NEW DELHI: The United States and the European Union are planning to expel Russian banks from SWIFT (Society for Worldwide Interbank Financial Telecommunications), an international banking network. The move is aimed at expelling selected leading Russian banks in the first phase. With this, 70 percent of Russia's international banking transactions will be disrupted.

Russia has the fourth largest foreign exchange reserves in the world. The collection is about $ 63.5 billion. Russia's inability to use this will destabilize the country's economy.

Russia will suffer
Russia, the world's second-largest oil exporter, will be hit in financial dealings in this sector. All exports from the country will suffer a setback. Russia will be plagued by famine as imports of essential commodities will not be possible.

Presently, Germany, France, Italy, Britain, Canada, the United States and the European Commission are in the forefront to expel Russia from SWIFT. It can be expelled unanimously only if the 27 EU countries take a decision.

Economic nuclear weapon
The Russian government reacted that if expelled from SWIFT, it will be seen as a war declared against Russia. However, French Finance Minister Bruno le Mayer retorted SWIFT is an ‘economic nuclear weapon’ against Russia.

What is SWIFT?
SWIFT is a Belgium based cooperative firm founded in 1973 to provide security for international banking transactions and to prevent fraud and cyber-attacks. Though it is regulated by the National Bank of Belgium, it also has representatives from central banks from the United States, Japan, China, Russia and Britain. SWIFT'S operation is similar to the IFS code used by banks in India.

1. 11,000 financial institutions in 200 countries are using SWIFT.
2. Swift handles an average of 4.2 crore transactions per day.
3. 300 Russian banks are members of Swift.

5%
In 2012, the United States succeeded in expelling Iran from SWIFT. In 2014, the European Union tried to oust Russia but was unsuccessful. This is because most European countries have large economic dealings with Russia. Trade between the European Union and Russia alone is worth 8000 crore euro; about Rs 6.78 lakh crore. Russia's GDP would drop by 5% if expelled from SWIFT. Russia will not be able to bear this.