That selected banks include Russian Central bank, doesn't it?
Yes, SWIFT applies only to the Russian Central Bank and select handful of banks. Gazprombank can still receive payment from other commercial banks in Europe.
Foreign reserve's purpose is that when a Russian company need to import anything like phone or cloth, it gives its rubel to commercial bank and gets foreign currency, let's say Euro. Then the company uses Euro to import from foreign market. The commercial bank in turn gets Euro from the Russian central bank when it runs out of Euro. Even though that commercial bank is not cut off from SWIFT, there is a huge shortage of EURO in the whole Russian Forex reserve.
There are
many loopholes to selective SWIFT ban. You forgot Gazprombank, 3rd largest Russian bank, which has HUGE surplus of Euros due to oil/gas exports (Gazprom), has a rich and plentiful supply of Euros for any non-sanctioned Russian commercial banks to exchange rubles-for-euros. The Russian Central Bank (RCB) is NOT the only source for rubles-for-euros. Gazprombank can sell rubles-for-euros to domestic banks using SPFS, or non-sanctioned Russian banks can directly trade for rubles-for-euros on the global '
' via '
' (FOREX) market directly.
When these commercial banks run out of their Euro, where would they get the needed Euro with Rubel? Certainly not through SWIFT from Europe, but Russian Central bank.
You contradicted yourself. When these non-sanctioned Russian banks run out of Euros, where do they get Euros? From FOREX market, from Gazprombank which has huge Euro surplus, or from European banks directly because they are not banned from SWIFT. You see, there is many LOOPHOLES to the recent SWIFT ban. The Russian Central Bank (RCB) and foreign reserves is not the only place to exchange currency.
Therefor, sanction on Russian Central bank and freezing its Euro asset is a sanction on the whole Russian financial system and the whole Russian population regardless who is on the sanction list. This is exactly what the western sanction on Saddam Hussain did to the whole Iraqi population. "Targeted sanction" is only a cover up to fool the wold populace and for the westerners to pretend innocence.
Even if you cut off RCB from SWIFT, freeze it's overseas Euro assets, the non-sanctioned Russian commercial banks can still buy/sell rubles-for-euros on the global '
' via '
' (FOREX), albeit at significantly higher exchange costs. You make it seem like the entire Russian financial sector is prohibited to buy Euros because of foreign reserve is exclusively held by sanctioned RCB, which is incorrect. They can buy euros, but with a tumbling ruble, the costs for exchange is higher on FOREX or other Russian banks, imposing a cost to Russian economy as a result of declining confidence in the valuation of ruble.
So the only sensible thing for Russia to do is to break that sanction by demanding Rubel payment, or cut off the oil and gas to Europe.
Yes, I agree, the goal should be Petro-Ruble to stabilize the currency (spike in artificial demand for rubles) by leverage Europe's dependence on oil/gas imports from Russia.