Last week, Russia’s attack on Ukraine was followed by retaliation, disagreement, and disputation from various nations worldwide.
The NATO allies decided to impose sanctions cutting down Russia from the global SWIFT financial ecosystem, which by many was considered an apt ‘punishment for President Vladimir Putin’s invasion of Ukraine.’
The SWIFT Controversy
The US and European Union (EU) have partially cut off several Russian banks from the leading international payment gateway, SWIFT. In addition, Russia’s central bank assets are expected to be frozen, constraining Moscow’s ability to access its overseas reserves.
According to a joint statement, the intention behind this move is to further ‘isolate Russia from the international financial system.’
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. The system is a secure platform for financial institutions to exchange global monetary transactions such as money transfers.
Experts expect that excluding Russian banks from the SWIFT platform could hit the country’s economy hard. The White House has also stated that cutting out SWIFT access will make the country rely on ‘the telephone or a fax machine’ to make payments.
However, many experts believe that the move may give central bank digital currencies (CBDCs), especially CBDCs like China’s Digital Yuan, an edge in the global market.
A Bloomberg analyst anticipated that this move could provide other ‘geopolitical rivals, such as China, the excuse to promote the digital versions of their own central banks’ money in global trade and finance.’ As a result, this move, if materialized, could further weaken the dollar’s international clout.
Meanwhile, as international tensions spur, cryptocurrencies have had a significant role in the larger narrative. As per reports, more than $19 million in BTC, ETH, and USDT has been donated to the Ukrainian government.