NEW YORK (Reuters) – The United States, Britain, Europe and Canada on Saturday moved to block Russia’s access to the SWIFT international payment system as part of another round of sanctions against Moscow as it continues its assault against Ukraine.
SWIFT is the world’s main international payments network.
Here is a link to the story:
Here is a primer about what SWIFT does and why it matters:
Here are some comments from market analysts and banks:
SONIA KOWAL, PRESIDENT, ZEVIN ASSET MANAGEMENT, BOSTON
“You need a functioning banking system to have a functioning economy. This goes some way toward undermining the Russian economy.”
EDWARD MOYA, SENIOR MARKET ANALYST, OANDA, NEW YORK:
“This will draw comparisons to what happened to Iran, and the crippling effect to their economy, and this is more likely to deliver a major shock to global financial markets when we open up on Sunday night.”
“I think a lot of traders were kind of becoming convinced that the US and Europe were not taking a hard stance and that they were really focused on protecting the economic situation at hand and not really posing a major blow to the financial system. This action will be really difficult to digest and it will really pick a nerve for a lot of investors … a lot of the rebound we saw in the latter half of last week will be tested.”
MICHAEL FARR, CEO AND FOUNDER OF FARR, MILLER & WASHINGTON LLC:
“Markets are looking for surprises, and this could be a surprise that is not taken very well if it means a slowdown in international trade.
“This move to remove Russia from SWIFT means that they are actually putting their money where their mouths are. This curtails Russia’s ability to execute transactions around the world, and cuts their financial flows off from most countries, so it is a severe step that should get their full attention.
“The issue will be the inflation that gets caused here, and the extent to which it can really slow the European economy. It could create headwinds if it goes on and on and on.”
PAUL MARQARDT, LAWYER WITH DAVIS POLK, WASHINGTON DC:
“Getting kicked out of SWIFT doesn’t make transactions impossible, it makes them much more difficult – getting kicked out of SWIFT would increase transaction costs significantly.”
PHIL ORLANDO, CHIEF EQUITY MARKET STRATEGIST, FEDERATED HERMES, NEW YORK:
“We’ve been calling for US to ban Russia from SWIFT and sanction purchase of Russian oil and gas. We can tighten the screws further. [Investors must] expect [Russia], if backed into an economic corner, [to] resort to some form of cybersecurity against those who acted.” That would increase market volatility, he said.
(Reporting by Davide Barbuscia, David Randall, Ross Kerber, Ira Iosebashvili; compiled by Megan Davies)
