By
NICK GOSNELL
Hutch Post
According to University of Kansas Law Brenneisen Distinguished Professor Raj Bhala, the choice by the European Union that was confirmed Wednesday to remove some Russian banks from SWIFT is cutting them off from the majority of trade with the world.
"Payment for normal trade transactions, by which Russia receives import revenues, those payments will not be processed by SWIFT," Bhala said. "The SWIFT banks are saying we will not deal with a designated list of major Russian banks. We'll not accept their payments. Those are the very banks that Russia has been using to make or receive payments for trade and investment transactions."
Two major Russian banks that process energy payments were not included in Wednesday's order.
"Banks will not have access to a large portion of its foreign exchange reserves," Bhala said. "Russia's got about $630 billion of hard currency in foreign exchange reserves. Those are in banks overseas. The Russian ruble is crashing."
The exchange rate as of midday Wednesday was at 105 rubles to the US Dollar.
"The denial of access to the SWIFT system is really, to me, the core sanction that is taking aim at Russia's fortress economy."
SWIFT is used by more than 11,000 financial institutions across the globe.