Western allies move to cut Russian banks from SWIFT and freeze central bank reserves

Western governments announced on Saturday that selected Russian banks will be removed from SWIFT, the messaging system that underpins most international payments between banks. They also agreed to impose restrictions on the Russian central bank to prevent it from using its international reserves to undermine sanctions.

The measures follow Russia's invasion of Ukraine this week and mark a significant escalation. Earlier sanctions targeted individual banks and people. Restricting a major central bank's access to its reserves is a much rarer step.

The practical impact depends on the details still to be published, including which banks are affected and how energy payments are treated. Europe relies heavily on Russian gas, and several governments have been cautious about measures that could disrupt supplies.

Analysts are watching several areas:

• Pressure on the rouble when markets reopen
• Whether Russia turns to alternative payment channels, including China's systems
• Whether crypto could be used to evade sanctions, a concern regulators have flagged

The decision also raises long-term questions about the global role of the dollar and the euro. Freezing reserves shows how much power Western countries hold over the international financial system, and some countries may consider that when deciding where to keep their reserves in the future.