The European Union has imposed strict sanctions on Russia, which have had a significant impact on its financial infrastructure and economic stability.

Exclusion from SWIFT Messaging Service

One of the key measures is the exclusion of Russian banks from the SWIFT messaging service, which has made it difficult for them to secure foreign currency or transfer assets abroad. This has had severe repercussions for both the Russian and Belarusian economies.

While it is technically possible for banks to conduct transactions without SWIFT, it is complicated and increases the risk of fraud and miscommunication.

Development of Financial Message Transfer System

In response to these sanctions, the Central Bank of Russia developed the Financial Message Transfer System (FMTS), but the EU has prohibited its use by entities operating outside of Russia, further isolating the Russian financial system.

Freezing of Assets

The freezing of assets of the Central Bank of the Russian Federation has left it unable to utilize significant reserves stored in EU central banks and private institutions, limiting its ability to support the banking system and stabilize the ruble.

Ban on Euro-Denominated Banknotes

The EU has also banned the sale, supply, transfer, and export of euro-denominated banknotes to Russia, which hampers the Russian government's access to euro cash.

These restrictions have significant implications for the Russian government's ability to fund its operations and support its economy, leading to potential inflation and a decline in living standards.

Long-Term Consequences

The cumulative effect of these sanctions is a transformation of the Russian economic landscape, with potential long-term consequences for global financial dynamics.