Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

The world imposed a raft of economic sanctions on Russian banks and oligarchs on Thursday,

with the goal of punishing Russia for invading Ukraine. But one punishment that many analysts put forth as the most severe,

ejecting Russia from the SWIFT international payment system,

was missing from the list.

Western leaders appear to be split on whether Russia should be removed from SWIFT,

a move that would harm the country's banks

and its ability to trade internationally. So let's quickly go over what SWIFT is and what

it would mean for Russia to be ejected. Swift stands for society for worldwide interbank

financial telecommunications.

And you can think of it as the WhatsApp of global banking.

It's a global provider of secure financial messaging services connecting more than 11,000

financial institutions in more than 200 countries worldwide.

So Swift doesn't move the money, but it moves information about

the money. In fact, you might remember a scandal from 2016 when hackers capitalized on

weaknesses in the security of Bangladesh's central bank and attempted to steal almost a billion

dollars from their account with the Federal Reserve Bank of New York.

Now Swift is headquartered in Belgium and while sanctions can be imposed by any country in the world,

Swift doesn't get to choose which sanctions to follow.

It's incorporated under Belgian law and so it's required to comply with EU regulation, as

confirmed by the Belgian government.

Being cut off from Swift is being put forth as a financial nuclear button, but it wouldn't

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