Who will be hurt by the move of Some Russian banks SWIFT? Gas prices have risen in Europe

Some analysts believe that the move will exclude Russia most international financial transactions, causing immediate long-term damage to the Russian economy. Countries that rely on oil gas imports Russia will also be greatly affected, some respondents said.

Freeze Putin's overseas accounts, freeze the foreign assets of some Russian banks, ban Russia selling debt... Under the conflict between Russia Ukraine, the United States European countries recently announced a number of financial sanctions against Russia.

The White House, together with the European Commission leaders of Germany, France the United Kingdom, agreed to exclude Some Russian banks the SWIFT payment system, the White House said in a statement on February 27, Beijing time. SWIFT is called a "financial nuclear bomb" because it is linked to the global financial information exchange.

Who's going to get hurt? Some analysts believe that the move will exclude Russia most international financial transactions, causing immediate long-term damage to the Russian economy. Countries that rely on oil gas imports Russia will also be greatly affected, some respondents said. Gas, for example, rose 60 per cent in Europe on the first day of the conflict on February 24, when supplies were already tight.

The situation is changing Russia is being threatened with being removed SWIFT

According to the new White House statement, in response to Russia's military action in the territory of Ukraine, the United States the European commission, Germany, France, Britain, Italy, Canada's leaders decided to part of the Russian Banks out of the SWIFT payment system, implement restrictions for Russia's central bank, to prevent the deployment of international reserves to weaken the impact of the sanctions.

SWIFT then spoke out. SWIFT said it is in contact with European authorities for details is preparing to comply with relevant sanctions against Russia in accordance with legal instructions, Chinanews.com quoted Reuters as saying.

This is expected by many market participants. In fact, after Ukrainian Foreign Minister Alexander Kuleba called for the closure of SWIFT against Russia on February 24, the EU was once divided, with strong resistance Germany other countries.

A senior researcher of foreign exchange investment recently accepted shell financial reporter interview also said that Russia was kicked out of the SWIFT system is very unlikely. The reason is that although the United States has a strong voice in the SWIFT system, there are also many European countries in the system. Russia is very important to Europe's food, energy oil supply, so the opinions of Europe other countries will affect the decision of the United States.

SWIFT sanctions are a double-edged sword, which requires caution because of its power. Iran lost nearly half of its oil export revenues 30 percent of its foreign trade in 2012 after its central bank Iranian financial institutions were kicked out of the SWIFT system. In recent years, Britain, France Germany set up the INSTEX settlement with Iran to bypass the SWIFT system keep trade flowing with the country.

European gas prices, which jumped 60 per cent on the first day of the conflict, are set to rise further

SWIFT, a neutral organisation, is once again a tool of sanctions. Who will be hurt?

Russia is hard to avoid. Analysts say the move will exclude Russia most international financial transactions, including access to international profits oil gas production, which together account for more than 40 percent of Russia's revenue.

But Russia has some preparation. In 2014, to replace SWIFT, the Russian Central Bank created the Russian Bank Financial Information System (" SPFS system "), according to public documents. In 2020, SPFS sent nearly 13 million financial messages; As of May 2021, 20% of all transfers in Russia were made through SPFS; As of 10 November 2021, the SPFS system had 400 users. But that number pales in comparison to the SWIFT system.

"Countries that depend on Russian oil gas imports will also be greatly affected, Europe is a big part of that." Lin Boqiang, director of the China Institute of Energy Policy Research at Xiamen University, said to Shell Financial reporter that after some Russian banks were kicked out of the SWIFT system, oil gas prices are expected to rise, which will have a great impact on inflation the economy. At present, we will see if there are any special arrangements.

European gas has already felt the pressure of soaring prices in recent days. European gas prices rose more than 60 per cent on the first day of the conflict on February 24, the biggest increase since 2005, amid uncertainty about how the crisis would affect supplies Russia. The next day, the mood brightened European gas prices fell by more than 20%.

A complete cut of Russian gas could cost Germany hundreds of billions of euros, with electricity prices reaching a record high of 32.63 euro cents per kilowatt-hour, the Global Times reported, citing German weekly Business Weekly. Germans have taken to the streets to protest against rising energy prices. A spokesman for Prime Minister Boris Johnson said on February 24 that the government would do all it could to control energy costs, but increases were almost certain.

Other analysts also said SWIFT was expected to consider workarounds that would allow payments even if some Russian banks were cut off SWIFT. Fitch ratings said banks could use other messaging systems, such as telex, but at the disadvantage of being less efficient more expensive.

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Source: Beijing News

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