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«European Parliament is supporting the latest EU sanctions against Russia and condemns Russian “counter-sanctions” calling them “groundless”. The European Parliament “calls for the EU to consider excluding Russia from the SWIFT system», the resolution reads.

«According to the EU articles of association the European Parliament is not a member of legislation, it is an advisory agency. Politically crucial EU decisions are made in the Union and country leaders – its members, do not always listen to the European Parliament, often making decisions contrary to the ones suggested by the European Parliament, if those decisions are believed to be more appropriate», — notes Alexander Zakharov, Paragon Advice Group partner.

Previously the UK government suggested exclusion of Russia from SWIFT, whereas the UK Prime Minister David Cameron, as reported by Bloomberg, intended to raise that issue at the meeting of European leaders at Brussels.

SWIFT (Society for Worldwide Interbank Financial Telecommunication) binds together more than 10,000 financial organizations in 210 countries, providing transfer of about 1,8 bln messages annually. Russian community makes up more than 600 participants, including the Bank of Russia and other largest banks. In Russia SWIFT operates through the separate company called “Rosswift”.

Should SWIFT be blocked Russian banks will not be able to manage their correspondent accounts abroad or to effect domestic payments.

«Block of the SWIFT bank network in Russia will complicate the whole financial market – says to RBC Alma Obaeva, CEO of the National Payment Council – First off, there will be an issue concerning bilateral bank messaging during payments effected in both Russia and abroad. Absence of payment messaging basically means that banks will not be able to neither send nor receive money».

Foreign currency payments transferred through SWIFT will be the first to take the blow, because for ruble payments banks use information system of the Bank of Russia.

«Contracts of all banks in contractual relationship with SWIFT have provisions describing actions if the system shuts down, - explains a source close to SWIFT. – In many cases it is fax: if the SWIFT is cut down many banks can use fax communication. SWIFT shutdown is equal to the mobile communication shutdown: people will find a way of communication and if push comes to shove they will revert to the landline communication no matter how unpleasant it might be».

Late in August RBC became aware of the intention of the Central Bank of Russia to create an analogue of SWIFT in Russia. Deputy Finance Minister Alexey Moiseev claimed last week that Ministry of Finance along with the Central Bank of Russia is drafting a law regarding creation of SWIFT analogue in Russia. Senior vice president of the Central Bank of Russia Georgy Luntovsky sent a letter to the National Payment Council calling to prepare and send to the Central Bank of Russia offers of the market players in relation to the «joint organization of alternative channels of interaction during the interbank message exchange».

Source: RBC