BusinessToday Previous Editions

11 INTERNATIONAL NEWS 3.3.2022 THE European Council has introduced further restrictive measures to suspend the broadcasting activities of Sputnik and RT/Russia Today while officially banning Russian banks from the SWIFT system. e council has decided to ban Bank Otkritie, Novikombank, Promsvyaz- bank, Rossiya Bank, Sovcombank, VNE- SHECONOMBANK (VEB), and VTB BANK from the SWIFT system - a meas- ure that will also apply to anyone estab- lished in Russia whose propriety rights are directly or indirectly owned for more than 50% by the same banks. It will also be prohibiting any invest- ment, participation, or contribution to fu- ture projects co-financed by the Russian Direct Investment Fund. Euro banknotes are banned from being sold, supplied, transferred or exported to Russia. e EU decided to suspend the broad- casting activities of Sputnik and Rus- sia Today, as well as the latter's foreign branches such as RT English, RT UK, RT Germany, RT France, and RT Spanish. eir broadcasting activities will remain suspended "until the Russian Federation and its associated outlets cease to con- duct disinformation and information ma- nipulation actions against the EU and its member states". EU High Representative Josep Borrell described the measure as an "important step against Putin's manipulation oper- ation and turning off the tap for Russian state-controlled media in the EU". "We have already earlier put sanctions on leadership of RT, including the edi- tor-in-chief Simonyan, and it is only log- ical to also target the activities the organ- isations have been conducting within our Union." Ukraine's government had demanded a full ban on Russian access to the banking system following Russia's invasion of the country on 24 February. "I will not be diplomatic on this. Every- one who now doubts whether Russia should be banned from SWIFT has to understand that the blood of innocent Ukrainian men, women and children will be on their hands too. BAN RUSSIA FROM SWIFT," Ukraine's foreign minis- ter Dmytro Kuleba tweeted on ursday. But what is SWIFT, and what happens when banks lose access to it? What is SWIFT? SWIFT, short for the "Society for World- wide Interbank Financial Telecommuni- cation", is a secure messaging system that facilitates rapid cross-border payments. Its standardised system of secure mes- sages is highly trusted, and allows banks to process high volumes of transactions very quickly. e Belgium-based system was set up in 1970 as a co-operative made up of the thousands of financial institutions that use it. It has become the backbone of interna- tional finance. In 2020, around 38 million messages were sent each day over the SWIFT platform, according to its Annu- al Review. Each year, trillions of euros are transferred using the system. While there are alternatives - for ex- ample, Russia and China operate their own systems that work in similar ways - SWIFT is the most-used worldwide. Why does a SWIFT ban matter? Banning "selected" Russian banks from SWIFT makes it much harder for them to access financial markets around the world. As a result, it will be much more difficult - although not impossible - for Russian businesses and individuals with accounts at the affected banks to import and export goods, and borrow and invest abroad. A ban on Russian banks is not a world first. Some Iranian banks were barred from SWIFT in 2019 following US sanc- tions. e country as a whole had its access suspended between 2012 and 2016. Russia's central bank also sanctioned Along with pulling access to SWIFT from some of the country's commercial financial institutions, Russia's central bank has also been sanctioned. e sanctions would prevent the cen- tral bank from "deploying its interna- tional reserves," the European Commis- sion said, effectively cutting the Russian government off from over $600 billion (€536 billion) of foreign currency re- serves. On Monday, the impact of the sanctions was felt as the ruble fell almost 30 per cent against the US dollar and the Russian central bank hiked interest rates to 20 per cent in an effort to stave off the risks of depreciation and inflation. "External conditions for the Russian economy have drastically changed," Rus- sia's central bank said in a statement. Czech customers of Russia's Sberbank queued up to withdraw money and close their accounts after it announced it would close branches in Europe What does banning 'selected' Russian banks from SWIFT mean?

• Cover