In recent years, a structural rupture has emerged in the cohesion of the West, pointing towards a new geoeconomic world order. This is the sixth and final blog post on the systemic shift, and on how it increases the risk of financial divergence.
This rupture is shifting the foundations of the global order, which since the Second World War has been based on institutions and rules, and thereby on predictability. The United States acted both as a central actor and as guarantor, as this aligned with its own interests. However, Trump’s MAGA approach assesses the net benefits differently. As a result, the model is now unravelling as a consequence of a deliberate strategic realignment.
The result is an emerging multipolar structure without a shared normative architecture.
The contours of a new world order are outlined in six blog posts
This system shift towards a new geo-economic order is outlined across six blog posts:
- The system shift (from rules to power)
- The erosion of institutions (UN, IMF, etc.)
- The US from system architect to system actor
- The two competing system models: China and the EU
- Middle powers and “value-based realism”
- Financial power and the risk of divergence - this blog post
The preceding posts described the systemic shift, the institutional consequences, the three system-defining economies, and the role of, inter alia, middle powers. This post focuses on the financial dimension, which is increasingly becoming both an instrument and a consequence of the new order.
The global financial architecture is under strain
The global financial order has been one of the most stable components of the global system since the Second World War. It has been anchored in the USD as the dominant settlement and reserve currency, in Western-based institutions (IMF, World Bank, etc.), and in payment infrastructures such as SWIFT. This structure has provided the United States and its allies with significant structural power, particularly through control over financial flows and sanctions.
Sanctions have, inter alia, created momentum towards structural alternatives
However, the use of financial sanctions has intensified markedly in recent years, raising concern across the rest of the world. This includes the freezing of Russia’s foreign exchange reserves following the invasion of Ukraine, as well as exclusion from international settlement systems.
As a result, a growing number of countries, both partners and adversaries of the United States, are seeking to reduce their financial dependence on a single system. This is gradually giving rise to alternative financial infrastructures with global potential.
- China has, for example, developed its own international payment system, CIPS, as a complement to SWIFT. Russia has established SPFS. More importantly, a number of countries are experimenting with bilateral settlements in local currencies, bypassing the USD as a pricing anchor.
None of these systems has yet achieved global scale. However, their mere existence increases the risk that other countries will gradually reduce their reliance on SWIFT and on the USD as a reserve currency, and thereby reduce their holdings of US Treasuries. This mechanism is currently central to financing US fiscal deficits. It could be triggered, for example, if the United States pursues further geopolitical initiatives that undermine allied confidence in the existing financial order. A decade ago, such alternatives did not meaningfully exist.
Monetary sovereignty has therefore re-emerged as a central priority
Beyond the development of CIPS and SPFS, almost all central banks are now working on central bank digital currencies (CBDCs). The objectives vary, including the efficiency of domestic payments, enhanced financial control, and reduced dependence on existing international systems.
- China is particularly advanced in the development of the e-CNY, which may potentially be used in international transactions. Since 2022, the e-CNY has been deployed both for interbank (“wholesale”) settlement and for retail use.
- Following the US decoupling from the EU in 2025, the ECB has accelerated its development of a CBDC for interbank settlement. Pilot testing is expected to begin in 2027, with the objective, inter alia, of securing the EU’s monetary sovereignty.
These developments point towards gradual fragmentation, and …
The key point is that no single unified alternative to the USD or to SWIFT is emerging. Instead, the most likely trajectory is continued gradual fragmentation. This will result in multiple parallel payment systems, a broader use of currencies in international trade, and more regional financial networks.
The central role of the USD remains significant, not least because no fully coherent alternative system exists that combines payment infrastructure with sufficiently large and liquid debt markets.
Over time, however, marginal shifts may acquire structural significance.
… financial divergence is therefore a systemic risk
This increases the risk of deeper financial divergence, where capital flows become more segmented, liquidity is unevenly distributed, and exchange rates and financial conditions diverge.
This reduces the efficiency of the global financial system and may increase volatility, particularly for countries with limited foreign exchange reserves and low levels of strategic self-sufficiency in areas such as raw materials, food, and technology.
These financial developments are closely linked to the geoeconomic shifts described in the preceding posts. Control over payment infrastructure, currencies, and capital flows is increasingly becoming an integral part of states’ strategic toolkits.
Financial architecture is therefore no longer neutral infrastructure, but an active component of system competition.
Within this landscape, the leadership challenge shifts, inter alia …
The financial dimension is both a consequence of and a driver of the new geoeconomic order. The trajectory does not point towards a single new global financial structure, but towards a more fragmented and network-based order.
For companies and institutions, this implies that financial risks increasingly acquire a political dimension, that access to capital and payment systems may vary across regions, and that currency risk and liquidity management become more complex.
The overall effect is a shift away from a single integrated financial structure towards multiple partially overlapping systems.
… towards securing the widest possible set of alternatives
Taken together, the six posts point to a world in transition—from institutional stability and shared values within a single dominant order, towards structural optionality and multiple parallel systems. The three major system models will intensify their efforts to become financially central actors. This confers “exorbitant privileges”, provided it does not simultaneously require assuming the role of global system architect and guarantor.
The new geoeconomic world order is not yet fully formed. However, the next few years will narrow the range of possible outcomes for the emerging multipolar structure.
As systems cease to converge, strategy shifts from prediction to positioning. In such a structure, continuous adaptation becomes more important than optimisation within a single stable model.
Global geopolitics is today best understood through a Darwinian lens. It is not necessarily the strongest or most efficient systems that endure, but those that adapt most rapidly to changing conditions.