Find out what the Swift global financial system is

Recently, Volodymyr Zelensky, President of Ukraine, made a request asking that Russia be excluded from the Swift global financial system. Since, many leaders in the West are considering taking tougher approaches against the Russian government.

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Furthermore, Dmytro Kuleba, the Ukrainian foreign minister, has stated that he will no longer be diplomatic about this, and that it is now necessary to remove Russia from the system. If approved, such a measure will be one of the toughest that Western countries can sanction due to the constant attacks on Ukrainian territory.

But after all, what is Swift all about?

Swift is nothing more than an international cooperative society. Headquartered in Brussels, Belgium, it was founded in 1973 and had 239 banks from 15 countries. Furthermore, this system has the purpose of generating a global communication channel between institutions, as well as promoting the standardization of international financial transactions.

Thus, around 11,000 financial institutions in more than 200 countries currently use Swift, making it a fundamental part of the international financial system.

What will be the consequences if Russia is excluded from Swift?

If the exclusion is implemented, Russian banks will no longer be able to use the system to operate, that is, they will be unable to receive payments. This also includes transactions of a commercial nature, from institutions outside the country.

Thus, the exclusion will make it difficult to negotiate goods such as, for example, oil, gas and metals, which usually take place in US dollars. This will cause the Russian ruble to suffer a major devaluation in the international market.

However, this is not the first time they have threatened to remove Russia from Swift. Since, in 2014, such an action was also considered shortly after the country annexed the territory of Crimea.

Due to these events, the country governed by Vladimir Putin claims to be working on the development of its own system of international transfers, called "System for Transfer of Financial Messages" (SPFS, in the acronym in English).

However, if we analyze it from a commercial point of view, the sanction would not be a good thing for European countries that do business with the Russian government. This is because the country is considered the largest supplier of natural gas, in addition to being one of the main oil exporters on the continent.