Sunday, December 4, 2022

Biden Said To Eye Cutting Moscow Off From SWIFT After Support Grows In Europe

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President Joe Biden is seriously considering kicking Russia out of the international financial-messaging system SWIFT, CNN reported Saturday, as more European countries said they backed the move to punish Russia for invading Ukraine.

Then-Vice President Joe Biden attends an event to honor former Vice President Walter Mondale at … [+] George Washington University in Washington, D.C., on October 20, 2015. (Photo by Mark Wilson/Getty Images)

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Key Facts

The Biden administration has discussed removing Russia from SWIFT with the U.S. Federal Reserve, which is one of the harshest financial penalties eyed against Moscow, CNN reported, citing multiple people familiar with Biden’s thinking, as well as one that would potentially be the most damaging for Western countries.

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

Asked why the U.S. hadn’t removed Russia from SWIFT, Biden said Thursday the measure was still an option, adding, “But right now, that’s not the position that the rest of Europe wishes to take.”

On Saturday, support seemed to be growing for the move in Europe, with Italy and Germany stating they were in favor, while a French official told Reuters that European Union members were close to reaching a consensus to act. 

Major U.S. banks, including JPMorgan and Citigroup, have suggested 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 world economy. They added 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 to date. It was cut off in 2012 as part of international sanctions over the country’s nuclear program.

Key Background
Russia would still be able to conduct banking transactions with other countries without SWIFT, but it would be much more labor-intensive and expensive. It could also have negative consequences for key trading partners of Russia, including European countries, which could have difficulties paying for the imports of Russian oil and gas they rely on.

Further Reading
Biden is seriously weighing whether to support removing Russia from SWIFT (CNN)

More European Countries Back Cutting Russia Off From SWIFT (Forbes)

Wall Street Counsels Washington Against Kicking Russia Off 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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