Iran Ostracized from Global fiscal system

The European Union has decided to block information necessary for inter-bank settlements to Iran, effectively cutting off the country from the global financial system. This is meant to toughen sanctions against Iran for its nuclear development program.

The EU reached the decision on Thursday, to prohibit the provision of key data to EU-sanctioned individuals and Iran's financial institutions, including its central bank.

In response, the Belgium-based Society for Worldwide Interbank Financial Telecommunication, or SWIFT, said that starting on Saturday, it will stop offering specialized financial messaging services to Iran in line with the EU directive.

SWIFT provides information for financial settlements among more than 10,000 financial institutions in 210 nations, including Japan. The information is likened to zip codes to confirm the identities of financial institutions and essential in international financial transactions.

The squeezing out from SWIFT's services makes it more difficult for Iran to receive money from abroad. It's feared that the move will also affect Japanese financial institutions that do business with Iranian banks in such deals as settling payments for crude oil trades.

US Treasury Under Secretary David Cohen welcomed the EU's decision, and said more pressure is needed to convince the Iranian regime to address the international community's concerns about its nuclear activities.

He said the US will work closely with other nations to further increase pressure on Iran.