Washington Post: Europe says it has a ‘financial nuclear weapon’ against Russia. But it’s uncertain if it wants to use it.
PARIS — As U.S. and European leaders ponder how far to go in sanctioning Russia for its attack on Ukraine, their attention has shifted to the most divisive — and potentially most severe — weapon at their disposal.
French Finance Minister Bruno Le Maire called it a “financial nuclear weapon” on Friday. He was talking about SWIFT — short for the Society for Worldwide Interbank Financial Telecommunication — a messaging network connecting banks around the world. The Belgian-based consortium links more than 11,000 financial institutions operating in more than 200 countries and territories, acting as a critical hub enabling international payments. Last year, the system averaged 42 million messages a day.
Whether to cut Russia off from SWIFT has become one of the first points of serious Western division in this crisis, after the European Union, a block of 27 nations, had for weeks demonstrated unity.
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WNU Editor: The U.S. Dollar is the world's reserve currency because 56% of all international transactions between countries is in US dollars. This reserve status is one of the cornerstones on why the U.S. is a superpower, and why it can finance its military and its huge budget deficits. Swift, to put it bluntly, is the critical financial tool that makes this all possible.
By banning the world's 11th largest economy and major exporter of energy and commodities from this financial platform will set into motion the U.S. dollar losing its dominance in Swift, and more importantly, its position as the world's reserve currency. The consequences of such an action cannot be underestimated, and it is the reason why the U.S. has delayed the imposition of these measures (so far).