What is SWIFT and how could it clip Putin's financial wings?
SWIFT headquartered in Belgium has 26 offices across the world, providing messaging services to banks in more than 200 countries
Bill Browder, the founder and CEO of Hermitage Capital Management, an investment fund and asset management company with experience in Russian markets, outlines what he believes will stop Russian President Vladimir Putin from further escalation.
As the world reels from Russia's invasion of Ukraine and Russian President Vladimir Putin's apparent indifference to the sanctions imposed against his country thus far, calls are growing across the globe for Putin to be hit with financial pain that he cannot ignore.
One way of doing that is to cut Russia off from access to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the main global network that allows financial institutions to send and receive information on international bank transfers.
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Those calls intensified Friday after Armed Forces minister James Heappey told colleagues during a Question Time session with the House of Commons that the U.K. continues to seek unanimous approval to cut Russia from the SWIFT bank system, but some countries continue to hold out.
Russia's President Vladimir Putin addresses the nation in Moscow, Russia on February 22, 2022. (Photo by Kremlin Press Service/Handout/Anadolu Agency via Getty Images) (Photo by Kremlin Press Service/Handout/Anadolu Agency via Getty Images / Getty Images)
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SWIFT is incorporated and headquartered in Belgium with 26 offices across the world, providing messaging services to banks in more than 200 countries. It is overseen by the central banks of the G-10, comprised of Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, the United Kingdom, the United States, Switzerland and Sweden.
SWIFT (Society for Worldwide Interbank Financial Telecommunication) logo displayed on a phone screen and coins are seen in this illustration photo taken in Krakow, Poland on January 23, 2022. (Photo by Jakub Porzycki/NurPhoto via Getty Images) (Photo by Jakub Porzycki/NurPhoto via Getty Images / Getty Images)
While SWIFT does not hold funds or manage client accounts, it can cut banks (including those of an entire country) off from its system when sanctions against the institutions are imposed by the European Union, in which Belgium is a member state.
The impacts of such an action can be crippling, and the tool has been used before as an international response. SWIFT booted EU-sanctioned Iranian banks from its network in 2012 and again in 2018.
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Bill Browder, the founder and CEO of Hermitage Capital Management, is one of the voices saying that now is the time to take the same step against Russia. The investment fund chief told FOX Business' "Mornings with Maria" host Maria Bartiromo on Thursday that he believes "at this point, it justifies cutting Russia off form the SWIFT international banking system."
American financier Bill Browder speaks at the Oslo Freedom Forum 2019 on May 28, 2019, in Oslo, Norway. (Photo by Julia Reinhart/Getty Images) (Julia Reinhart/Getty Images / Getty Images)
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"That’s what we did with Iran, that put them back to the stone ages economically and that’s what ultimately forced them back to the negotiating table," Browder explained. "That’s what has to be done with Vladimir Putin right now."
Following a speech announcing further sanctions against Russia on Thursday, President Biden said cutting Russia off from SWIFT is not an action Europe wants to take at this point.