Russian trade suffers as a result of its exclusion from the international payment system.
On Saturday, the United States and its partners imposed further sanctions against Russia, including the exclusion of several Russian banks from the world’s major payment system.

The US, Canada, and others warned they will impose limits on Russia’s central bank, limiting its capacity to sustain the currency, in an effort to ratchet up economic punishment for Russian President Vladimir Putin for his invasion of Ukraine.

As war raged across Ukraine, the announcement was made. On Saturday evening, witnesses in Kyiv reported hearing sporadic booms and gunshots, although it was unclear where they were coming from. Russian artillery and cruise missiles have bombarded the capital and nearby cities.

Putin started a “special military operation” before daybreak on Thursday, defying Western warnings and claiming that Ukraine’s “neo-Nazis” posed a security danger to Russia.
Russia’s attack is the most serious against a European state since WWII, and it threatens to upend the continent’s post-Cold War order.

According to a US defence source, Ukraine’s military are putting up “quite strong opposition” to Russia’s three-pronged offensive, which has displaced hundreds of thousands of Ukrainians and clogged vital roadways and railway lines.

“As Russian forces launch an assault on Kyiv and other Ukrainian cities, we are determined to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies,” the US, France, Canada, Italy, the United Kingdom, and the European Commission said in a joint statement.

“These steps will be implemented in the following days.”

The allies agreed to “ensure that certain Russian banks are removed from the SWIFT messaging system,” after originally being hesitant. They didn’t say which banks will be kicked out.

The action, which the French finance minister dubbed a “financial nuclear bomb” because of the economic harm it would do, hurts Russian commerce and makes it more difficult for Russian enterprises to conduct business.

SWIFT, or the “Society for Worldwide Interbank Financial Telecommunication,” is a secure messaging network that allows for quick cross-border payments, making it an important tool in international trade.

SWIFT stated in a statement that it is “working with European authorities to understand the nature of the businesses that will be subject to the new restrictions” and that it is “preparing to comply upon legal instruction.”

Sanctions on Russia’s central bank might limit Putin’s ability to employ his $630 billion in overseas reserves, which have been largely viewed as protecting Russia from some economic harm.

According to Ursula von der Leyen, chairperson of the European Commission, the European Union’s executive, the additional sanctions will prevent Russia from “using its war chest.”

“Thanks to our allies… for the pledge to suspend many Russian banks from SWIFT” and “the paralysis of the assets of the central bank of Russia,” Ukrainian Prime Minister Denys Shmygal said on Twitter early Sunday.

The latest sanctions, according to Clay Lowery, executive vice-president of the Institute of International Finance, are expected to do substantial harm to the Russian economy. “This will very certainly aggravate continuing bank runs and dollarization, resulting in a strong sell-off and a drain on reserves,” he warned.

New sanctions placed on Russia’s big banks, such as cutting them off from SWIFT, might have a spillover impact, harming business partners in Europe and abroad.

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