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Paysera shuts down payments to Russia; Swift exclusion remains off the table

Paysera shuts down payments to Russia; Swift exclusion remains off the table

Baltic fintech Paysera is to halt transfers to and from Russia and close accounts of Russian clients in a show of solidarity with Ukraine as it comes under siege from Russian armed forces.

The company says it will no longer process transactions in Russian roubles, close its Russian clients' accounts, and restrict money transfers to and from Russian banks. It encourages other financial institutions to stand in solidarity and suspend operations related to Russia.

Gintautas Mežetis, CEO of Paysera, says: "While we understand that we are not a giant in the financial market, we do want to send the message that we can all have an impact through the choices we make. While we refuse to transfer money, someone else might refuse to insure, produce, advise, invest, or provide transport."

The European Union is currently seeking to garner support from member states for a ban on correspondent accounts with Russian banks. A previous ban on bank-to-bank transfers in Iran and Belarus seriously hit their banking systems and economies.

But for all the tough talk, Western nations have so far stepped back from the ultimate sanction of banning Russian banks from the Swift correspondent banking network.

Swift was last forced to take the unprecedented step of cutting off its financial messaging network to Iranian banks subject to European sanctions back in 2012. The taps were only turned back on three years later as part of a deal that saw the country limit its nuclear activity in exchange for an end to economic sanctions.

Exclusion from Swift has often been seen as the ultimate global sanction for rogue nations, but it has also been the spur behind the build out of competing networks in both Russia and China.

According to a report in the Financial Times, Boris Johnson is currently pushing for Russia to be excluded from Swift - a key Ukrainian demand - but meeting resistance from other countries, and particularly the EU.

The Ukrainian foreign minister turned to twitter to press the case for radical action.

Politicians are well aware of the growing alternatives to Swift, both from Russia and China, as well as from emerging blockchain networks. They fear that a suspension from Swift could cause a domino effect that would ultimately push nation states to other alternatives and do serious damage to the US dollar's status as a global reserve currency.

In the House of Commons, UK prime minister Johnson insisted that "nothing is off the table" with regards to Swift. However, US president Joe Biden confirmed that European countries are currently against kicking Russia off the network.

In Ukraine itself, the central bank has banned the issuance of electronic money and the replenishment of electronic wallets following the invasion by Russia. The orders also suspend the foreign exchange market; limit withdrawals from consumers' bank accounts; and prohibit the withdrawal of foreign currency from customer accounts.

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