- Trading
- Trading
- Markets
- Markets
- Products
- Forex
- Commodities
- Metals
- Indices
- Shares
- Cryptocurrencies
- Treasuries
- ETFs
- Accounts
- Accounts
- Compare our accounts
- Our spreads
- Funding & withdrawals
- Open account
- Try free demo
- Platforms & tools
- Platforms & tools
- Platforms
- Platforms
- Platforms overview
- MetaTrader 4
- MetaTrader 5
- Mobile trading platforms
- Premium trading tools
- Premium trading tools
- Tools overview
- VPS
- Genesis
- Education
- Education
- Resources
- Resources
- News & analysis
- Education hub
- Economic calendar
- Earnings announcements
- Help & support
- Help & support
- About
- About
- About GO Markets
- Our awards
- Sponsorships
- Client support
- Client support
- Contact us
- FAQs
- Quick support
- Holiday trading hours
- Fraud and scam awareness
- Legal documents
- Trading
- Trading
- Markets
- Markets
- Products
- Forex
- Commodities
- Metals
- Indices
- Shares
- Cryptocurrencies
- Treasuries
- ETFs
- Accounts
- Accounts
- Compare our accounts
- Our spreads
- Funding & withdrawals
- Open account
- Try free demo
- Platforms & tools
- Platforms & tools
- Platforms
- Platforms
- Platforms overview
- MetaTrader 4
- MetaTrader 5
- Mobile trading platforms
- Premium trading tools
- Premium trading tools
- Tools overview
- VPS
- Genesis
- Education
- Education
- Resources
- Resources
- News & analysis
- Education hub
- Economic calendar
- Earnings announcements
- Help & support
- Help & support
- About
- About
- About GO Markets
- Our awards
- Sponsorships
- Client support
- Client support
- Contact us
- FAQs
- Quick support
- Holiday trading hours
- Fraud and scam awareness
- Legal documents
- Home
- News & Analysis
- Geopolitical Events
- What is SWIFT and the sanctions against Russia?
- Home
- News & Analysis
- Geopolitical Events
- What is SWIFT and the sanctions against Russia?
- 24/7 instant payments and real-time line-by-line settlement via the Reserve Bank of Australia’s Fast Settlement Service
- PayID, the new and easy way to link a financial account with an easy-to-remember identifier such as a mobile phone number, email address or ABN for businesses
- Open access platform that truly empowers innovation through competition
- Overlay services framework that will provide new value services to Australian consumers, businesses and government
News & AnalysisNews & AnalysisThe Society for Worldwide Interbank Financial Telecommunication, legally S.W.I.F.T. SC, is a Belgian cooperative society providing services related to the execution of financial transactions and payments between banks worldwide. Its principal function is to serve as the main messaging network through which international payments are initiated. It also sells software and services to financial institutions, mostly for use on its proprietary “SWIFTNet”.
Its important to understand that money is not moved through the SWIFT system but most importantly is the data attributed to the money that is moved through this medium. In other words, without SWIFT the institutions wouldn’t know who and for what reason is a transaction is being made. For example; if you are sending money from country to country, SWIFT would inform the recipient bank that is getting the money, to expect a certain sum, from a certain bank. So its an extremely important step that will be taken away from Russia. If you do not have that information flow; you simply cannot do any international transactions.
SWIFT welcomes the public launch of the New Payments Platform (NPP) in Australia, which is set to revolutionise the way payments are made domestically. SWIFT has helped to design, build, test and deliver the NPP and will play a key role in operating the infrastructure for the NPP.
The NPP’s paradigm-shifting financial architecture has been designed and constructed to fundamentally improve how consumers, businesses and governments transact with one another. The key features of the NPP include:
Russia’s SWIFT Sanction
Since the invasion of Russia, many countries have joined forces in order to impose heavy sanctions on Russia. Some of these actions are to limit, deter and coerce Russia or Vladimir Putin into changing his strong stance in the war against Ukraine. These sanctions would be felt throughout all classes of Russia’s community and its corporate arm.
