Financial Sanctions and Global Banking: Legal and Economic Implications for SWIFT Transactions after the Russia-Ukraine Conflict
Keywords:
Financial Sanctions, SWIFT (Society for Worldwide Interbank Financial Telecommunication), Russia-Ukraine Conflict, Global Banking, Economic Coercion, Alternative Payment Systems (e.g., SPFS, CIPS), Extraterritorial JurisdictionAbstract
The unprecedented financial sanctions imposed on Russia following its invasion of Ukraine in February 2022 have fundamentally reshaped the architecture of international financial governance. Among the most consequential measures was the exclusion of selected Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging system, effectively severing their connection to the global financial network. This article examines the legal and economic implications of SWIFT-related sanctions, analysing their effectiveness as instruments of economic coercion, their impact on global banking operations, and the legal frameworks governing their imposition and enforcement. Drawing upon international law, financial regulation theory, and empirical evidence, this paper evaluates the consequences of SWIFT disconnections for the targeted state, third-party jurisdictions, and the stability of the international financial system. The analysis further considers the strategic responses adopted by sanctioned states, including the development of alternative payment systems such as Russia's SPFS and China's CIPS, and their implications for the future of the dollar-denominated financial order. The article concludes with an assessment of the legal adequacy of existing sanctions frameworks and proposes reforms to enhance their proportionality, effectiveness, and compliance with international legal standards.
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