Calls for a ban on Russia from SWIFT gained momentum with the UK leading the drive after Vladimir Putin ordered a military operation in Ukraine.
United States, Germany, Britain, Canada, are among the countries that have so far announced the sanctions.
South Korea on Monday said it will ban shipments of strategic items to Russia and supported banning the country from SWIFT.
The ruble plunged to a record 30% on Monday in view of new sanctions. Meanwhile, Russia's Central Bank raised its key rate from 9.5% to 20% in an attempt to support the currency.
The Central Bank also ordered a slew of measures to help the banks cope with the crisis by infusing more cash into the system and easing restrictions for banking operations.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is the world's main banking messaging service which links around 11,000 banks and institutions in more than 200 countries, including India.
SWIFT is the backbone of the international financial transfer system and the exclusion will have a grave impact on Russia's economy.
Russia will not get any access to financial markets across the world. The ban would make it harder for Russian companies and individuals to pay for imports and receive cash for exports.
SWIFT enables Russian energy companies to get payments for selling oil or gas globally.
However, it would also hurt some European countries, too, as it may lead to energy price hikes and inflation.
How will it impact the global financial system?
Removing some Russian financial institutions from SWIFT may result in the adoption of alternate tools like the telephone, fax, telex, or emails for transactions.
This may not be a secure and efficient way and result in delays, a drop in payment volumes, and an increase in transaction costs
However, Russia may lose some international foreign trade if some of its banks are barred.
The move will also cause some loss for the US and European banks, too, as they will lose a major chunk of business.
Russia produces 10% of global oil and supplies 40% of Europe's gas. It is the world's largest grains and fertilizers exporter, top palladium and nickel producer, third-largest exporter of coal and steel, and fifth-largest wood exporter.
Any ban on Swift could prompt the usage of Russia's alternative — the System for Transfer of Financial Messages.
Even China has been developing alternatives to SWIFT called CIPS.
This may make several nations consider an alternative to SWIFT and end US dominance over the payments system. It could also weaken the dollar’s international clout.
China is also working on digital Yuan (e-CNY) that it can use for cross-border payments.
