Glossary
Plain-language definitions for terms you'll encounter in geopolitics and international economics.
Comparable treatment principle
A core principle of the Paris Club's sovereign debt restructuring framework: a debtor government's restructuring offer to Paris Club creditors must be matched, in present-value terms, by the offers made to non-Paris-Club creditors (commercial bondholders, Chinese policy banks, bilateral lenders outside the club). The principle is designed to prevent free-riding — where one creditor group preserves its claim while others take haircuts. In practice, applying comparable treatment to Chinese policy-bank loans has been a structural friction in the G20 Common Framework restructurings of Zambia, Ghana, and other distressed African sovereigns. Chinese creditors prefer case-by-case bilateral negotiation; Paris Club creditors prefer collective application of the principle. The dispute is procedural in form, distributive in substance.
Correspondent banking
An arrangement where one bank (the respondent) holds an account at another bank (the correspondent) to access services in a market it doesn't directly operate in. Most cross-border payments rely on correspondent banking, which is why loss of correspondent access from major banks effectively excludes a country from global finance.
Dollar liquidity (as power)
In a financial crisis, banks and firms outside the United States still need dollars — to settle trade, to refinance dollar debt, to meet collateral calls. Only the Federal Reserve can create dollars without limit. Whoever controls access to that liquidity in a crisis exercises a form of power most observers miss until it is being used. Adam Tooze develops this reading at length in *Crashed* (2018), arguing that the Fed's 2008 and 2020 dollar swap lines to selected foreign central banks were the decisive interventions that kept the global financial system from fragmenting — and that the choice of which central banks got swap lines (the ECB, BoE, BoJ, SNB, and a small expanded group) and which did not was a strategic act, not a technical one. The swap-line geography maps closely onto the US security alliance system. The same liquidity architecture explains why extraterritorial sanctions bite: banks that lose dollar correspondent access cannot fund their books in a crunch. The sanctions analyses on this site treat this liquidity dimension as the binding constraint, not the SWIFT messaging layer.
Extraterritorial sanctions
Sanctions that apply to persons or transactions outside the imposing country's territory, typically by threatening to cut off access to the imposing country's financial system if foreign parties deal with a designated target. US secondary sanctions are the prototypical example.
SWIFT
The Society for Worldwide Interbank Financial Telecommunication — a messaging network used by banks to send payment instructions to each other. SWIFT does not move money itself; it transmits the messages that authorize money movement between banks.
Sovereign immunity
The doctrine in international law that a sovereign state cannot be sued in another state's courts without its consent. Modern practice distinguishes 'absolute' sovereign immunity (no suits permitted) from the 'restrictive' doctrine that most states now follow, under which commercial activity by states is subject to ordinary jurisdiction but sovereign acts (military, diplomatic, regulatory) are not. The US Foreign Sovereign Immunities Act of 1976 codifies the restrictive approach. Sovereign immunity is the legal architecture behind the practical fact that defaulting sovereigns cannot be forced to pay by court order alone — restructuring requires creditor coordination rather than judicial enforcement.