Germany and its Western allies agreed Saturday to cut "selected" Russian banks out of the SWIFT global payment system.

The move is part of a new round of sanctions targeting Russia over its invasion of Ukraine. 

The US, EU and UK also agreed to impose ''restrictive measures'' on Russia's Central Bank. 

The measures were announced jointly and mark a major escalation of sanctions against Moscow.

"This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally," European Commission President Ursula von der Leyen said after a videoconference with the leaders of the US, Germany, France, Italy and Canada.

"All of these measures will significantly harm [Russian President Vladimir] Putin's ability to finance his war and they will have a severely eroding impact on his economy," she said. "Putin embarked on a path aiming to destroy Ukraine, but what he is also doing in fact is destroying the future of his own country."

The restrictions on the Central Bank target the more than $600 billion (€530 billion) in reserves that the Kremlin has at its disposal. 

US officials said the new sanctions aimed to send the ruble into "free fall" and promote soaring inflation in the Russian economy. 

The allies also announced a commitment to "taking measures to limit the sale of citizenship — 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.''

Ukraine grateful for financial sanctions on Russia

Ukrainian Prime Minister Denys Shmygal took to Twitter to thank the countries for the latest round of financial sanctions.

"Thanks to our friends ... for the commitment to remove several Russian banks from SWIFT," and for "the paralysis of the assets of the central bank of Russia," he said.

Germany changes course on SWIFT  

The move was made possible after Germany dropped opposition to kicking Russia out of the SWIFT system. Berlin had been reluctant to take that step because it could also have a negative impact on Germany's economy.

Earlier on Saturday, German Foreign Minister Annalena Baerbock and Economy Minister Robert Habeck said in a joint statement that they were "urgently working on how to limit the collateral damage of decoupling from SWIFT in such a way that it affects the right people."

"What we need is a targeted and functional restriction of SWIFT," the ministers said.

In an apparent concession to Berlin, the Western powers agreed that the ban would only apply to selected banks.

The SWIFT financial system moves billions of dollars around more than 11,000 banks and other financial institutions worldwide on a daily basis.

nm/lo (Reuters, AFP, AP)