When finance becomes a weapon: the challenge of central bank sanctions under International Law

Central bank sanctions have become a significant foreign policy tool, with states increasingly targeting these institutions to pressure other states to change their conduct. However, this practice raises significant legal challenges under international law. This article offers a comprehensive analysis of central bank sanctions and their compatibility with key international legal principles, such as proportionality and state immunity. Upon offering an overview of state practice and the applicable legal framework, it argues that due to their inherent characteristics, central bank sanctions can only be justified in exceptional circumstances and must adhere to strict conditions to be considered lawful. The article concludes by highlighting the need for responsible use of central bank sanctions and exploring avenues to minimise legal challenges associated with their use.