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MOSCOW, September 16. /ITAR-TASS/. A possible decision to block Russian access to the SWIFT international banking transaction system under the expansion of Western sanctions over the Ukraine crisis may cause Russia’s GDP to shrink by 5%, former finance minister Alexei Kudrin said on Tuesday.
“If the SWIFT system is cut off after all, this factor alone may cause a GDP contraction by up to 5% during the year since the restriction is imposed,” Kudrin said at a conference held by the US Chamber of Commerce.
Kudrin said, however, he presumed this sanction would not be imposed against Russia. He noted that in case of the Iranian sanctions scenario with tighter restrictions on foreign currency settlements, Russia’s GDP contraction would be more profound and last 2-3 years.
In March 2012, the EU cut off Iranian banks from SWIFT, the world’s biggest electronic payment system, as part of its sanctions over Iran’s controversial nuclear program.
In late August 2014, media reports said the UK had proposed banning Russia from the SWIFT network as part of an upcoming new round of sanctions against Moscow over its stance on developments in neighboring Ukraine. However, this proposal was not supported by the EU countries.
Russian National SWIFT Association (RosSWIFT) Executive Director Roman Chernov said it is hardly likely that the international banking transaction system will quit Russia.
“This scenario is hardly possible,” he said. “Historically, some major countries, including the United States, Japan and China have been developing their own financial message transmission infrastructure.”
Russian Deputy Finance Minister Alexei Moiseyev said in late August Russia’s government had already drafted a bill to create a local alternative to the SWIFT payment system.
The Society for Worldwide Interbank Financial Telecommunications (SWIFT) transmits 1.8 billion communications a year, remitting payment orders worth $6 trillion a day. The system comprises over 10,000 financial organizations from 210 countries.
Under the SWIFT charter, groups of members and users are set up in each country covered by the system. In Russia, these groups are united in the RosSWIFT association.