The threat is in the air of Vladimir Putin ordering a Russian invasion of Ukraine.
There have also been threats and promises of repercussions from the U.S. and Western governments if it happens. There’s one in particular that could force Putin to consider if it would be worth it seriously; cutting Russia off from the global banking system.
SWIFT is a high-security network that connects financial institutions all over the world. IT stands for the Society for Worldwide Interbank Financial Telecommunications and was founded 48 years ago to replace telex. Currently, over 11,000 financial institutions worldwide use it to send secure messages and payment orders.
Simply put, to do business on a global scale, a country has to be connected to this network. There is no alternative.
Hence, the cat and mouse game going on. US leaders have suggested that Russia could be cut off from SWIFT, but Russian politicians counter that by saying that shipments of oil and gas to Europe would be stopped if that happened.
If Russia invaded Ukraine and was cut off From SWIFT, it would be impossible for financial institutions to send money in or out of Russia, potentially crippling Russian companies and their foreign customers.
In 2012 Iran was unplugged from SWIFT, and they lost roughly 50% of their oil export revenue.
British Prime Minister Boris Johnson said Tuesday that he was in talks with the US about potentially banning Russia from SWIFT. Here’s part of Johnson’s statement from Tuesday.
“There is no doubt that that would be a very potent weapon [against Russia]. I’m afraid it can only really be deployed with the assistance of the United States though. We are in discussions about that.”
It’s a high-stakes chess game, playing out on a world stage.