Let’s say I owe you $200, and you owe me $150. Would you give me $150, and I give you $100? No. We would agree to cancel out $100, and you would owe me $50. SWIFT is an international system that acts as a clearinghouse among 11,000 banks in 200 countries worldwide by canceling debts. SWIFT stands for The Society for Worldwide Interbank Financial Telecommunication. It was founded in 1973 to send secure messages and payment orders. SWIFT doesn’t move money around the world. It allows banks to send each other instructions on transferring funds across borders. SWIFT is an international clearinghouse for financial institutions.
The European Union has excluded seven Russian banks from the SWIFT messaging system but stopped short of including those handling energy payments. The EU did not mention Russia’s largest lenders because they are the main channels for payments for Russian oil and gas, which EU countries are still buying despite the conflict in Ukraine. Russia is the EU’s largest supplier of energy resources, meeting some 40% of its natural gas demand and nearly a third of its crude oil imports. The war in Ukraine and the ensuing sanctions against Russia could harm Europe’s energy supplies and stall its economic growth, says European Commissioner for Economy Paolo Gentiloni. “Russia’s invasion of Ukraine will likely impact growth negatively, including through repercussions on financial markets, further energy price pressures, more persistent supply chain bottlenecks, and confidence effects that we should not under-evaluate.” The European Commission also issued a statement outlining the negative impact of anti-Russian sanctions on the economic situation of member states.
Although SWIFT is the largest clearinghouse, there are alternatives, such as the SPFS system. When Russia invaded Ukraine, the Russian ruble plunged 30% to a record low against the US dollar on the Moscow Stock Exchange. A declining ruble favors Russia because when foreigners buy from Russia, the price of Russian goods decreases. When the ruble’s value declines relative to other currencies, there is an increase in sales to foreigners because the value of foreign currencies increases relative to the value of the Russian ruble. Expelling Russia from SWIFT sets a bad precedent for the US because it has repeatedly politicized its economic power. For example, the World Bank had not approved any new lending to Belarus since mid-2020, when the United States imposed sanctions over a disputed presidential election. Now Belarus has joined Russia.
Truth needs an audience – please forward https://kennethelongauthor.com/ to friends
Email ideas and/or videos to firstname.lastname@example.org