If sanctions are implemented, it would hit Russian trade making it harder for companies to do business.
The West is increasing pressure on Russia for launching a full-scale attack on Ukraine. In the latest development, Canada, the United States, Britain and the European Union on Friday said they could act to exclude Russia from the SWIFT global interbank payments system.
Such a move could happen in coming days, news agency Reuters reported citing US and European officials.
What is the SWIFT banking system?
SWIFT is a secure messaging system that facilitates rapid cross-border payments and is the principal mechanism for financing international trade.
It was created in 1973 in Belgium. More than 11,000 banks and institutions in more than 200 countries are connected to the system.
According to SWIFT system's official website, more than 40 million messages are sent every day, and trillions of dollars and transacted between governments and financial institutions in the same period.
New system introduced
"We do this every single instant of every single day, right across the world. No other organisation can address the scale, precision, pace and trust that this demands," according to its official website.
It further said that a new SWIFT gpi system was introduced, which is a new framework of rules agreed by banks to increase transparency and speed.
Who controls SWIFT system?
According to the website, SWIFT is overseen by the G-10 central banks (Belgium, Canada, France, Germany, Italy, Japan, The Netherlands, United Kingdom, United States, Switzerland, and Sweden), as well as the European Central Bank, with its lead overseer being the National Bank of Belgium.
In 2012, this framework was reviewed and a SWIFT Oversight Forum was established, in which the G-10 central banks were joined by other central banks from major economies: Reserve Bank of Australia, People's Bank of China, Hong Kong Monetary Authority, Reserve Bank of India, Bank of Korea, Bank of Russia, Saudi Arabian Monetary Agency, Monetary Authority of Singapore, South African Reserve Bank and the Central Bank of the Republic of Turkey.
How the sanction would impact Russia?
If these sanctions are implemented, it would hit Russian trade and make it harder for Russian companies to do business.
Since Russian companies will lose access to smooth transactions, the companies won't be able to receive payments for energy products like gas and oil.
Russia was threatened with similar sanctions when it annexed Crimea in 2014. Moscow developed its own cross-border money transfer system, but it is not as advanced and secure as SWIFT.
The West is so far divided over imposing the sanctions but White House spokesperson Jen Psaki said removing Russia from SWIFT "remains an option on the table" and underscored President Joe Biden's preference to take steps together with allies.