EU to disconnect some Russian banks from SWIFT, block FX reserves

MOSCOW/BRUSSELS/WASHINGTON, Feb 28 (PRIME) -- The E.U. has agreed to disconnect a number of Russian banks from the international interbank settlement system SWIFT and freeze around 50% of the central bank’s foreign exchange and gold reserves, head of the E.U. diplomacy Josep Borrell said on February 27 without mentioning the banks.

“Around a half of the Russian central bank’s financial reserves will be frozen thanks to these measures, because they are held in banks of the Big 7 states… They will be frozen and will impact Russia’s financial system much,” Borrell said.

According to the central bank, Russia’s foreign exchange and gold reserves stood at U.S. $643.2 billion as of February 18.

Borrell also said that the Western states are unable to block the central bank’s FX reserves, placed in Moscow or in China.

The central bank said that the Russian banking system is stable and has sufficient reserves of capital and liquidity.

“The Russian banking system is stable, it has sufficient capital and liquidity reserves for smooth operations in any situation,” the regulator said.

The central bank will continuously provide cash and non-cash liquidity in rubles to Russian banks, including through a limitless REPO auction on Monday, the authority also said.

The regulator added that all banking services and cards are operating smoothly inside Russia and that under any scenario, all interbank messaging will be supported by the messaging system SPFS, a national alternative to the SWIFT.

As seen by PRIME in documents, released on the E.U.’s Official Journal on Monday, the E.U. has prohibited operations linked to the management of reserves and assets of the central bank. The European states will only be able to perform transactions with the regulator to ensure financial stability of the union.

End