What Does the Shift from Financial Hegemony to a System-Based Global Order Mean?
The world is undergoing a financial transformation that differs from the crises markets have traditionally experienced. What is happening today cannot be reduced to temporary fluctuations in interest rates or currencies. It reflects a gradual change in how the international financial system itself operates. Since 2020, and amid overlapping health, economic, and geopolitical shocks, the limits of a model built around a single center and the assumption of long-term stability have become increasingly clear.
The core idea is that the challenge does not lie in any single currency. The US dollar still accounts for around 58% of global foreign exchange reserves, according to the latest available data. This figure does not signal stable dominance as much as it points to a gradual shift in how risk is distributed. The world is not abandoning the dollar, but it is reconsidering reliance on one currency as the sole pillar of the global financial system, moving instead toward a system that distributes roles across multiple currencies, assets, and sources of financial influence.
This shift becomes more evident when examining the state of US public finances. By 2026, US public debt had approached $38 trillion, exceeding 120% of GDP. This figure is not important only because of its size, but because it signals that the cost of the US financial model is increasingly extending beyond its borders. At such levels, debt dynamics become part of global risk assessments, rather than a purely domestic issue.
In the same context, US monetary policy highlights the limits of traditional tools in managing a highly complex global economy. After interest rates reached elevated levels during 2023 and 2024, expectations in 2026 began to tilt toward easing. This shift did not occur because structural problems were resolved, but because the cost of continued tightening became higher than its stabilizing impact. This back-and-forth reflects the difficulty of managing a volatile global economy with tools designed for a more stable era, leaving uncertainty dominant in investment and financing decisions.
When monetary tools alone are no longer sufficient to provide stability or clear signals to markets, revisiting historical experience becomes necessary. In 1971, the collapse of the Bretton Woods system reshaped the global monetary order through a single, decisive action that ended one phase and launched another. Today’s situation is different. There is no single decision or defining moment. Instead, gradual changes that began after the 2008 global financial crisis and accelerated after 2020 are reshaping the system from within, making the transformation slower to recognize but deeper in its impact.
One of the clearest signs of this transformation is the behavior of central banks worldwide. Rather than relying on a single reserve instrument, central banks have increasingly diversified their reserves and treated them as tools for risk management rather than simple stores of value. By the end of 2025, central bank gold purchases had exceeded 1,000 tons. This does not indicate a return to an old monetary system, but reflects a pragmatic search for safety within a financial system that no longer offers absolute confidence in any single instrument.
In this context, the Middle East plays an important role in accelerating this transformation. The region is no longer viewed only through the lens of political tension, but as a structural component of global financial stability. Supplying roughly one-third of global energy, any disruption in the region quickly feeds into energy prices, inflation, and the global interest rate path. Geopolitics, therefore, has become embedded within the financial system itself, rather than remaining an external factor.
In light of this, it appears that what the world is experiencing today does not resemble past financial collapses, but may be more consequential because of its quiet nature. We are witnessing a real transition from single-point financial hegemony to an integrated, system-based global order, where no single currency or instrument can carry the system alone. This transition will not be completed overnight. It will unfold over years, perhaps over an entire decade. This raises a question that cannot be ignored: if monetary and financial tools are no longer sufficient on their own to regulate the international financial system or enforce its rules, will global competition remain confined to economics and politics, or could history once again introduce military power, not as an explicit choice, but as an indirect means of reshaping balance? It is an open question—but ignoring it may prove more costly than attempting to answer it.
The world is undergoing a financial transformation that differs from the crises markets have traditionally experienced. What is happening today cannot be reduced to temporary fluctuations in interest rates or currencies. It reflects a gradual change in how the international financial system itself operates. Since 2020, and amid overlapping health, economic, and geopolitical shocks, the limits of a model built around a single center and the assumption of long-term stability have become increasingly clear.
The core idea is that the challenge does not lie in any single currency. The US dollar still accounts for around 58% of global foreign exchange reserves, according to the latest available data. This figure does not signal stable dominance as much as it points to a gradual shift in how risk is distributed. The world is not abandoning the dollar, but it is reconsidering reliance on one currency as the sole pillar of the global financial system, moving instead toward a system that distributes roles across multiple currencies, assets, and sources of financial influence.
This shift becomes more evident when examining the state of US public finances. By 2026, US public debt had approached $38 trillion, exceeding 120% of GDP. This figure is not important only because of its size, but because it signals that the cost of the US financial model is increasingly extending beyond its borders. At such levels, debt dynamics become part of global risk assessments, rather than a purely domestic issue.
In the same context, US monetary policy highlights the limits of traditional tools in managing a highly complex global economy. After interest rates reached elevated levels during 2023 and 2024, expectations in 2026 began to tilt toward easing. This shift did not occur because structural problems were resolved, but because the cost of continued tightening became higher than its stabilizing impact. This back-and-forth reflects the difficulty of managing a volatile global economy with tools designed for a more stable era, leaving uncertainty dominant in investment and financing decisions.
