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Explainer-A SWIFT primer as West moves to freeze Russia out of international payments -Breaking


© Reuters. FILEPHOTO: The Swift logo is displayed on both the Ukrainian and Russian flag colors. This illustration was taken in Bosnia and Herzegovina February 25, 2022. REUTERS/Dado Ruvic/Illustration

Tom Bergin

LONDON, (Reuters) – The European Union has joined with other Western partners to announce additional sanctions against Russia in response to its invasion of Ukraine. This includes the exclusion of a few Russian banks from SWIFT, the interbank payment system.

SWIFT, the main international payment network in the world is the largest. This is what SWIFT does, and why it matters.

What is SWIFT?

SWIFT (or the Society for Worldwide Interbank Financial Telecommunication) is a secure messaging platform that allows for fast cross-border payments and facilitates international trade.

SWIFT messaging can be used to pay banks who connect to SWIFT systems and build relationships with others.

Because the messages are secured, payment instructions will usually be accepted without any questions. Banks can process large volumes of transactions quickly because this allows them to do so at a faster pace.

It is now the most important mechanism for international trade financing. According to their 2020 Annual Review, approximately 38 million SWIFT messages referred to as FIN were received each day via the SWIFT platform. The system is used to transfer trillions of dollars each year.


SWIFT was founded in 1970 by thousands of institutions that use it.

Based in Belgium, SWIFT made a profit of €36 million in 2020, according to its 2020 Annual Review. It serves its members primarily as an administrative service.


Excluding Russian banks from SWIFT restricts the country’s access to financial markets across the world.

Russian individuals and companies will have a harder time paying for imports.

Russian banks may use alternative channels to make payments, such as email, SMS apps and phones. Russian banks could use this option to pay foreign banks through their banks, even though they are not subject to sanctions. However due the fact that alternatives may be more efficient and less secure than banks with sanctioned status, transactions volumes might fall and cost rise.


Russia is a more dangerous and costly market for exporters.

Russia is an important buyer of manufacturable goods. According to World Bank data, Russia has Germany and the Netherlands as its top two trading partners. Russia, however, isn’t a top-10 export market.

Russian exporters would find the process more complicated, and could be forced to search for alternative suppliers.

Foreign buyers may have a harder time finding replacement suppliers for Russian oil or gas.

Russia is the main EU supplier of , and solid fossil fuels, according to the European Commission


SWIFT will be bound by the European Union rules and Belgian laws. These would include economic sanctions.

The website of SWIFT states: “While sanctions are applied independently in various countries around the globe, SWIFT can’t arbitrarily select which jurisdiction’s sanction system to follow.”

SWIFT was prohibited by the European Union from serving Iranian individuals and firms. This ban came in response to Iranian sanctions. It included both the central bank as well as other major banks.