Canada among countries moving to block Russian access to SWIFT

Western allies announced sweeping new sanctions against Moscow on Saturday, including kicking some Russian banks off the main global payments system.

Seeking to ratchet up economic punishment for Russian President Vladimir Putin over his invasion of Ukraine, the United States, Canada and others also said they would impose restrictions on Russian's central bank to limit its ability to support the ruble.

The announcement came as fighting continued across Ukraine. Reuters witnesses in Kyiv reported occasional blasts and gunfire in the city on Saturday evening, but it was not clear exactly where it was coming from. The capital and other cities have been pounded by Russian artillery and cruise missiles.

Putin launched what he called a special military operation before dawn on Thursday, ignoring Western warnings and saying the "neo-Nazis" ruling Ukraine threatened Russia's security.

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Russia's assault is the biggest on a European state since the Second World War and threatens to upend the continent's post-Cold War order.

A U.S. defence official said Ukraine's forces were putting up "very determined resistance" to the three-pronged Russian advance that has sent hundreds of thousands of Ukrainians fleeing westwards, clogging major highways and railway lines.

"As Russian forces unleash their assault on Kyiv and other Ukrainian cities, we are resolved to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies," according to a joint statement from the United States, France, Canada, Italy, Great Britain and the European Commission.

"We will implement these measures within the coming days."

After initially shying away from such a move, the allies committed to "ensuring that selected Russian banks are removed from the SWIFT messaging system." They did not name the banks that would be expelled.

The move — which the French finance minister had earlier called a "financial nuclear weapon" because of the damage it would inflict on the Russian economy — deals a blow to Russian trade and makes it harder for Russian companies to do business.

SWIFT, or the "Society for Worldwide Interbank Financial Telecommunication," is a secure messaging network that facilitates rapid cross-border payments, making it a crucial mechanism for international trade.

"We are engaging with European authorities to understand the details of the entities that will be subject to the new measures and we are preparing to comply upon legal instruction," SWIFT said in a statement.

Sanctions on Russia's central bank could limit Putin's use of his more than $630 billion US in international reserves, which have been widely seen as insulating Russia from some economic harm.

The new measures will prevent Russia from "using its war chest," according to Ursula von der Leyen, president of the European Commission, the European Union's executive.

Ukrainian Prime Minister Denys Shmygal said in a Twitter post early on Sunday: "Thanks to our friends ... for the commitment to remove several Russian banks from SWIFT" and for "the paralysis of the assets of the central bank of Russia."

Clay Lowery, executive vice-president for the Institute of International Finance, said the new sanctions are likely to cause serious harm to the Russian economy. "This will most likely exacerbate ongoing bank runs and dollarization, causing a sharp sell-off, and a drain on reserves," he said.

But because Russia's large banks are deeply integrated into the global financial system, new sanctions imposed on them, such as cutting them off from SWIFT, could have a spillover effect, hurting trading partners in Europe and elsewhere.

'The fighting goes on'

The Kremlin said its troops were advancing again "in all directions" after Putin ordered a pause on Friday. Ukraine's government said there had been no pause.

"We have withstood and are successfully repelling enemy attacks. The fighting goes on," Ukraine President Volodymyr Zelensky said in a video message from the streets of Kyiv posted on his social media.

The crisis has galvanized the NATO Western military alliance, which has announced a series of moves to reinforce its eastern flank. While NATO has said it will not deploy troops to Ukraine, a string of countries are sending military aid.

U.S. President Joe Biden approved the release of up to $350 million US worth of weapons from U.S. stocks, while Germany, in a shift from its long-standing policy of not exporting weapons to war zones, said it would send anti-tank weapons and surface-to-air missiles.

Canadian Prime Minister Justin Trudeau has said up to 460 additional Canadian Armed Forces members are being sent to Latvia and the surrounding region to bolster NATO.

Ottawa also said it will match Canadians' donations to the Red Cross in aid of Ukraine, up to a maximum of $10 million Cdn. The federal government said the matching donations are in addition to the $50 million in funding given to Ukraine for development and humanitarian aid, and the recently announced $620 million in sovereign loans that Canada has extended to Ukraine.