Finance Minister Yuval Steinitz on Sunday welcomed the exclusion of Iranian banks from international financial transfer networks.

The decision deals "a tough blow to Iran's economy" and "makes the import and export of oil very difficult," he told reporters before the weekly cabinet meeting in Jerusalem.

"This thing can cause the collapse of the Iranian economy. Is it enough? I don't know. Is it significant and will it affect their endurance? Without a doubt it is a very dramatic step," he said.

All Iranian banks that were already subject to a freeze on their EU-held assets are affected, including the central bank and several commercial lenders.

It was to be applied as of 1600 GMT on Saturday, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) said Friday.

EU countries agreed to the measure on Thursday, as part of efforts alongside the United States to pressure Iran into backing down on its nuclear program, which the West suspects is of a military nature.

Iran insists it is strictly peaceful.

SWIFT, which has a global reach, said it had to comply with EU demands because it is registered in EU member Belgium and subject to that country's legislation.