One popular sanction has been to remove Russia from the SWIFT messaging system, with the intention to stop any Russian companies from doing international business, which in turn would hurt Russia’s economy and potentially turn Russian loyalists against Mr. Putin and force him into an unlikely reversal of the war. Although this is somewhat looked upon as a key destabilizing strategy by the West, there are some that feel the move is mostly symbolic.
EU bars 7 Russian banks from SWIFT, but spares those in Energy (Reuters). The European Union said on Wednesday (2nd march) it was excluding seven Russian banks from the SWIFT messaging system, but stopped short of including those handling energy payments, in the latest sanctions imposed on Russia over its invasion of Ukraine.
VTB Bank PJSC and Bank Rossiya are among the banks that face a ban from the messaging system. The other institutions included on the EU list are Bank Otkritie, Novikombank, Promsvyazbank PJSC, Sovcombank PJSC and VEB.RF, said the officials, who asked not to be identified because the decision was private.
European Union ambassadors agreed to spared the nation’s biggest lender Sberbank PJSC and a bank part-owned by Russian gas giant Gazprom PJSC.
Would it work:
Professor of Financial Economics at the University of Loughborough University, Alistair Milne, explains why he is sceptical of the sanction. “Russia’s exclusion from the international payments messaging system Swift, is presented as a powerful means of undermining its economy. But for a payment’s expert such as myself, this is something of a myth.”
He continues, “The reality, however, is that limiting access to Swift is less practically effective than most media coverage supposes. It is an important symbol of global repudiation of Russia’s exercise of military force, but not much more. It is other measures, such as blocking the central bank of the Russian Federation from transacting internationally, which is undermining confidence in the Rouble.”
“There is no fundamental problem with transferring funds using some other secure messaging systems. Russian banks might, for example, instead arrange payments using the SPFS system, which was established after the 2014 invasion of Crimea by the Russian central bank. This is currently used by a handful of international banks in Germany and Switzerland linked to Russian banks.”
“Or they could use the CIPS network, which was created by the People’s Bank of China for the purpose of cross-border payments with indirect participants in many countries. They could even use WhatsApp to instruct the necessary transactions.”
Leaving room for negotiation?
The EU has avoided the sanctioning of all Russia banks, specially those that use SWIFT in the energy industry. This might be crucial as they seem to be trying to limit Russia, but at the same time keep the door ajar to be able to negotitate energy deals, which, the West are hugely dependednt on. Another thing to note is payments for Russian energy exports, for example to Gazprom, are even less Swift-dependent. When operators buy oil or gas from Gazprom, they make payments in either euro or US dollars into bank accounts held by the Russian energy company. So if the intention of sanctions is to block payments for Russian gas, the tool is not Swift; it is sanctions on Gazprom and its banking facilities. Perhaps this could be something that is visited in the future.
The absence of Sberbank PJSC and Gazprombank shows the continuing level of concern over the consequences for Europe from a financial isolation of Russia spilling over into the global economy, especially when it comes to energy supplies. The bloc is also worried Russia could retaliate by cutting deliveries.
Sources: Reuters, Wikipedia, Loughborugh University, Bloomberg, swift.com
Ready to start trading?
Disclaimer: Articles are from GO Markets analysts and contributors and are based on their independent analysis or personal experiences. Views, opinions or trading styles expressed are their own, and should not be taken as either representative of or shared by GO Markets. Advice, if any, is of a ‘general’ nature and not based on your personal objectives, financial situation or needs. Consider how appropriate the advice, if any, is to your objectives, financial situation and needs, before acting on the advice.
Next Article
Is Bitcoin ready for a reversal?
Bitcoin has seen a resurgence in recent days on the back of the Ukraine/Russian conflict. The price has risen 15% as money has poured into the cryptocurrency. Western countries have placed economic sanctions as an attempt to reduce military conduct from Russia. This includes excluding several Russian banks from the SWIFT network. Consequently, the ...
March 4, 2022Read More >Previous Article
Energy crunch sees coal, oil and gas soar.
Coal and Gas prices have surged and joined gold and oil as demand surges due to the supply shortages stemming from the Russia and Ukraine conflict. ...
