As tensions horrifically rise between Russia and Ukraine NATO countries are starting to make the move to sever Russia from the global financial system by banning them from utilizing the SWIFT (The Society for Worldwide Interbank Financial Telecommunication) international banking system.
In a letter signed by the United States, UK, Canada and other European allies, drastic measures are being taken in order to “paralyze the assets of Russia’s central bank” and freeze foreign assets of sanctioned individuals. This is a strategic move with the hope that cutting several commercial banks from SWIFT “will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally,” – EU Commission President Ursula von der Leyen.
“Cutting banks off will stop them from conducting most of their financial transactions worldwide and effectively block Russian exports and imports,” Ursula Von Der Leyen said. “Putin embarked on a path aiming to destroy Ukraine, but what he is also doing, in fact, is destroying the future of his own country,” the EU Commission President commented.
While it is unclear exactly what Russian banks will be cut off this move by NATO countries will “significantly harm Putin’s ability to finance his war” – Von Der Leyen.
In wake of the looming ban, Russia’s national currency, the Russian Rouble fell to an all-time low against the US dollar in the past week. All western banks have now been banned from selling the Rouble to Russia with many investors wanting out of the national currency.
“The [war chest] is impressive, but it’s only impressive if Russia can use those reserves. Without having the ability to defend its currency it will go into free-fall,” the White House spokesman said.
“I think potentially Russia will need to be completely isolated from the world by sanctions before it eases up on Ukraine. Putin, so far, has not seemed to care at all about sanctions imposed by the West,” Ms Mrachek, Russia and Eurasia expert at The Heritage Foundation said.
“After all, they certainly didn’t deter him from ordering a second invasion of Ukraine. Plus, it will take a few weeks at least for the sanctions to go into full effect, so Russia theoretically can still do what it wants in Ukraine for a while more without feeling the effect of the sanctions.”
What we might expect moving forward from Russian elites and the country itself is a surge towards the use of Cryptocurrency in order to evade the sanctions put in place by the Western countries involved. Russia prior to these sanctions being made was already in the process of passing laws which would better enable them to comprehensively regulate all transactions in the crypto space.
While we have seen the price of Bitcoin take somewhat of a minor fall over the last few days, crypto strategists are confident that the tensions between Russia and ultimately the rest of the Western world will not be able to bring down the best performing asset of the decade.
“The first major geopolitical conflict that’s really, potentially, scaring a lot of the West wasn’t able to drag Bitcoin’s price down nor it was able to do that for Ethereum. One of the biggest macro events that could only be compared to the kind of tension we had in the Cold War [or] World War II wasn’t able to drag down Bitcoin. That is an incredibly resilient sign for crypto markets.” – Nicholas Merten, popular Crypto Strategist.