The United States and its allies will expel some Russian banks from the SWIFT banking system

The White House announced on Saturday that the United States and its allies would expel some Russian banks from a major international banking system, a major step in an effort to cripple the Russian economy in response to the invasion of Ukraine by the country.

The Biden administration and its European allies have agreed to cut off Russia’s access to the Society for Worldwide Interbank Financial Telecommunications (SWIFT), a rapid change from just days ago when it seemed that such a decision was unlikely in the near future.

The United States and European countries have also pledged to impose measures to prevent the Russian Central Bank from using its reserves to undermine sanctions and boost the ruble.

The announcement was made via a joint statement from the leaders of the United States, European Commission, France, Germany, Italy, United Kingdom and Canada. The leaders called the Russian attacks on Ukraine “an assault on fundamental international rules and norms that have prevailed since World War II, which we pledge to uphold.”

“We stand with the people of Ukraine in this dark hour. Even beyond the measures we are announcing today, we are ready to take further steps to hold Russia accountable for its attack on Ukraine.” they said in the release.

Banks around the world use SWIFT to finalize transactions and transfers. Cutting Russia off from SWIFT would make it incredibly difficult for its banks to operate efficiently, but could also wreak economic havoc on European countries that rely on Russian oil and natural gas exports.

If a Russian bank that has been removed from SWIFT wants to transact with a bank outside Russia, it will have to use the phone or a fax, a senior administration official told reporters.

On Thursday, Biden had indicated that Russia’s expulsion from SWIFT was not part of the first round of sanctions because not all European allies agreed with the measure. But as fighting has intensified in Ukraine in recent days and Russia has moved closer to the capital of Kiev, pressure has grown for Western nations to offer a tougher response.

Additional measures announced on Saturday included limitations on the use of so-called golden passports that allow wealthy Russians with Kremlin ties to become citizens of other countries and access their financial systems.

The United States and its allies also said they would announce a task force to ensure the effective implementation of coordinated sanctions against Russia.

The Biden administration and its European allies unveiled several rounds of sanctions in response to Russia’s invasion of Ukraine, which began late Wednesday night. The United States has sanctioned several Russian financial institutions to freeze their American assets as well as a list of several Russian oligarchs.

The White House announced additional sanctions against the Russian president on Friday. Vladimir PoutineVladimir Vladimirovich PutinTrudeau announces sanctions against Putin and Russian Foreign Minister Overnight Defense and national security — Ukraine is at stake Ovechkin of capitals calls for ‘no more war’ with Ukraine MORE and a dozen of his top advisers, freezing all their assets in the United States

Imposing sanctions on Russia’s central bank could crush the country’s economy and financial sector, depending on how severely Western allies restrict its assets.

With limited access to its foreign exchange reserves, Russia could face serious challenges in keeping targeted banks afloat and mitigating the economic impact of sanctions. A total freeze in foreign exchange reserves would likely devastate the Russian economy, cause a domestic financial crisis and leave the ruble worthless.

The United States has only targeted the central banks of North Korea, Iran and Venezuela with sanctions – nations with limited influence on the global economy. Taking action against the Russian central bank could pose its own economic risks for the United States and its allies. The Biden administration and its Western allies are wary of any sanctions that could limit access to Russian oil or natural gas exports.

“Our calculation is that we have two choices,” the senior administration official told reporters on Saturday. “Either we continue to increase the costs to make it a strategic failure for President Putin, or the alternative, which is unacceptable, and which would allow uncontrolled aggression in the heart of Europe.”

Sylvan Lane contributed.

Updated at 6:27 p.m.