The Russo-Ukrainian war shook the world and will have a profound impact on the world economic and political structure.
After the war, the United States and Europe continued to increase sanctions against Russia. But the biggest concern is whether the West will kick Russia out of the global payment system SWIFT, which is a "financial nuclear bomb" that cannot be easily used. Expelling Russia from the SWIFT system would mean disconnecting Russian banks from the international financial system and preventing Russia from executing most of their global financial transactions and commodity imports and exports.
The shoes finally landed.
On Saturday, February 26, local time, the United States, Canada and many European countries announced in a joint statement that Russia would be kicked out of the global interbank payment system SWIFT. The sanctions would cut off Russia's ties to most international financial transactions, including profits from oil and gas exports, which together account for more than 40 percent of Russia's fiscal revenues. "We stand with the Ukrainian government and the Ukrainian people, and we will make Russia responsible for the war and collectively guarantee that this war will become a strategic defeat for Putin," the European and American countries said in the statement. ”
Whether to adopt "nuclear bomb-level sanctions" against Russia, that is, kick Russia out of SWIFT, has become a matter of strong concern in Western public opinion since the beginning of the Russo-Ukrainian war. After repeated negotiations among EU member states, most countries have gradually become one. In this process, the biggest resistance comes from Germany, which is particularly dependent on Russia for energy, and more than half of the gas it needs imports from Russia. There was also a dispute over whether to stop the Nord Stream 2 gas pipeline, and germany eventually decided to ban Nord Stream 2.
But the German government has been wary of kicking Russia out of the SWIFT settlement system, fearing that its gas and coal supplies would go wrong. Polish President Duda, who visited Germany on Saturday, publicly criticized Germany for being "selfish," telling the media, "I came here to shake the conscience of Chancellor Scholz, to shake the conscience of Germany." At the most critical moment of the "Battle for Kiev", Ukrainian Prime Minister Zelenskiy repeatedly urged Germany to "summon up the courage" to expel Russia from the SWIFT system. After much deliberation, Germany has made it clear that it is in favor of "targeted" restrictions.
German Chancellor Scholz
Finally, on February 26, the United States, Canada, the European Commission, the United Kingdom, France, Germany, and Italy jointly signed a statement to kick Russia out of the global payment system SWIFT. A senior White House official said the sanctions were aimed at preventing Russian President Vladimir Putin from using the Central Bank's $630 billion in foreign exchange reserves. In addition, the statement said that the United States, Canada and European countries will take measures against the individuals and entities that contributed to the war, such as restricting the admission of rich people with close ties to the Russian government from Western citizenship and access to the financial markets of Europe and the United States.
It should be pointed out that kicking Russia out of the SWIFT system will also cause damage to Europe and the United States, which is a double-edged sword. Russia occupies an important position in global energy exports, oil, natural gas needless to say, Russia is still an important metal exporter such as primary aluminum, the soaring price of commodities will undoubtedly aggravate the inflationary pressure of the United States and Europe, and even cause an energy crisis in Europe. In addition, the closure of the "SWIFT" system to Russia will deal a heavy blow to Russian banks and will make it difficult for European creditors to recover their funds.
Although SWIFT is nominally a neutral organization, it is difficult to escape political influence. Logically, the SWIFT system, headquartered in Brussal, Belgium, should be dominated by the European Union, but in fact the United States is the real dominant country, and SWIFT has repeatedly become a tool for the United States to launch financial sanctions against other countries. The U.S. control of the SWIFT payment system is based on the hegemonic position of the U.S. dollar, the world's most important trade settlement currency and foreign exchange reserve currency. Now, SWIFT has become a US-controlled association, and once a member of one of SWIFT's associations is blacklisted by the US Treasury, it may be blocked from financial transactions with external banks, which is an unbearable blow for both companies, financial institutions and the country.
So, what are the implications for China that Russia has been kicked out of the SWIFT system?
Russia is a pivotal power, with close economic and trade relations with Europe, kicked out of the SWIFT system by the West, we can observe the impact, it is equivalent to using Russia to do a stress test, to see how much power this "financial nuclear bomb" can produce. At the same time, we can also take this opportunity to establish an independent international payment and settlement system with Russia and other countries, which is a rare and good opportunity for the internationalization of the renminbi and the weakening of the hegemonic position of the US dollar.
Being expelled from the SWIFT system is actually a risk that China is also facing, and some POLITICIANS IN the United States have repeatedly called for this. To this end, China must prepare for the worst, prepare in advance, and know that one day in the future, this kind of thing is likely to fall on China, such as when it is resolving the Taiwan issue, or when other major events occur.
Putin's visit to China at the opening of the Beijing Winter Olympics also discussed with the Chinese side the issue of reducing dependence on the dollar and the possibility of establishing an international payment system independent of the West. China and Russia have now increased the proportion of bilateral trade settled in local currency, in 2015, nearly 90% of Sino-Russian trade was settled in US dollars, and by 2020, the proportion of US dollar settlement has fallen below 50%, replaced by the euro and the renminbi.
China has realized that it cannot be bound by the hegemony of the US dollar if it wants to enhance its strategic autonomy in the world, so we have been steadily advancing the internationalization of the renminbi, including the introduction of the renminbi cross-border payment system (CIPS) and the development and launch of the digital yuan.
Trivia: SWIFT is an acronym for Association for Global Interbank Financial Telecommunication. Founded in 1973 and headquartered on the outskirts of Brussels, Belgium, the organization includes more than 11,000 financial institutions in more than 200 countries and regions, and almost all major financial institutions in the world are members of the system, including nearly 300 Russian banks. SWIFT is the safest, most convenient and most important cross-border payment system in the world, and if a major financial institution in a country is banned from using this system, it is almost catastrophic for a country's financial and trading system.