By opening the door for banks to trade loans, developing countries could unlock billions in untapped capital, giving small businesses and everyday borrowers a fair shot at growth.
In much of the developing world, the story is frustratingly familiar: small businesses with big ambitions can’t get the financing they need, and individuals with valuable property are told their collateral “doesn’t count.” Banks, cautious about locking up limited funds in long-term loans, turn away customers not because they question their integrity, but because the rules, the risks, and the balance sheets make lending too dangerous. A Tradeable Loan System could rewrite that story. By allowing banks to sell loans — in whole or in part—to other institutions after they are issued, risk is shared, capital is freed, and the door to new lending swings open. It’s a model that has long powered credit markets in the United States and is now gaining traction in the European Union. For developing economies, it could be transformative. For such a system to succeed, the banking sector must move in unison. Collateral must be valued and accepted according to international standards, without the excessive conservatism that locks borrowers out. Credit ratings should follow global models to ensure risk is assessed fairly. Asset and real estate appraisals must meet internationally recognized inspection practices.
Banks should have the freedom to transfer loans — in part or in full — to other lenders, giving them the flexibility to manage liquidity and spread risk. The entire process must run on a secure, computer-based platform capable of handling everything from transactions and document generation to accounting and communication. The state’s role should be enabling rather than obstructive, providing data access and regulatory approval without adding bureaucratic delays. And when the system is ready, it must be actively promoted to international investors, whose participation will bring both capital and confidence.
What it would look like in practice
In a Tradeable Loan System, every application would follow a standardized, internationally compliant format. A robust credit insurance framework would cover defaults. When real estate is pledged as collateral, the property, title deed, and valuation would be insured, giving lenders certainty. For larger loans, syndicated lending would allow multiple banks to share the risk.
Independent credit rating agencies would assess companies, owners, and individual borrowers, ensuring a transparent, reliable, and consistent evaluation process.
Insurance would form the backbone of risk protection. Credit default insurance would cover short-term payment delays, ensuring borrowers aren’t pushed into default over temporary setbacks. Title insurance would shield lenders and borrowers from disputes over ownership, permits, or licenses. Appraisal insurance would lock in the stated value of collateral. And borrower, property, or business insurance could be provided through existing insurers. The heart of the system would be a digital loan marketplace, where standardized loans could be bought or sold between institutions, either entirely or in portions. This platform would also manage essential back-office functions, creating a seamless process for both domestic and international transactions.
Once operational — even in part — the system should be introduced to global markets through targeted campaigns and overseas roadshows. Attracting foreign investors will expand liquidity, diversify lending sources, and embed the system into international finance networks. Governments can play a decisive role. By granting access to tax, legal, civil registry, and criminal record data for credit assessments, authorizing the full suite of necessary insurance products, encouraging participation across the sector, and temporarily waiving taxes on credit transactions, they can lay the groundwork for rapid adoption. Over time, the formalization of lending will generate higher tax revenues, making this a long-term win for public finances.
Why it matters
The Tradeable Loan System should be built in partnership with the Ministry of Treasury and Finance and the central bank, anchored by robust insurance mechanisms. It is not an untested experiment — it is a proven model.
For developing countries, the potential gains are significant: more accessible credit, faster business growth, and a banking sector strong enough to weather economic shocks. In a world where opportunity often depends on access to capital, trading loans might be the fastest way to trade up to a better future.
Yaman Törüner is the former Governor of the Central Bank of Türkiye. Served as Chairman of the Istanbul Stock Exchange, and was a State Minister.
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