The European Union (EU) has finally agreed to join the United States (US) and the United Kingdom (UK) in blocking some Russian banks from the main international payment system, SWIFT.
Previously, some EU leaders had opposed the proposal because they feared it would have a major impact on international trade and hurt their economies.
The agreement would also involve a freeze on Russia’s central bank assets that could limit its ability to access foreign reserves.
This is aimed at further isolating Russia from the international financial system, according to a joint statement following the report.
Russia relies heavily on the SWIFT system in its major oil and gas exports. These sanctions are the most ‘tough’ measures imposed so far against the Kremlin following its attacks on Ukraine.
While it will affect the Russian economy, there is an alternative system called the Financial Message Transfer System (SPFS) that Russia created after Crimea in 2014.
Germany is among the countries with the highest dependence on Russia which supplies two -thirds of its gas. Restrictions on the Nord Stream 2 pipeline project from Russia to Germany are seen to affect Europe's largest economy.
With the decision made to block Russia from SWIFT, it is seen as a way to minimize this vulnerability.
