What happens if Russia is cut off from the Swift global payments system?

A total ban could tighten the noose on Moscow, crippling its financial system and severely curtail its ability to trade globally

A Ukrainian soldier walks past the shell of a burnt military vehicle, on a street in Kiev. AP

A screengrab from CCTV footage shows a missile hitting a residential building in Kiev. Reuters

A man inspects a broken window, after shelling carried out by Russian troops in the Ukrainian capital. Reuters

Ukrainian soldiers take positions outside a military centre as two cars burn on a street in Kiev. AP

Medical specialists transport a woman, who was wounded in the shelling of an apartment building, to an ambulance, as her husband looks on. Reuters

A woman outside her apartment building after it was damaged by a rocket, in Kiev. AP

A Ukrainian police officer detains a driver on a street in Kiev. AP

A soldier's helmet with a bullet hole on a street in the Ukrainian capital. AP

Ukrainian soldiers walk by a damaged vehicle, at the site of fighting with Russian troops, in Kiev. Reuters

Ukrainian policemen move parrots to safety after a high-rise apartment block was damaged by shelling in Kiev. EPA

A screengrab from a video shows rescue workers carrying a person at the site of a damaged multi-storey residential building, south-west of the Ukrainian capital. Reuters

A building damaged by shelling carried out by Russian troops in Kiev. EPA

Helga Tarasova comforts her daughter Kira Shapovalova as they wait in an underground shelter during a bombing alert in Kiev. AFP

A man walks past a building damaged by a rocket attack in the Ukrainian capital. AP

Emergency services workers near an apartment building damaged by shelling in Kiev. Reuters

Ukrainian soldiers collect unexploded shells in the capital. AFP

An apartment building damaged by shelling in Kiev. Reuters

Debris of a burnt military truck on a street in Kiev. AP

Natali Sevriukova stands next to her home after a rocket attack in Kiev, Ukraine. AP

People on foot and in cars move to cross from Ukraine to Poland at the Korczowa-Krakovets border crossing following the Russian invasion of Ukraine. AFP

Servicemen from the Ukrainian National Guard in central Kiev. Reuters

Ukrainian soldiers in downtown Kiev after Russian troops reached the outskirts of the capital. AP Photo

Police officers detain demonstrators in St. Petersburg, Russia. Hundreds of people gathered in Moscow and St. Petersburg on Thursday, protesting against Russia's attack on Ukraine. Similar protests took place in other Russian cities, and activists were also arrested. AP Photo

Hungarian troops in Vasarosnameny, close to the border with Ukraine, prepare to help refugees. AP Photo

Wrecked Russian army rocket launchers in Kharkiv, Ukraine. Reuters

The aftermath of a rocket attack in Kiev. AP Photo

A US Air Force jet refuels over Poland. Reuters

Devastation after shelling in Ukraine's Luhansk enclave. Reuters

The Royal Welsh Battlegroup from the UK makes its way to Estonia. Reuters

Firefighters tackle a blaze in a building in Kiev. AFP

The wreckage of an unidentified aircraft in a residential area in Kiev. Reuters

Smoke rises near the Ukrainian Defence Ministry in Kiev. Reuters

Russian military helicopters fly over the Ukrainian capital. AP

An anxious wait to board a train to leave Kiev as the attack loomed. AP Photo

Ukrainian servicemen on tanks in the Donetsk region, eastern Ukraine. AP Photo

Ukraine troops said this destroyed armoured vehicle outside Kharkiv belonged to the Russian army. Reuters

Rescuers at the crash site after a Ukraine armed forces Antonov aircraft was shot down in Kiev, according to the Ukrainian authorities. Reuters

Ukrainian tanks that aim to repel an attack by the Russian military in the Luhansk enclave of Ukraine. AFP

A Ukrainian State Border Guard Service base is ablaze after heavy shelling near Kiev. Reuters

Damaged radar at a Ukrainian military plant outside Mariupol. Officials in Kiev say Russian troops have rolled into the country from the north, east and south. AP Photo

Firefighters attend a blaze after bombing in the eastern Ukrainian town of Chuguiv, as Russian armed forces appeared to be bombarding Ukraine from several directions. AFP

A traffic jam in Kiev, with many Ukrainians leaving their capital after Russian troops entered. EPA

The Border Service of Ukraine released CCTV footage purporting to show Russian military vehicles passing a checkpoint to drive into Crimea. AP

A man picks up fragments of military materiel on the street after an apparent Russian strike in Kharkiv, Ukraine. AP

Workers load the debris of a rocket on to a lorry in the aftermath of Russian shelling in Kiev. AP

Emergency staff treat an injured man after bombing in Chuguiv. AFP

An American woman in distress after crossing the border to flee the violence in Ukraine, in Medyka, Poland. Reuters

People take shelter in a Kiev subway station, after Russian President Vladimir Putin authorised a military operation in eastern Ukraine. Reuters

People in a rush near Kiev-Pasazhyrskyi railway station in the Ukrainian capital. AFP

