How expelling Russia from SWIFT could impact the country. And why there's reluctance to do so

Countries around the world have placed sanctions on Russia for its invasion of Ukraine, with some also calling for Moscow to be banned from SWIFT, a banking communications platform used by financial institutions in over 200 countries.

CBC News takes a look at SWIFT, how Russia might be impacted if removed from the important system, and why some countries are reluctant to take that step.

SWIFT is the acronym for the Society of Worldwide Interbank Financial Telecommunication. The Belgian-based co-operative is used by thousands of financial institutions in over 200 countries, including Russia, and provides a secure messaging system to facilitate cross-border money transfers.

The system averaged 42 million messages daily last year to enable payments. About half of all high-value payments that cross national borders go through its platform.

SWIFT is much like a "social network for banks" that doesn't move money around, but provides information about where the money is going, said Alexandra Vacroux, executive director of the Davis Center for Russian and Eurasian Studies at Harvard University in Massachusetts.

"It's really like a social messaging system, and it's like Twitter for banks," Vacroux said.

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Banks that connect to the SWIFT system and establish relationships with other banks can use messages within the system to make payments, Reuters reports. The messages are secure so that payment instructions are typically honoured without question. This allows banks to process high volumes of transactions at high speed. It has become the principal mechanism for financing international trade.

"You can think of SWIFT as the backbone of the financial services sector," said Markos Zachariadis, a professor and chair in financial technology and information systems at the University of Manchester.

"It is the most influential infrastructure we have in financial services in terms of the volume and value of money that it's being moved around the world." 

According to the Russian National Swift Association, about 300 leading banks and organizations in the country are users of SWIFT, more than half of the Russian credit organizations are represented in SWIFT, and Russia is ranked second by number of users of the platform, after the United States.

Excluding Russian banks from SWIFT would restrict the country's access to financial markets around the world. 

It would be almost like cutting a country from the internet, Zachariadis said.

"Imagine all these organizations that operate online. They have their customers where they send information and transact with suddenly having zero access to this infrastructure."