By Nathan Ferguson
According to many reports, alongside the crisis and chaos that is spread in the region of Ukraine, the SWIFT payment system’s connection to the Russian banks is now being revoked.
Announced on Saturday, in a collaborative move, the United States, Canada, and other European-based western countries such as, the UK and Germany have decided to revoke the connection of the SWIFT payment system and Russian banks.
A formal statement was published which stated that focus will be put on” disconnecting Russian Banks from these crucial financial systems” in order to restrict Russian banks from operating internationally and further strengthen the effects of the previously placed sanctions. President of the European Commission, Ursula Von Der Leyen specifically stated that they will be working to stop any Russian accounts from utilizing “their financial assets in the markets” and as for Putin, he might be on the path to take control of Ukraine, but instead he is failing to secure his own region.
Effects on Russian Market
SWIFT is known to be the largest financial message passing system, used globally by nearly tens of thousands of institutions, including ones present in Russia. In the case of this new restriction being placed, Russia will lose its capability of liquidating assets and Russian institutions will not be able transfer any funds around the system and without the SWIFT payment system, many institutions might be on the verge of crumbling, because they must find another way or just give up.
New Option for Russians
There is no doubt that Russian president Vladmir Putin must have been expecting such responses from the west and many reports have been highlighting that Russia has been working on a project that is aimed to act as a replacement for SWIFT. As of now, a Chinese replacement already exists, called as CIPS, which the Russian may take advantage of, because around 23 Russian banks already have an existing connection with the banking system.
What about Crypto?
As for Crypto, if Russians were to fully utilize Cryptocurrencies, it would become a nuisance for international regulators to handle, as the demand for further restrictions would increase. The point is that cryptocurrencies would be condemned, because of its use by Russians, leading to further instabilities. Many countries have applied different levels of regulations that have made it difficult for cryptocurrencies to operate, with several crypto exchanges having to provide verifications for their trading numbers, in order to avoid further trouble.