Functioning of the global loan market under international sanctions

Abstract

The period of 2020–2026 marks a fundamental destruction of the global financial architecture and the erosion of the liberal paradigm of unhindered investment. While the early 2020s focused on pandemic recovery, since 2022, unprecedented international sanctions have become the primary determinant of market evolution. This systemic pressure has provoked "financial fragmentation," where the unified lending space has disintegrated into antagonistic blocks formed along geopolitical lines. Parallel financial circuits are emerging where bilateral agreements dominate, and access to capital is determined less by credit ratings and more by political positioning.

One of the most destructive consequences is the decline in debt sustainability for countries linked to sanctioned entities. In this environment, debt sustainability has evolved into an indicator of "infrastructural resilience." The restriction of access to USD and EUR liquidity has forced issuers to revise public debt strategies. In the sovereign bond market, an abnormal rise in credit spreads now functions as a barometer of geopolitical tension, absorbing a significant premium for the risk of losing access to systems like Euroclear. Private external debt has also faced transformation; "de-risking" by international banks has led to a financial vacuum where even legitimate borrowings are blocked due to excessive compliance. This has stimulated alternative channels, including CBDCs and regional settlement systems.

The exclusion of key players from SWIFT acted as a catalyst for new gateways, signaling a loss of the London and New York monopoly in favor of Asian hubs. Institutional creditors, such as the Paris and London Clubs, face a crisis as the inability to coordinate among sanctioned members undermines the principle of solidarity. Simultaneously, regional currencies, notably the Chinese Yuan, have expanded through swap lines into full-fledged funding currencies. In commercial lending, the transition from LIBOR to SOFR/€STR coincided with sanction shocks, forcing emerging markets to seek liquidity through Panda bonds.

This research conceptualizes "infrastructural debt sustainability," where solvency depends on uninterrupted access to settlement gateways. The practical novelty lies in recommendations for diversifying portfolios through regional instruments and modernizing compliance to avoid isolation. The study successfully analyzed market transformation, assessed new benchmark rates, and substantiated the role of alternative payment systems. The global market has entered a phase where financial security and technological autonomy are prioritized over economic efficiency.