Russia’s invasion of Ukraine has resulted in sanctions and calls to cut the country off from the main global payment system.

Western allies moved on Saturday to deny certain Russian banks access to the SWIFT international payment system, further punishing Moscow as it presses on with its military assault.

What is SWIFT and what does it do?

SWIFT is used by over 11,000 financial institutions worldwide, making it the backbone of the international financial transfer system.

Who owns SWIFT?

Under Belgian law, SWIFT is a cooperative company. According to the company’s website, “it is owned and controlled by its shareholders [financial institutions] representing approximately 3,500 firms from around the world.”

The system is overseen by the G10 central banks as well as the European Central Bank, with the National Bank of Belgium serving as the system’s lead overseer.

How is Russia involved?

According to the Russian National SWIFT Association, Russia has the second-highest number of users after the United States, with approximately 300 Russian financial institutions in the system, accounting for more than half of Russia’s financial institutions.

According to Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis in Hong Kong, Russia’s exclusion from SWIFT would be a serious blow to the country.

“[It’s significant] because no debt or trade finance payments can be made. It is more serious than halting EU imports of Russian gas,” Garcia Herrero told Al Jazeera.

What has Russia said?

In January, Nikolay Zhuravlev, vice-speaker of Russia’s Federation Council, acknowledged that the country could be kicked out of SWIFT.

“SWIFT is a service, not a settlement system.” As a result, if Russia is cut off from SWIFT, we will not receive [foreign] currency, but buyers, primarily European countries, will not receive our goods – oil, gas, metals, and other important components of their imports. Do they require it? “I’m not sure,” Zhuravlev said, according to the Russian news agency TASS.

Zhuravlev also pointed out that, while SWIFT is convenient, it is not the only way to transfer money, and a decision like suspending a country would require unanimous agreement among members.

What does the suspension mean?

Russian banks will find it more difficult to communicate with peers abroad, even in friendly countries such as China, slowing trade and increasing transaction costs.

However, the allies, who have also promised to limit Russia’s central bank’s ability to support the rouble, have not yet specified which banks will be targeted. According to sanctions and banking experts, this would be critical to the measure’s effectiveness.

If the list includes the largest Russian banks, such as Sberbank SBER.MM, VTB VTBR.MM, and Gazprombank, it will be “an absolutely huge deal,” according to economic expert Edward Fishman, who added that “details would matter.”

Sberbank and VTB have previously stated that they are prepared for any changes.

According to Sergey Aleksashenko, a former deputy chairman of the Russian central bank who now lives in the United States, the sanctions are likely to have a significant impact on the rouble when markets open on Monday, resulting in the disappearance of many imports to Russia.

“This is the end of a significant part of the economy,” Aleksashenko added. “Half the consumer market is going to disappear. These goods will disappear if payments can’t be made for them.”