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It should have had a negative effect, but in what ways did it hurt Russian economy, exactly?

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Not all Russian banks were actually banned from Swift just most commercial ones.

Swift is the Society for Worldwide Interbank Financial Telecommunication. It is basically a highway for financial messages to go through. Every time you buy or sell/buy something using your debit/credit card the bank has to send a message to the bank of the person who is buying from/selling to you.

In the past bank transfers were expensive and took long time because it took long time to send messages between different banks. Swift simplifies all this by creating common framework (with common way of numbering accounts identifying banks etc) which makes sending and processing financial messages (and hence transactions) much more simpler.

So being banned from Swift increases costs for Russian banks that have to either develop their new system or use alternatives (like the Chinese Swift equivalent). However, the western banks are unlikely to be willing to process payments if they are not done via Swift or if so only at extra expense so this effectively means that Russian people are cut of sending money abroad or buying things abroad (of course alternatives such as Bitcoin exist).

However, EU didn’t sanctioned all banks because they still buy hydrocarbons from Russia.

As to what effect this has on Russia economy that’s unclear because there is no rigorous research on this yet and this sort of action is unprecedented. This sanctions clearly hurt the trade between Russia and EU and US, but that was already hurt by other sanctions. Moreover, it does not affect the trade in hydrocarbons. On the other hand it creates extra costs for Russian banks/financial system.

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