South Korea’s government announced Tuesday that it will cut financial transactions with seven Russian banks as part of its economic sanctions against the Russian government, in response to Russia’s attack on Ukraine.
The Finance Ministry stated that it will halt financial transactions with seven major Russian banks and their subsidiaries that the United States has sanctioned, local media Yonhap News Agency reported.
These banks include Russian state development corporation VEB, state-owned financial institution Sberbank, PSB, VTB Bank, Bank Otkritie, Novikombank, and Sovcombank.
The government also urged local public and financial institutions to stop trading in Russian state bonds issued from March 2.
The new sanctions came just a day after the government announced a restriction on strategic item shipments to Russia and joined the international community in banning Russian banks from the SWIFT global interbank network.
The strategic items include microelectronics, telecommunications items, sensors, navigation equipment, avionics, marine equipment, and aircraft components.
“The Korean government has strongly condemned Russia’s armed invasion against Ukraine. As a responsible member of the international community, the Korean government has decided to actively join the international community’s efforts, including economic sanctions, for a peaceful resolution of the situation,” it stated.
South Korea’s Foreign Ministry noted that it will promote the additional release of strategic oil reserves to stabilize the international energy market, and will further review other measures, including diverting liquefied natural gas to Europe.
The ministry added that South Korea will increase humanitarian assistance to Ukraine in coordination with the international community.
Jeong Min-hyeon, an economist at the Korea Institute for International Economic Policy, said that blocking SWIFT will adversely affect trade financing, despite the fact that South Korea’s overall imports of natural gas and oil from Russia stood at a rate of roughly 5 to 10 percent.
“The difficulties South Korean buyers of Russian commodities and other exporters go through with payment difficulties could lead to supply disruption and price increases,” Jeong added.
Thousands of banks as well as financial institutions around the world use the SWIFT system to settle cross-border payments. SWIFT, the “Society for Worldwide Interbank Financial Telecommunication,” is used by more than 11,000 financial institutions in over 200 countries and is regarded as crucial for financing international trade.
Among the countries that have announced SWIFT sanctions on certain Russian banks are the United States, the European Union, Canada, France, Italy, the United Kingdom, Taiwan, and Japan.
Mimi Nguyen Ly and Reuters contributed to this report.
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