Pep Guardiola says FIFA proposals designed to limit the number of players allowed to be loaned out to rival clubs will seriously alter Manchester City's business model.
City and Chelsea are among the Premier League teams who will be most seriously impacted by the proposals that, from 2020, clubs will only be allowed to have between six and eight players loaned out to other clubs.
At the moment, Chelsea have an astonishing 39 players on loan with rival clubs across Europe, while City have 28, one more than Wolves but nearly twice as many as any other Premier League club.
"We are going to adapt to the rules. The new rules are coming, we're going to see the situation about loan players and see what we can do," Guardiola told reporters.
"The club is going to adapt if FIFA decide to do that. If we cannot loan them, they are going to come back here.
"If we don't believe they are going to play, if we cannot loan them we are going to sell them. It's simple.
"We're going to see before they take the players where they are going to play, and if it is not possible to loan them we are not going to buy them."
The new measures could spark something of a fire sale at City over the next 18 months before the rules come into force in the summer of 2020.
Many City youngsters, from the under-23 and academy squads, have been loaned out to 'sister' clubs who are part of the City Football Group that is spearheaded by Guardiola's Premier League champions.
City have players on loan all over the world within their own group, from Melbourne in Australia to Girona in Spain, as well as a number of young stars playing at lower levels in Britain.
But Guardiola pointed out the example of young Brazilian Douglas Luiz, who was unable to obtain a work permit to play in England for City and instead moved to Girona in La Liga, as an example of how the new system may limit players' development.
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"It's not good, for me," said Guardiola. "For the young players to come through the academy, the next step is the first team.
"Loan players are in good leagues, so to then come here to play (for academy teams) in front of 10 people is not good for their development.
"There's no way Luiz comes back here to the second team. He would have been with us to be an alternative for Fernandinho but we couldn't get a work permit.
"Now he's playing a lot of games for Girona and playing in the Camp Nou, in the Bernabeu. It would make no sense to come here to the second team. It would not help the young players in that way."
Meanwhile, Guardiola has spoken of the challenge French defender Benjamin Mendy faces to regain consistent fitness after undergoing knee surgery for the second successive season.
France manager Didier Deschamps had warned Mendy earlier this season about the need to look after his body, before he sustained his latest injury which will sideline him for several weeks.
"I think he's a good professional. When he's there, on the pitch or in the locker room, he's doing what he has to do," said Guardiola.
"But we cannot deny that he had a big injury last season, he has another big injury right now and hopefully everyone can understand what you need to be.
"A strong guy is one who plays every three days. These kind of guys are never injured. That has to be his main target.
"After that we decide if he plays or not. Continuity is the target. He's young, incredible potential and it's a pity, an incredible guy. In two seasons it's a long time not playing for him.
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