Sanctions and the weaponisation of finance: implications for the Global South.

Weaponisation of finance means using dominance over currencies and payment infrastructure — SWIFT messaging, dollar clearing, trade credit — as an instrument of coercion. An IMF study of cross-border payments finds that use of currencies other than the dollar and euro remains limited [1], so sanctions bite hardest on the Global South, which trades in borrowed money and borrowed pipes.

How the chokepoints work

• SWIFT exclusion blocks payment instructions, but the deeper lever is settlement: money ultimately moves through banks holding dollars.
• The dollar underpins over 80% of trade finance — the credit and guarantees that let goods actually ship [1].
• Secondary sanctions and compliance fear push even neutral banks to "de-risk", shrinking correspondent banking for poor economies.

Implications for the Global South

• Economic: costlier and slower settlement of energy, fertiliser and food imports; currency volatility; higher risk premia on borrowing.
• Developmental: remittance corridors — a lifeline for South Asia and Africa — become expensive, hurting SDG 10.c targets on remittance costs.
• Strategic: loss of policy autonomy, driving the push for national-currency trade endorsed in the BRICS New Delhi Declaration (2026).

Responses, and why they remain partial

• CIPS (China, 2015), SPFS (Russia, 2014) and the CBDC platform mBridge offer escape routes, but the renminbi is only about 2% of cross-border payments and remains capital-controlled [2]; joining CIPS shifts dependence from Washington to Beijing rather than removing it.
• India's calibrated route: the Special Rupee Vostro Account mechanism for rupee trade settlement [3], plus retail linkages such as UPI–PayNow with Singapore [4] and Project Nexus — cheaper payments without building a rival sanctions bloc.
• Constraint: trade imbalances leave partners holding idle rupees, so local-currency settlement stays a small share of trade.

Thus today's alternatives are defensive — they reduce the pain of exclusion without offering a better system. The durable answer lies in credible domestic macro-fundamentals, interoperable low-cost payment rails, and rule-based multilateral oversight of financial infrastructure through the G20 and IMF, so that payment systems serve development rather than geopolitics.