Swift payments crackdown on Russia edges closer

26 February 2022

Moves to shut Russia out of the main global bank payments system have gained ground after Germany's government softened its stance.

Countries including the UK have lobbied for Russia to be blocked from the Swift system, which makes it possible to move money across frontiers.

Now Germany, which opposed the move, has said it favours "targeted and functional" restrictions.

The economy and foreign ministers said they wanted to hit "the right people".

The change of heart opens the way to further economic sanctions against Russia in the wake of its invasion of Ukraine.

Until now, Germany had argued that simply ejecting Russia from Swift would damage Western economies massively and bring widespread suffering to ordinary Russian people, rather than the government.

So far, sanctions have included freezing the assets of Russian President Vladimir Putin and his Foreign Minister, Sergei Lavrov, as well as halting Russia's Nord Stream 2 gas pipeline.

Swift is used by more than 11,000 banks and financial institutions worldwide to carry out transactions worth trillions of dollars.

Excluding Russia from Swift would not stop its banks sending and receiving cross-border payments, but it would make the process much more difficult and expensive.

Germany's new stance was signalled in a joint statement by Foreign Minister Annalena Baerbock and Economy Minister Robert Habeck.

"We are urgently working on how to limit the collateral damage of decoupling from Swift in such a way that it affects the right people," they said.

"What we need is a targeted and functional restriction of Swift."