he EU, US and their allies have agreed to cut off a number of Russian banks from the main international payment system, Swift.
They did not name the banks that would be expelled, but an EU diplomat said some 70 per cent of the Russian banking market would be affected.
The decision – which the French finance minister had called a “financial nuclear weapon” because of the damage it would inflict on the Russian economy – deals a blow to Russia’s trade and makes it harder for its companies to do business.
Swift, a secure messaging network that facilitates rapid cross-border payments, said it was preparing to implement the measures.
Boris Johnson has said the West is “tightening the economic ligature” around Vladimir Putin’s Russia as allies unveiled new measures to hit its financial system.
After talking by telephone to Ukrainian President Volodymyr Zelensky, Mr Johnson said the West had to do everything possible to change the “very heavy odds” against Ukraine in its struggle against Moscow’s forces.
He confirmed Britain would be sending further arms to the Ukrainians and he said that the financial measures were essential to put pressure on the Kremlin.
“It is incredibly important for tightening the economic ligature around the Putin regime,” he told broadcasters during a visit to RAF Brize Norton.
Earlier German Chancellor Olaf Scholz announced he was dropping his country’s opposition to the move removing a major obstacle to international agreement.
“The horror of what is unfolding in Ukraine is becoming clear to Western audiences and that in turn is putting huge pressure on Western politicians,” Mr Johnson said.
He said that while the Ukrainian forces were fighting “heroically”, it was clear that some “terrible atrocities” had been committed and the country faced some “grim days” to come.
Britain had been pressing for action on Swift – described by one minister as the “ultimate economic sanction” – for some time.
Germany and Italy – which both rely heavily on Russia oil and gas imports – were among the countries said to be reluctant.
The move came on the day the expected Russian assault on the the Ukrainian capital Kyiv failed to materialise.
Despite skirmishing in the outskirts of the city, the UK Ministry of Defence (MoD) said in its latest intelligence assessment that the Russian advance had “temporarily slowed”.
Mr Johnson said: “Let’s be in no doubt, things are not going all the way of President Putin, very far from it.
“The Ukrainians are fighting heroically, and in some places with great success, as many of us thought they would because they’re a great country and a very brave country.
“But there are some terrible atrocities being committed and there will be some very grim days ahead for Ukraine.”