SWIFT is the world’s leading international payments network.
Here is a link to the article:
Here is an introduction to what SWIFT does and why it matters:
Here are some comments from market analysts and banks:
HARRY BROADMAN, CHAIR OF EMERGING MARKETS PRACTICE, BERKELEY RESEARCH GROUP, WASHINGTON, DC
“Sanctions have many weaknesses, as we know from history. The more comprehensive they can be, the more areas they cover, the more you increase the likelihood of effectiveness. motivates Putin’s decision-making process. The more sanctions there are and the larger the coalition of people who put them in place, the higher the likelihood of success. But there is no formula.”
SERGEY ALEKSASHENKO, FORMER VICE PRESIDENT OF THE CENTRAL BANK OF RUSSIA, WASHINGTON DC:
“It means there is going to be a disaster in the Russian currency market on Monday. I think they will stop trading and then the exchange rate will be set at an artificial level, like in Soviet times.”
“It’s much worse than [la crise financire russe de] 1991 because we don’t really know under what conditions all of this can be undone. It’s a very strong decision, the strongest that can be made and I consider it to be absolutely correct.”
ROSS DELSTON, AMERICAN LAWYER AND FORMER BANKING REGULATOR, ST LOUIS, MO:
“It’s the closest thing to a declaration of war from a financial point of view. If there was a real hot war between the United States and Russia, this is the kind of sanctions we might expect.
“This will result in Russia being considered radioactive by US and European banks, which in turn will be a major impediment to trade with Russia.”
JORDAN KAHN, PRESIDENT AND CHIEF INVESTMENT OFFICER, ACM FUNDS, LOS ANGELES:
“If we talk about market effects, I think that’s going to be seen as a net negative … global banks are all interconnected to some degree and so if that causes a run on Russian banks, or something like that , I think that’s a negative perception, combined with the fact that the United States is cracking down on Russia by enacting SWIFT.
“We already saw cyberattacks late last week… I think investors might be worried about further retaliation from Russia: are they going to try to escalate things there?
“So I think the concern is going to be about the escalation of that retaliation. … It could be positive longer term, because it’s an attempt to put pressure on Putin for a resolution. But in the short term, it seems like it’s kind of a net negative.”
“There’s perception and sentiment, and then there’s reality and fundamentals. I don’t think there will be any mention or charges that they have to take because of this, but in the short term, on a sentiment and fear level, I think US banks might be caught in some concern: does this have ripple effects on the global banking system?
CLAY LOWERY, EXECUTIVE VICE PRESIDENT, INSTITUTE OF INTERNATIONAL FINANCE:
“These new sanctions, which include the withdrawal of several Russian banks from SWIFT and the sanction of the Russian central bank, are likely to cause serious damage to the Russian economy and its banking system. This will most likely exacerbate bank withdrawals and the ongoing dollarization, causing strong selling and a drain on reserves.
“One of the biggest impacts on the global economy is likely to be on trade. harder for Russia to export energy and other commodities. As a result, we could see a spike in commodity prices.”
DENNIS DICK, HEAD OF MARKET STRUCTURE AND PROPRIETARY TRADER AT BRIGHT TRADING LLC, LAS VEGAS:
“I think the whole world is trying to find a way to obviously rectify or at least stop what is happening in Ukraine without physical intervention.
“Any action to avoid… the sending of troops will probably be considered positive by the Stock Exchange.”
“Is the worst behind us for the Wall Bourse? I tend to think so.”
“I think anything the United States can do to limit Putin’s finances will be viewed positively by the stock market.”
SONIA KOWAL, CHAIRMAN, ZEVIN ASSET MANAGEMENT, BOSTON
“You need a functioning banking system to have a functioning economy. This will to some extent undermine the Russian economy.”
EDWARD MOYA, SENIOR MARKET ANALYST, OANDA, NEW YORK:
“It will draw comparisons to what happened to Iran, and the crippling effect on their economy, and is more likely to produce a major shock to global financial markets when we open on Sunday evening.”
“I think a lot of traders were sort of convincing themselves that the US and Europe weren’t taking a tough stance and that they were really focused on protecting the current economic situation and that they weren’t really delivering a major blow to the financial system. This action is going to be really tough to digest and it’s really going to get on the nerves of a lot of investors…a lot of the rebound we’ve seen in the second half of the week last will be tested.”
MICHAEL FARR, CEO AND FOUNDER OF FARR, MILLER & WASHINGTON LLC:
“Markets are looking for surprises, and it could be a surprise that is not taken very well if it means a slowdown in international trade.
“This decision to withdraw Russia from SWIFT means they are walking the talk. It reduces Russia’s ability to transact globally and cuts off its financial flows from most countries, so it is a measure severe that should hold their full attention.
“The problem will be the inflation that will be caused here, and the extent to which it can really slow down the European economy. It could create headwinds if it continues again and again.”
PAUL MARQARDT, ATTORNEY AT DAVIS POLK, WASHINGTON DC:
“Getting kicked out of SWIFT doesn’t make transactions impossible, but makes them much more difficult – getting kicked out of SWIFT would significantly increase transaction costs.”
PHIL ORLANDO, CHIEF EQUITY MARKET STRATEGIST, FEDERATED HERMES, NEW YORK:
“We have asked the United States to ban Russia from SWIFT and to sanction the purchase of Russian oil and gas. We can tighten the screws more.[InvestorsshouldexpectthatRussiaifitiscorneredinaneconomiccorneremploysomeformofcybersecurityagainstthosewhoacted”Thiswouldincreasemarketvolatilityheadded[Lesinvestisseursdoivents’attendrecequelaRussiesielleestacculedansuncoinconomiqueaitrecoursuneformedecyberscuritcontreceuxquiontagi”Celaaugmenteraitlavolatilitdumarcha-t-ilajout