With Moscow’s invasion of Ukraine intensifying, the United States and several key allies moved to cut Russia off from much of the global financial system – barring select Russian banks from participating the SWIFT global finance network.
But what’s the significance of the move?
Severing access to this financial network hampers Russian financial institutions and their ability to operate globally, finance professor Michael Faulkender said in the latest episode of the Global Pulse presented by the Center for Global Business at the University of Maryland’s Robert H. Smith School of Business.
SWIFT, the Society for Worldwide Interbank Financial Telecommunication, connects over 11,000 financial institutions spanning over 200 countries and territories and facilitates international trade by ensuring rapid cross-border payments.
“It means that their customers can no longer realize speed when transferring foreign funds,” said Faulkender, Dean’s Professor of Finance at Maryland Smith. “It will greatly reduce their ability to engage in cross-border financial transactions.”
However, he noted, there’s another issue entirely to consider: What role will China choose to play in all of this?
Watch now: Global Pulse Ep. 75: The Impact Of Most Russian Banks Losing SWIFT Network Access.
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