In response to Russia's invasion of Ukraine, Japan will join the United States and other Western countries in blocking Russian banks from the SWIFT global bank settlement network. It is only natural to apply maximum financial pressure against violent acts that trample on international order and democracy.
It will become difficult for major Russian banks to conduct transactions with other countries, and Russia will likely be hit by a huge decline in trade with other nations. The method is said to be the strictest economic sanction, and the impact on Russia, which relies on the export of crude oil and natural gas for most of its national income, is enormous.
Sanctions imposed by Japan, the U.S. and Europe last week were limited to partial restrictions on Russia's banking transactions. However, as the sanctions failed to prevent the intensification of Russian attacks, worldwide public opinion demanding stricter measures increased.
Western countries such as Germany, which is highly dependent on Russian natural gas, were initially cautious about excluding Russia from the SWIFT system, but changed their policy while knowing well that it could hurt their own nations.
Japan, the U.S. and Europe have come together to show their determination that they will not tolerate Russia's invasion of Ukraine. The move has significant meaning.
Sanctions to prevent Moscow's foreign exchange intervention to buy and support the ruble will also be imposed on the Central Bank of Russian Federation. The ruble is plummeting due to uncertainties about the future of Russia's economy. A currency depreciation will lead to an increase in prices, and greater damage to the economy.
The U.S. and Europe are also aiming to destabilize the administration of President Vladimir Putin by fueling dissatisfaction among the Russian people. Yet by ejecting Russia from SWIFT, this could also damage Western economies, so there is urgent need for countermeasures.
Energy prices are further rising as Russian exports are expected to significantly decline. Utility and distribution costs may skyrocket, affecting a wide range of products. The governments of Japan, the U.S. and European countries need to protect the lives of their people.
Inflation will weigh down on the global economy, which is in the process of recovering from the damage caused by the coronavirus pandemic. This will have an adverse effect especially on developing nations, where many people are in poverty. What's needed is the expansion of support by advanced industrial economies.
Russia may limit the export of crude oil and natural gas as retaliation. Countries across the globe should prepare, such as by lending their stockpiles to each other.
Disruption of the Russian economy may lead to a destabilized world economy, and authorities in Japan, the U.S. and Europe are responsible for keeping an eye on economic trends to avoid confusion.