Russia.
SWIFT said in a statement that it is preparing to implement the new measures in the coming days.
“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.”
Financial analysts were wary, saying that the move could bring a shock for global markets.
3:03 Volunteers queue to join Ukraine armyEdward Moya, senior market analyst at Oanda in New York, said: “This will draw comparisons to what happened to Iran (which was kicked out of Swift in 2012), and the crippling effect to their economy, and this is more likely to deliver a major shock to global financial markets when we open up on Sunday night.”
He added: “This action will be really difficult to digest and it will really pick a nerve for a lot of investors… a lot of therebound we saw in the latter half of last week will be tested.”
Michael Farr, chief executive and founder of investment managers Farr, Miller & Washington, said: “This curtails Russia’s ability to execute transactions around the world, and cuts their financial flows off from most countries, so it is a severe step that should get their full attention.
“The issue will be the inflation that gets caused here, and the extent to which it can really slow the European economy.
“It could create headwinds if it goes on and on and on.”