Korea Excluded from SWIFT Sanctions... Bank of Korea Weighs Severity of Sanctions Against Russia

Expected Damage to Domestic Companies Due to Russia Trade
Response After Discussing Diplomatic Issues

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jung] As South Korea has decided to join Western financial sanctions against Russia, the Bank of Korea is closely consulting with the government and is on high alert regarding the level of financial sanctions against Russia.

With the intensification of the conflict between Russia and Ukraine worsening the situation, damage to domestic companies engaged in trade with Russia is expected, prompting a thorough review of whether to provide support to these companies.

According to the Bank of Korea on the 2nd, central banks of the 10 major countries including South Korea (G10) are currently discussing the exclusion of Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

While joining the financial sanctions against Russia, the Bank of Korea is exploring practical measures to respond within the limits allowed for supporting domestic companies if the U.S. sanctions become concretely visible in the future. However, since this is diplomatically sensitive, prior consultations between governments are necessary, and accordingly, practical responses are planned.

A Bank of Korea official said, "Although the scale of exports and imports with Russia is not large compared to South Korea's total trade, the overall impact is limited, but individual companies may face significant difficulties," adding, "We are discussing with the government specific methods and the scale of support that can be practically provided." During the past SWIFT sanctions on Iran, the government negotiated with the U.S. to allow won settlements through some domestic commercial banks.

According to the Bank of Korea, as of last year, the export amount to Russia was $9.98 billion, and the import amount was $17.36 billion, accounting for 1.5% and 2.8% respectively of South Korea's total trade. The export amount to Ukraine was $580 million, and the import amount was $310 million, accounting for only 0.1% each.

A Bank of Korea official said, "If excluded from SWIFT, international fund transactions of Russian banks will be virtually impossible, and alternative methods mentioned by some, such as using their own communication networks, will be difficult to actively utilize at present," adding, "A preference for safe assets continues across the international financial market, and volatility is increasing, so we plan to monitor the domestic situation 24 hours a day."

This content was produced with the assistance of AI translation services.