A Flightradar24.com screengrab shows a dearth of civilian aircraft in Ukrainian airspace after the Russian invasion. AP

The aftermath of bombing in Chuguiv. AFP

A Ukrainian rocket launcher vehicle prepares for action. Reuters

Cars are driven across a field to leave the city of Kharkiv. Reuters

People chant, carry placards and wave Ukrainian flags as they gather in Sydney, to demonstrate against Russian attacks on its neighbour. AP

People with many of their belongings packed take shelter in a Metro station in Kiev. AFP

Emergency services at the scene of an explosion at a military unit building in Kiev. EPA

A Kiev resident sweeps up debris after Russian shelling. AP

The first 40 soldiers of the 173rd US Army Airborne Brigade step off a military plane in Latvia. EPA

More damage from shelling in Kiev. AP

People wait at a bus station to travel to western parts of Ukraine, after violence in the east. Reuters

A woman carries her cats in a quest for a safe haven. AFP

Ukrainian President Volodymyr Zelenskyy holds an urgent government meeting in Kiev to discuss the next step. AFP

European Commission President Ursula von der Leyen and foreign policy chief Josep Borrell give a joint statement in Brussels, updating the press about the situation in Ukraine. EPA

People survey the damage after bombing in Chuguiv. AFP

A building on fire in Chuguiv. AFP

Live updates: follow the latest news on Russia-Ukraine

While the US and its European allies pushed out a series of sanctions to punish Russia for its military offensive in Ukraine, they stopped short of imposing restrictions on its strategic energy and aluminium industries as this would have reverberations in the global economy.

On February 26, the US in co-ordination with the European Commission, France, Germany, Italy, the United Kingdom and Canada, said they will bar certain Russian lenders from the Swift payments network to “ensure that these banks are disconnected from the international financial system and harm their ability to operate globally”.

In a joint statement, they also pledged “restrictive measures that will prevent the Russian Central Bank from deploying its international reserves in ways that undermine the impact of our sanctions".

"We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin," the statement said.

The joint statement did not list the banks that will be disconnected from the Swift network.

As a global payments network, Swift handles more than five billion financial messages a year, supporting fast and secure cross-border payments, and allowing international trade to flow smoothly.

It is considered a fast, reliable and secure platform for businesses worldwide. A ban could severely affect Russian trade, making it difficult for local companies to do business globally.

Here is a quick rundown on the payments network.

What is Swift?

Based in Belgium since its founding in 1973, the Society for Worldwide Interbank Financial Telecommunication (Swift), is a member-owned co-operative that serves as an intermediary and executor of financial transactions between thousands of banks in more than 200 countries.

It is governed by a 25-member board and the organisation is overseen by G10 central banks, as well as the European Central Bank.

Swift processes transactions worth trillions of dollars everyday. It acts as a messaging system for banks — processing payment requests and keeping a record of them in secure servers in Europe and the US.

Swift does not arrange fund transfers but sends payment orders that must be settled by the correspondent banks or accounts.

More than 11,000 institutions sent an average of 42 million messages a day through the Swift network in 2021, 11.4 per cent more than 2020.

The platform works by assigning each financial institution a unique identification code that specifies the bank name, its country, city, and branch.

The payment network enables people and businesses to take electronic or card payments, even if a customer or vendor uses a different bank than the payee.

How will a Swift ban affect Russia?

When the EU tightened its sanctions on Iran in 2012, Iranian banks were disconnected from the global financial network. Similarly, if a Swift ban is imposed it would limit Russia’s access to foreign companies and global financial markets.

Notable in Mr Biden's speech on Thursday was that European allies were not ready to impose such a ban yet, largely because of how intertwined European economies are with Russia's. But also worth noting is that Swift adheres to Belgian and European law, not US law.

“While sanctions are imposed independently in different jurisdictions around the world, Swift cannot arbitrarily choose which jurisdiction’s sanction regime to follow,” the network says on its website.

If Russia is banned from the platform, businesses in the country would find it very difficult to buy imports and be paid for their exports. Foreign exporters would find shipping goods to Russia dangerous and costly.

A Swift ban could have devastating impact on Russia’s economy and make everyday life difficult for Russians. As is the case with Iran, Russians would not be able to use credit cards abroad and tourists visiting the country would not be able make payments using their cards.

What are Russia’s alternatives?

Any ban on Swift could prompt the usage of Russia's alternative — the System for Transfer of Financial Messages.

“Introduced in response to the first threat of a Swift ban for Russia, usage of the system has grown domestically but has not yet been widely adopted internationally,” according to S&P Global Platts.

In 2014, when a potential ban was first discussed as a response to Russia's role in the conflict in Ukraine, Swift said it was a neutral global co-operative company.

The platform said it would not make unilateral decisions to disconnect institutions from its network as a result of political pressure, but would comply fully with European law as it has with respect to Iran.

Russian banks could also use other platforms for payments such as messaging apps, emails and smartphones.

However, industry experts say such alternatives would be less effective, not secure and could lead to a drop in payment volumes and an increase in transaction costs.

.