Sticky sanctions: New study shows targeted boycott can isolate an entire financial system

A new study by the University of Chicago and Northwestern University reveals that targeted financial sanctions can isolate an entire financial system, with banks not directly sanctioned in countries like Belarus, Kyrgyzstan, Myanmar, and Russia losing access to major currencies. The article opens with Prime Minister Benjamin Netanyahu's warning about sanctions on Israel.

A new study by the University of Chicago and Northwestern University, published this month, reveals that targeted financial sanctions can isolate an entire financial system. The study examined data on international payment transfers across 17,000 financial institutions, combined with data on sanctions imposed by the US, the EU, and the UK between 2021 and August of this year. It found that even banks not directly sanctioned in countries such as Belarus, Kyrgyzstan, Myanmar, and Russia lost access to the dollar, euro, and pound due to the concerns of intermediary banks. In Belarus, the number of partnerships with correspondent banks in dollar, euro, and pound transactions dropped from 139 in 2021 to 19 in 2026. The article opens with Prime Minister Benjamin Netanyahu's warning over the weekend about banking sanctions on Israel and his proposal to prepare using blockchain. Senior economic officials who spoke with Globes noted that no such plan has been prepared at the Treasury and that the step is not feasible.