The European Union, United States and their allies have agreed to cut off a number of Russian banks from the main international payment system, SWIFT.

A German government spokesman said: “This is intended to cut off these institutions from international financial flows, which will massively restrict their global operations.”

Russia is heavily reliant on the Swift system for its oil and gas exports.

However, the move could also harm Western businesses doing business with Russia.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT), is a secure messaging system that makes fast, cross-border payments possible, enabling international trade.

The banks set to be affected are “all those already sanctioned by the international community, as well as other institutions, if necessary”, the German spokesman said.

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Ursula von der Leyen, president of the European Commission, said the allies would stop Russia from “using its war chest,” by paralysing the assets of its central bank. They also agreed to freezing its transactions and prevent the central bank from liquidating its assets.

She added there would be a crackdown on so-called “golden passports” that “let wealthy Russians connected to the Russian government become citizens of our countries and gain access to our financial systems”.

UK PM Boris Johnson said Britain had taken “decisive action”, tweeting: “We will keep working together to ensure Putin pays the price for his aggression.”

The measures were agreed by the US, UK, Europe and Canada.

It is the latest round of sanctions to hit Russia since it launched an invasion of Ukraine this week.

Removing banks from Swift is deemed to be a severe curb because almost all banks use the system.