Ukraine war: What does banning 'selected' Russian banks from SWIFT mean?

Some Russian banks will be excluded from the international payments system SWIFT as part of increasing sanctions announced by the European Union, US, UK and Canada.

"We commit to ensuring that selected Russian banks are removed from the SWIFT messaging system. This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally," the European Commission said in a statement.

Ukraine's government had demanded a full ban on Russian access to the banking system following Russia's invasion of the country on February 24.

"I will not be diplomatic on this. Everyone who now doubts whether Russia should be banned from SWIFT has to understand that the blood of innocent Ukrainian men, women and children will be on their hands too. BAN RUSSIA FROM SWIFT," Ukraine's foreign minister Dmytro Kuleba tweeted on Thursday.

But what is SWIFT, and what happens when banks lose access to it?

SWIFT, short for the "Society for Worldwide Interbank Financial Telecommunication", is a secure messaging system that facilitates rapid cross-border payments.

Its standardised system of secure messages is highly trusted, and allows banks to process high volumes of transactions very quickly

The Belgium-based system was set up in 1970 as a co-operative made up of the thousands of financial institutions that use it.

It has become the backbone of international finance. In 2020, around 38 million messages were sent each day over the SWIFT platform, according to its Annual Review. Each year, trillions of euros are transferred using the system.

While there are alternatives - for example, Russia and China operate their own systems that work in similar ways - SWIFT is the most-used worldwide.

Banning