The US and the EU announce the exclusion of Russian banks from SWIFT and the paralysis of Central Bank assets

The President of the United States, Joe Biden, and the President of the European Commission, Ursula von der Leyen, announced this Saturday their intention to to suspend Russian banks from the SWIFT financial mechanism and to paralyze the international assets of the Central Bank of Russiain the battery of tougher economic response measures against the Kremlin since the beginning of the Russian invasion of Ukraine.

Both leaders have denounced in unison the “barbaric actions” of Russia committed against the Ukrainian population, which have motivated this new round of sanctions with the consensus of the German Chancellor, Olaf Scholz, the French President, Emmanuel Macron, the Prime Minister of Italy, Mario Draghi, Canadian Prime Minister Justin Trudeau and British Prime Minister Boris Johnson.

The German Government has specified that the designated banks are those entities sanctioned this week, namely: Sberbank, VTB, Bank Otkritie, Sovcombank OJSC and Novikombank. “All Russian banks that have already been sanctioned by the international community, and if necessary, other Russian banks will be excluded from the SWIFT international payment system,” according to the note collected by Europa Press.

In addition to SWIFT’s exclusion of these designated banks, additional measures are added against “the deployment of international reserves of the Central Bank of Russia”as well as the ban on “Russian oligarchs” to trade in western marketsin addition to blocking their citizenship processes based on their investments abroad, the so-called “golden passports”.

In the Central Bank of Russia there are much of the 570,000 million euros in gold and foreign exchange reserves of the Government of Vladimir Putin, in what would be an extraordinary blow to his plans to reinforce aid to banking entities and the foreign exchange market after the invasion of Ukraine.

In fact, the Central Bank launched one of the first internal measures after the invasion of the inject additional liquidity into the banking sector and with the sale of foreign currency after the national currency, the ruble, fell to record lows the day Moscow sent its troops to Ukraine.

The allied countries against Russia also commit to launch next week a transatlantic working group “that will guarantee the effective implementation of our financial sanctions” by “identifying and freezing the assets of sanctioned individuals and companies” that exist within their respective jurisdictions.

These measures are specifically aimed at the “war chest” of Russian President Vladimir Putin, in line with the promise to the Russian authorities that the invasion of Ukraine will result in “a huge price to pay” that will result in his “isolation international,” Von der Leyen has made known.

“We stand with the Ukrainian people in this dark hour,” Biden added. “Even beyond the measures we announced today, we are prepared to make further decisions to hold Russia accountable for its attack on Ukraine,” she added.

Russia Says It Will Maintain Financial Stability

“The Bank of Russia has the necessary resources and tools to maintain financial stability and ensure the operational continuity of the financial sector,” the entity’s press service said in a statement.

The institution is committed to continuing to provide liquidity to banks and ensures that the Russian banking system “has enough capital and liquidity to function smoothly in any situation.”

“All client funds in the accounts are guaranteed and available at any time,” according to the Central Bank. “Bank cards of all banks in Russia also continue to work normally,” he added.

Likewise, the Bank recalls that it has its own transfer system, similar to SWIFT but with a much more limited scope, the Bank of Russia’s Financial Message Transfer System (SPFS), which will continue to operate “under any scenario.”