Biden said he was considering cutting Moscow off from SWIFT after support surged in Europe

Topline

President Joe Biden is seriously considering expelling Russia from the international financial messaging system SWIFT, CNN reported on Saturday, as more European countries said they supported the decision to punish Russia for invading the Ukraine.

Highlights

The Biden administration has discussed Russia’s removal of SWIFT with the US Federal Reserve, which is one of the toughest financial sanctions against Moscow, CNN reported, citing several people familiar with Biden’s thinking, as well as the one that would potentially be the most damaging for West Country.

The Federal Reserve is one of the financial institutions overseeing the Belgium-based international messaging system that connects 11,000 financial institutions in more than 200 countries and territories, delivering 42 million messages a day last year that coordinate transactions.

Asked why the United States hadn’t pulled Russia out of SWIFT, Biden said Thursday that the move was still an option, adding, “But right now, that’s not the position the rest of Europe wishes to adopt”.

On Saturday, support appeared to be growing for the decision in Europe, with Italy and Germany declaring their favour, while a French official told Reuters that European Union members were close to reaching a a consensus to act.

Contra

Major U.S. banks, including JPMorgan and Citigroup, have suggested to U.S. lawmakers and the Biden administration not to restrict Moscow’s access to SWIFT, Bloomberg reported. They warned that the measure could encourage the development of an alternative to SWIFT, reducing the dollar’s supremacy in the global economy. They added that removing Russia from SWIFT would make it difficult for Western countries to track Russia’s financial transactions.

Surprising fact

Iran is the only country blocked from SWIFT so far. It was cut in 2012 as part of international sanctions over the country’s nuclear program.

Key Context

Russia would still be able to bank with other countries without SWIFT, but it would be much more labor intensive and expensive. It could also have negative consequences for Russia’s main trading partners, including European countries, which could have difficulty paying for Russian oil and gas imports on which they depend.

Further reading

Biden seriously considering whether to back Russia’s withdrawal from SWIFT (CNN)

More European countries refuse to cut Russia off from SWIFT (Forbes)

Wall Street advises Washington not to kick Russia out of SWIFT (Bloomberg)

What is SWIFT? Here’s how this banking system could be used to punish Russia for invading Ukraine (Forbes)

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