March 3, 2022Read More >We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies. You can view our cookie policy here.Manage consentPrivacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.Cookie Duration Description AWSALBCORS 7 days This cookie is managed by Amazon Web Services and is used for load balancing. cookielawinfo-checkbox-advertisement 1 month Set by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category . cookielawinfo-checkbox-analytics 1 month This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics". cookielawinfo-checkbox-functional 1 month The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". cookielawinfo-checkbox-necessary 1 month This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary". cookielawinfo-checkbox-others 1 month This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other. cookielawinfo-checkbox-performance 1 month This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance". elementor never This cookie is used by the website's WordPress theme. It allows the website owner to implement or change the website's content in real-time. PHPSESSID session This cookie is native to PHP applications. The cookie is used to store and identify a users' unique session ID for the purpose of managing user session on the website. The cookie is a session cookies and is deleted when all the browser windows are closed. viewed_cookie_policy 1 month The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data. _GRECAPTCHA 5 months 27 days This cookie is set by Google. In addition to certain standard Google cookies, reCAPTCHA sets a necessary cookie (_GRECAPTCHA) when executed for the purpose of providing its risk analysis. __cfruid session Cloudflare sets this cookie to identify trusted web traffic. Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.Cookie Duration Description CONSENT 16 years 3 months 17 days 20 hours These cookies are set via embedded youtube-videos. They register anonymous statistical data on for example how many times the video is displayed and what settings are used for playback.No sensitive data is collected unless you log in to your google account, in that case your choices are linked with your account, for example if you click “like” on a video. SPSI session This cookie is used for setting a unique ID for the session and it collects user behaviour on the website during the session. This collected information is used for statistical purposes. vuid 2 years Vimeo installs this cookie to collect tracking information by setting a unique ID to embed videos to the website. _ga 2 years The _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors. _gat_UA-2467324-17 1 minute This is a pattern type cookie set by Google Analytics, where the pattern element on the name contains the unique identity number of the account or website it relates to. It appears to be a variation of the _gat cookie which is used to limit the amount of data recorded by Google on high traffic volume websites. _ga_9P2FTXTH5P 2 years This cookie is installed by Google Analytics. _gcl_au 3 months Provided by Google Tag Manager to experiment advertisement efficiency of websites using their services. _gid 1 day Installed by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously. _uetsid 1 day This cookies are used to collect analytical information about how visitors use the website. This information is used to compile report and improve site. Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.Cookie Duration Description IDE 1 year 24 days Google DoubleClick IDE cookies are used to store information about how the user uses the website to present them with relevant ads and according to the user profile. MUID 1 year 24 days Bing sets this cookie to recognize unique web browsers visiting Microsoft sites. This cookie is used for advertising, site analytics, and other operations. NID 6 months NID cookie, set by Google, is used for advertising purposes; to limit the number of times the user sees an ad, to mute unwanted ads, and to measure the effectiveness of ads. test_cookie 15 minutes The test_cookie is set by doubleclick.net and is used to determine if the user's browser supports cookies. VISITOR_INFO1_LIVE 5 months 27 days A cookie set by YouTube to measure bandwidth that determines whether the user gets the new or old player interface. YSC session YSC cookie is set by Youtube and is used to track the views of embedded videos on Youtube pages. yt-remote-connected-devices never YouTube sets this cookie to store the video preferences of the user using embedded YouTube video. yt-remote-device-id never YouTube sets this cookie to store the video preferences of the user using embedded YouTube video. yt.innertube::nextId never These cookies are set via embedded youtube-videos. yt.innertube::requests never These cookies are set via embedded youtube-videos. Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.Cookie Duration Description AWSALB 7 days AWSALB is a cookie generated by the Application load balancer in the Amazon Web Services. It works slightly different from AWSELB. DEMO_FORM_PCODE past No description geot_rocket_city session No description available. geot_rocket_country session No description available. geot_rocket_state session No description available. ms-uid 1 year No description available. SPSE session No description available. STYXKEY_geot_country session No description _uc_current_session 1 hour No description available. _uc_initial_landing_page 1 month No description available. _uc_last_referrer 1 month No description available. _uc_referrer 1 month No description available. _uc_visits 1 month No description available. _uetvid 1 year 24 days No description available. Please share your location to continue.
Check our help guide for more info.