The European Union stated today that seven Russian banks will be removed from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), messaging system within 10 days. This move will affect both the ordinary citizen and the Russian economy at large.
VTB, Russia’s second-largest bank, Bank Otrkitie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, and VEB are among the sanctioned banks.
Russian banks, and by extension the Russian economy, are likely to suffer huge losses if they do not have access to SWIFT, a Belgian messaging system that connects over 11,000 financial institutions worldwide. For example, after being blocked from SWIFT in 2012, Iran lost 30% of its overseas commerce.
Effects of the sanctions on Russia and her citizens
In the setting, however, sanctions have a greater impact on ordinary Russians than on rulers. Although no one knows for sure, Vladimir Putin’s wealth is estimated to be in the billions of dollars, implying that the Russian president can still enjoy a very extravagant lifestyle even if a large portion of his net worth is wiped out by such punitive measures.
The Russian people, on the other hand, cannot be said to be in the same boat. The Russian currency has lost approximately 30% of its value since the invasion of Ukraine began one week ago, according to XE statistics.
Ordinary Russians’ savings are claimed to have been destroyed as a result of the economic consequences. To make matters worse, the European Union has made it illegal to send euro banknotes to Russia on the same day.
The increasing demand from Russia and Ukraine, both of which are facing serious currency destabilization concerns, is driving up crypto trade volume.
In countries facing escalating sanctions, stablecoins, in particular, serve a critical role. In the midst of continuous hyperinflation, Venezuelan émigrés told Cointelegraph how they support their families still in the country by converting their local wage into Tether (USDT) via an app called Reserve.
In a previous interview with Cointelegraph, “Ardashir,” an Iranian crypto phile whose name has been changed to protect their identity, detailed how digital currencies had become a critical tool for accessing services despite the country’s sanctions:
“We don’t have Visa, MasterCard, or any type of credit card here. So thanks to Bitcoin and crypto, we can buy items like Xbox, Apple gift cards, VPNs, flight tickets, etc.”
When asked how cryptocurrency may help counteract the Iranian toman’s inflation, Ardashir responded: