The threat has weighed for several months but it has taken on a new consistency since the Russian military offensive launched on Thursday February 24 on Ukraine.

After the first financial sanctions fell on Tuesday, the United States and its allies could step up a gear by advocating for the exclusion of Russia from the Swift system.

Swift is the acronym for "Society for Worldwide Interbank Financial Telecommunication".

Founded in 1973, this private company based in Belgium has built a titanic ultra-secure messaging network dedicated to financial transactions.

"Swift is an IT intermediary that does not transfer funds but centralizes transfer orders between customers of different banks," says Yamina Fourneyron, professor of economics at the University of Lorraine, contacted by France 24. It is an essential tool for facilitating and securing large transactions,” adds the CNRS researcher.

This cooperative, which brings together more than 11,000 banking establishments in 200 countries, plays a considerable role in the workings of international finance.

In 2021, the network transmitted approximately 10.6 billion payment orders worldwide.

Technically, nothing stands in the way of excluding some 300 Russian banks and institutions from this system.

To achieve this, Western countries will have to put pressure on the company and convince at least 13 of Swift's 25 board members to make such a decision.

"Devastating" consequences for Russia

This sanction, described by the United States as a "nuclear weapon", would not be a first.

It has already been effective after North Korea's missile tests in 2017, then against Iran between 2012 and 2016 and reinstated in 2018 by Donald Trump.

It was also considered against Russia during the annexation of Crimea in 2014.

The consequences of a disconnection of Russian banks would be "devastating, particularly in the short term", explains a note from the Carnegie Moscow Center.

“After the disconnection of Iranian banks from Swift, the country lost almost half of its oil export revenue and 30% of its foreign trade,” the group of experts recalls.

In the event of a sanction, the Russian banking system would slow down and the country's companies would have to find other means of carrying out transactions with foreign countries.

"Let's imagine a Russian exporter who wants to buy champagne in France. He will be blocked because the Russian bank will not be able to transmit the transfer order to the French bank", explains Yamina Fourneyron.

“The Russian trader will then have to either pay in cash or have another account in a bank connected to Swift in another country, in France or Cyprus for example”, specifies the economist.

>> To read: Gas, oligarchs, finance... How Russia protects itself from Western sanctions

To mitigate the effect of this sanction, Russian banks will also be able to rely on an alternative secure messaging system, the Financial Message Transfer System (SPFS).

Launched in 2014 by the Bank of Russia after the first disconnection threat, the SPFS offers the same service as Swift but is currently only used by about twenty foreign banks.

A Russian entrepreneur could therefore theoretically request an Indian bank, a member of the SPFS, to carry out the transfer order via the Swift system, a banking institution being able to be a member of several information transfer networks at the same time.

"It will be longer and more expensive insofar as there is an additional intermediary", explains Yamina Fourneyron.

“This will clearly complicate the life of Russian companies but knowing the speed of financial innovations, India or China will be quite capable of offering alternatives”, assures the expert.

A double-edged sword for the West

In fact, the exclusion of Russia could encourage the Kremlin to accelerate the development of this alternative network of bank information transfers to the detriment of transactions in dollars carried out with Swift.

If the hegemony of the greenback is not called into question, the emergence of a parallel network would not be good news for Washington, especially since the Russians have the ambition to integrate their system with the service Chinese equivalent, the CIPS (Cross-Border Inter-Bank Payments System).

Ultimately, the Russian-Chinese objective is to embark on this new network of emerging countries such as India and Iran and to assert their independence vis-à-vis American financial institutions.

>> See: Russian military invasion in Ukraine: why sanctions could prove unsuccessful?

Finally, this sanction would put in difficulty many European companies and in particular French ones like TotalEnergies or Société Générale, solidly established in Russia.

For several years, France has been the second largest foreign investor in the country and the largest employer, with 160,000 employees.

"The problem will arise in particular for the payment of Russian gas in Europe. To pay Russian companies, Europeans will also have to resort to financial arrangements", specifies Yamina Fourneyron, increasing energy prices already at most high.

Closing Swift's door to Russian banks is therefore a double-edged sword.

Disastrous for the Russian economy, this decision could also turn against Westerners.

As the financial markets panic after the Russian invasion of Ukraine, the United States will no doubt think twice before pressing the red button on this "nuclear weapon".

The summary of the

France 24 week invites you to come back to the news that marked the week

I subscribe

Take international news everywhere with you!

Download the France 24 app

google-play-badge_EN