When monetary tools alone are no longer sufficient to provide stability or clear signals to markets, revisiting historical experience becomes necessary. In 1971, the collapse of the Bretton Woods system reshaped the global monetary order through a single, decisive action that ended one phase and launched another. Today’s situation is different. There is no single decision or defining moment. Instead, gradual changes that began after the 2008 global financial crisis and accelerated after 2020 are reshaping the system from within, making the transformation slower to recognize but deeper in its impact.
One of the clearest signs of this transformation is the behavior of central banks worldwide. Rather than relying on a single reserve instrument, central banks have increasingly diversified their reserves and treated them as tools for risk management rather than simple stores of value. By the end of 2025, central bank gold purchases had exceeded 1,000 tons. This does not indicate a return to an old monetary system, but reflects a pragmatic search for safety within a financial system that no longer offers absolute confidence in any single instrument.
In this context, the Middle East plays an important role in accelerating this transformation. The region is no longer viewed only through the lens of political tension, but as a structural component of global financial stability. Supplying roughly one-third of global energy, any disruption in the region quickly feeds into energy prices, inflation, and the global interest rate path. Geopolitics, therefore, has become embedded within the financial system itself, rather than remaining an external factor.
In light of this, it appears that what the world is experiencing today does not resemble past financial collapses, but may be more consequential because of its quiet nature. We are witnessing a real transition from single-point financial hegemony to an integrated, system-based global order, where no single currency or instrument can carry the system alone. This transition will not be completed overnight. It will unfold over years, perhaps over an entire decade. This raises a question that cannot be ignored: if monetary and financial tools are no longer sufficient on their own to regulate the international financial system or enforce its rules, will global competition remain confined to economics and politics, or could history once again introduce military power, not as an explicit choice, but as an indirect means of reshaping balance? It is an open question—but ignoring it may prove more costly than attempting to answer it.
The world is undergoing a financial transformation that differs from the crises markets have traditionally experienced. What is happening today cannot be reduced to temporary fluctuations in interest rates or currencies. It reflects a gradual change in how the international financial system itself operates. Since 2020, and amid overlapping health, economic, and geopolitical shocks, the limits of a model built around a single center and the assumption of long-term stability have become increasingly clear.
The core idea is that the challenge does not lie in any single currency. The US dollar still accounts for around 58% of global foreign exchange reserves, according to the latest available data. This figure does not signal stable dominance as much as it points to a gradual shift in how risk is distributed. The world is not abandoning the dollar, but it is reconsidering reliance on one currency as the sole pillar of the global financial system, moving instead toward a system that distributes roles across multiple currencies, assets, and sources of financial influence.
This shift becomes more evident when examining the state of US public finances. By 2026, US public debt had approached $38 trillion, exceeding 120% of GDP. This figure is not important only because of its size, but because it signals that the cost of the US financial model is increasingly extending beyond its borders. At such levels, debt dynamics become part of global risk assessments, rather than a purely domestic issue.
In the same context, US monetary policy highlights the limits of traditional tools in managing a highly complex global economy. After interest rates reached elevated levels during 2023 and 2024, expectations in 2026 began to tilt toward easing. This shift did not occur because structural problems were resolved, but because the cost of continued tightening became higher than its stabilizing impact. This back-and-forth reflects the difficulty of managing a volatile global economy with tools designed for a more stable era, leaving uncertainty dominant in investment and financing decisions.
When monetary tools alone are no longer sufficient to provide stability or clear signals to markets, revisiting historical experience becomes necessary. In 1971, the collapse of the Bretton Woods system reshaped the global monetary order through a single, decisive action that ended one phase and launched another. Today’s situation is different. There is no single decision or defining moment. Instead, gradual changes that began after the 2008 global financial crisis and accelerated after 2020 are reshaping the system from within, making the transformation slower to recognize but deeper in its impact.
One of the clearest signs of this transformation is the behavior of central banks worldwide. Rather than relying on a single reserve instrument, central banks have increasingly diversified their reserves and treated them as tools for risk management rather than simple stores of value. By the end of 2025, central bank gold purchases had exceeded 1,000 tons. This does not indicate a return to an old monetary system, but reflects a pragmatic search for safety within a financial system that no longer offers absolute confidence in any single instrument.
In this context, the Middle East plays an important role in accelerating this transformation. The region is no longer viewed only through the lens of political tension, but as a structural component of global financial stability. Supplying roughly one-third of global energy, any disruption in the region quickly feeds into energy prices, inflation, and the global interest rate path. Geopolitics, therefore, has become embedded within the financial system itself, rather than remaining an external factor.
In light of this, it appears that what the world is experiencing today does not resemble past financial collapses, but may be more consequential because of its quiet nature. We are witnessing a real transition from single-point financial hegemony to an integrated, system-based global order, where no single currency or instrument can carry the system alone. This transition will not be completed overnight. It will unfold over years, perhaps over an entire decade. This raises a question that cannot be ignored: if monetary and financial tools are no longer sufficient on their own to regulate the international financial system or enforce its rules, will global competition remain confined to economics and politics, or could history once again introduce military power, not as an explicit choice, but as an indirect means of reshaping balance? It is an open question—but ignoring it may prove more costly than attempting to answer it.
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What Does the Shift from Financial Hegemony to a System-Based Global Order Mean?
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