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1 1 (February 28, 2022)

handle is hein.crs/govefij0001 and id is 1 raw text is: s Congressional * Research Service Russia's Invasion of Ukraine: New Financial and Trade Sanctions February 28, 2022 On February 24, Russia launched a full-scale invasion of Ukraine. On February 26, the leaders of the European Commission (the European Union's main executive body), France, Germany, Italy, the United Kingdom, Canada, and the United States announced that specific Russian banks will be removed from the SWIFT (Society of Worldwide Interbank Financial Telecommunication) financial messaging system, as well as measures to prevent the Russian central bank from accessing a portion of its international reserves. Between February 22 and February 25, the United States and allies also expanded sanctions on Russian sovereign debt, Russia's two largest banks (Sberbank and VTB, which account for about 50% of banking assets in Russia), and technology exports to Russia, among other targets. For more on U.S. and allied responses to Russia's invasion, see CRS Insight IN 11869, Russia's Invasion of Ukraine: Overview of U.S. andAllied Responses, and CRS Insight IN 11866, Russia's Invasion of Ukraine: NATO Response. SWIFT Sanctions Globally, financial institutions use financial messages to send payment instructions to other banks in order to process financial transactions, such as which accounts to debit or credit. The main international financial messaging system used around the world is SWIFT. SWIFT is headquartered in Belgium and owned by over 2,400 financial institutions. More than 11,000 financial institutions from 200 countries use SWIFT's messaging services for cross-border payments. Removing key Russian financial institutions from SWIFT makes it difficult for them to process cross-border payments. SWIFT sanctions, although used with Iran, are generally rare. U.S. and European policymakers have discussed removing Russia from SWIFT since Russia's first invasion of Ukraine in 2014, although policymakers had been reluctant to do so given potential economic disruptions. Reportedly, the purpose of excluding some but not all Russian banks from SWIFT is in part to allow for continued payments for European imports of Russian natural gas. Central Bank Sanctions The Bank of Russia has large reserve holdings, totaling $630 billion at end-January 2022. Russia, like many central banks, holds a portion of their reserves abroad, in other central banks and commercial Congressional Research Service https://crsreports.congress.gov IN11871 CRS INSIGHT Prepared for Members and Committees of Congress