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Western allies to expel some Russian banks from global payments system

Sanctions on Russia's central bank could limit Putin's use of his more than $630 billion in international reserves, which have been widely seen as insulating Russia from some economic harm.

February 27, 2022 / 09:24 AM IST
Russian President Vladimir Putin (Image: Reuters)

Russian President Vladimir Putin (Image: Reuters)

Western allies announced sweeping new sanctions against Moscow on Saturday, including kicking some Russian banks off the main global payments system, as a defiant President Volodymyr Zelenskiy said Ukrainian forces were repelling Russian troops advancing on Kyiv.

Seeking to ratchet up economic punishment for Russian President Vladimir Putin over his invasion of Ukraine, the United States and its European partners also said they would impose restrictions on Russian's central bank to limit its ability to support the rouble.

The announcement came as fighting continued across Ukraine. Reuters witnesses in Kyiv reported occasional blasts and gunfire in the city on Saturday evening, but it was not clear exactly where it was coming from. The capital and other cities have been pounded by Russian artillery and cruise missiles.

Putin launched what he called a special military operation before dawn on Thursday, ignoring Western warnings and saying the "neo-Nazis" ruling Ukraine threatened Russia's security.

Russia's assault is the biggest on a European state since World War Two and threatens to upend the continent's post-Cold War order.

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A U.S. defence official said Ukraine's forces were putting up "very determined resistance" to the three-pronged Russian advance that has sent hundreds of thousands of Ukrainians fleeing westwards, clogging major highways and railway lines.

"As Russian forces unleash their assault on Kyiv and other Ukrainian cities, we are resolved to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies," the Western allies said as they escalated their punitive response.

"We will implement these measures within the coming days," according to a joint statement from the United States, France, Canada, Italy, Great Britain and the European Commission,

After initially shying away from such a move, the allies committed to "ensuring that selected Russian banks are removed from the SWIFT messaging system."

The move deals a blow to Russian trade and makes it harder for Russian companies to do business. SWIFT, or the "Society for Worldwide Interbank Financial Telecommunication", is a secure messaging network that facilitates rapid cross-border payments, making it a crucial mechanism for international trade.

Sanctions on Russia's central bank could limit Putin's use of his more than $630 billion in international reserves, which have been widely seen as insulating Russia from some economic harm.

The Kremlin said its troops were advancing again "in all directions" after Putin ordered a pause on Friday. Ukraine's government said there had been no pause.

"We have withstood and are successfully repelling enemy attacks. The fighting goes on," Zelenskiy said in a video message from the streets of Kyiv posted on his social media.

The crisis has galvanised the NATO Western military alliance, which has announced a series of moves to reinforce its eastern flank. While NATO has said it will not deploy troops to Ukraine, a string of countries are sending military aid.

U.S. President Joe Biden approved the release of up to $350 million worth of weapons from U.S. stocks, while Germany, in a shift from its long-standing policy of not exporting weapons to war zones, said it would send anti-tank weapons and surface-to-air missiles.



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