The Weaponization of Money: How SWIFT, Reserve Currency, and Sanctions Are Being Used To Handcuff Russia

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Everything has a cost.

Some are direct - like the price tag on the clothes you buy. Some are hidden - like sleepless nights as a new parent.

Either way, you have to pay a price for everything.

There are numerous headlines about the globally organized “weaponization of money” in order to stymie Russian advances.

This week, in <5 minutes, we’ll go over the weaponization of money:

• State of Russian Economy Pre-Ukraine 👉 Major imports/exports, energy impact
• Russian Economic Response 👉 SWIFT cutoff, Ruble plummets, Central bank doubling interest rates
• How GRIT’s Playing It 👉 In a rising rate environment, stick to these names.

1. State of Russian Economy Pre-Ukraine 👉 Major imports/exports, energy impact

Direct Impact on Energy Market

Many are likening the international backlash of Russia’s invasion of Ukraine to the 1970s Oil shocks when Iran went under a revolution at home and an asset freeze by the US government. Bloomberg’s gauge of raw materials was set for its biggest weekly gain since the 1960s as sanctions on Russia have now scared off all major buyers.

European nat gas broke price records and oil futures swung in the widest range in three decades.

2. Economic Sanctions👉 SWIFT cutoff, Ruble plummets, Central bank doubling interest rates

The U.S., EU, UK, Canada, Japan, and other countries have moved to delist certain Russian banks from the SWIFT financial transactions system.

SWIFT, formally known as the Society for Worldwide Interbank Financial Telecommunication, is a messaging system for banks and other financial institutions around the world. It doesn’t shuttle any money itself but provides instruction messages for just how to give and receive specific funds.

3. How GRIT’s Playing It 👉 In a rising rate environment, stick to these names.

I do think that in a rising rate environment, banks are the way to play. As long as we can avoid major recession, the macro read-throughs particularly for Canadian banks, look promising.

For those following my paid newsletter, you’re aware that I recently added to my Royal Bank of Canada (RY-T) as well as Manulife (MFC-T).