SWIFT 101: What is the global banking system and how it works

Yahoo Finance Live's Brian Cheung explains what SWIFT is and why it’s such a big talking point as Russia faces bans from the service amid further invasion of Ukraine

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- Really, what this is, is the primary comms channel for banks internationally. So this facilitates payment requests and it does the recordkeeping for the trillions of dollars of funds that zigzag around the world, which means if you disconnect them, it's going to be hard to settle any payments. It's going to cripple a country's ability to settle payments for their exports, like oil or gas or metals. The payment's not done on SWIFT, it's just a communications channel.

Just because a bank is disconnected from the SWIFT network doesn't mean they can't facilitate the payment. It just means they can't use the comms channel of SWIFT to get that transaction done. So really, at the end of the day, SWIFT is just a messaging service provider, and they've made it clear that they're neutral. Any decision to impose or to lift sanctions on countries or individual entities rests solely with the competent government bodies and legislators.