The US, Japan and other Western nations moved over the weekend to impose additional sanctions against Russia, including restrictions on access for some Russian banks to the SWIFT global bank payments system.
Restrictions on the Russian central bank target its access to more than $600 billion in reserves the Kremlin has at its disposal, hindering its ability to support the ruble after it fell last week to its lowest level ever.
The decline of the ruble would likely send inflation soaring, hurting all Russians and not just the Russian elites who were the targets of earlier sanctions. The resulting economic disruption, if Saturday’s measures are as harsh as described, could leave Putin facing political unrest at home.
Analysts predicted intensifying runs on banks by Russians, and falling government reserves as Russians scrambled to sell their targeted currency for safer assets.
The SWIFT financial messaging system daily moves countless billions of dollars around more than 11,000 banks and other financial institutions around the world.
Allies on both sides of the Atlantic also considered the SWIFT option in 2014, when Russia invaded and annexed Ukraine’s Crimea and backed separatist forces in eastern Ukraine. Russia declared then that kicking it out of SWIFT would be equivalent to a declaration of war and the allies shelved the idea. Russia since then has tried to develop its own financial transfer system, with limited success.
The disconnection from SWIFT announced Saturday was partial, leaving Europe and the United States room to escalate penalties later. Officials said they had not fully settled on which banks would be cut off and that the aim was for targeted, functional restrictions.