US and Europe expel Russian banks from the global financial system

US and Europe expel Russian banks from the global financial system

The United States, the European Union and the United Kingdom have finally agreed to an expulsion of major Russian banks from the Swift banking system , which allows communication between financial accounts around the world. After intense negotiations, the White House announced that the Atlantic partners have agreed on these and other responses to the invasion of Ukraine, including sanctions against the Russian Central Bank so that it cannot use the 643,000 million dollars (570,000 million euros) that it has in your reservations.

After the announcement, a White House official who spoke to the press on condition of anonymity explained that the partners are still working on the final list of banks that will be expelled from Swift, and that this must still be validated by the EU and by managers of that banking system in Belgium.

“The effects of these measures will have an immediate and chilling effect on the Russian economy ,” that official said in a phone call. The model, he added, is the one applied to isolate Iran from international financial markets.

The White House trusts that finally the Russian banks expelled from Swift will be those that the US has already penalized with the freezing of assets under its jurisdiction: VTB, Sovcombank, Novikombank, Promsvyazbank and Otkritie Bank.

There was resistance within the EU to this measure, especially from Germany, Hungary and Italy. NATO partners already raised the move in 2014, when Russia invaded eastern Ukraine and annexed the Crimean peninsula . At the time, the Kremlin said that such a move would amount to ” a declaration of war .” The war has been started today by Russia invading the Ukraine.

The truth is that many European companies continue to rely on this system to do business with key Russian sectors, especially oil and gas. The aforementioned US official said that is why the expulsion is partial , which also leaves room for Europe and the US to intensify sanctions later, if Kiev finally falls.

In addition to the expulsions from the banking system, the sanctions on the Russian Central Bank will prevent it from using the dollar reserves it has been amassing for years to avoid the other penalties of the West.

Finally, the NATO partners form a team that will be dedicated to searching for the assets of sanctioned Russian officials to freeze them, in addition to preventing them from obtaining residence permits and passports outside of Russia. “This coordination to apply sanctions is unprecedented, and is designed to bring down the Russian fortress,” the US official said.

Melissa Galbraith
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.