(foreign language)
- [Narrator] After Ukrainian president, Volodymyr Zelenskyy,
said the west sanctions on Russia were not enough
to prevent further Russian attacks on his country,
a powerful coalition representing some of the world's
biggest democracies announced it would block
some Russian banks from SWIFT.
The move was part of a series of severe economic penalties,
and it was seen as a significant step up
in the West's efforts to punish Russia
and its president, Vladimir Putin,
for its military assault on Ukraine.
- The European union and its partners
are working to cripple Putin's ability
to finance his war machine.
- [Narrator] So what is SWIFT?
And what does this move mean for Russia
and the rest of the world?
SWIFT, which stands for the Society for Worldwide
Interbank Financial Telecommunication,
is a global system that banks use to securely send
and receive transfer requests.
Similar to how phone networks facilitate calls,
SWIFT facilitates the movement of money.
- The infrastructure is what connects people together,
to be able to talk to each other.
And this is the same thing for banks,
it's simply instead of ideas and love
and messages like that you're sending on the phone,
you're sending money.
- [Narrator] SWIFT handles billions
of financial messages each year.
And while there are other systems designed
to circumvent SWIFT and challenge
the dominance of the dollar,
SWIFT is by far the most commonly used system
around the world.
It connects more than 11,000 financial institutions
in more than 200 countries and territories.
Headquartered in Belgium,
SWIFT is a member owned cooperative.
Iran and North Korea are cut off from it.
So how could SWIFT sanctions impact Russia?
By cutting off some Russian banks from the system,
the sanctions significantly hinder
the movement of money into and out of Russia.
And that could lead to higher inflation
and a weakening of the Russian Ruble.
- It's like you're putting a noose
around the pipeline of money into and out of Russia.
- [Narrator] Not only do the sanctions aim
to cripple Moscow's ability to finance the Russian military,
but they'll also affect every other aspect
of the economy, trickling all the way down
to the ability of businesses and households
to move money outside of the country.
- The leverage is the leverage on the economy
and the markets, that puts political pressure
internally on Putin to reverse course.
- [Narrator] But SWIFT is a global network,
and experts say the sanctions could have an impact
on countries around the world.
Foreign banks have about 121 billion in assets
owed to them by Russian based entities.
So cutting Russian banks off from SWIFT
could make it hard to collect that money,
and companies will undoubtedly face problems
conducting trade with Russian counterparts,
paying Russian staff, or buying goods from Russia.
However, the west is planning for now,
to keep some Russian banks online for oil and gas exports
critical to the European and global economies.
- The willingness for the west, particularly Europe,
to accept these economic sacrifices,
which are not small, but what that reflects is
the seriousness they take Russia's actions as a threat
to Western democracy, European democracy,
post-world war II sort of agreements.