Not all economic statecraft is created equal
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Geopolitical shifts are shaping global finance
Image: REUTERS/Maxim Shemetov
Matthew Blake
Head, Centre for Financial and Monetary Systems; Member, Executive Committee, World Economic ForumStay up to date:
Global Governance
- The G7's use of financial tools has prompted emerging economies to seek alternatives to the Western-led financial system.
- The evolving geopolitical landscape highlights the necessity of defining "red lines" in global finance.
- This article is published in full in The Banker, read it here.
As one of his last official acts, in December, US President Joe Biden approved the transfer of $20 billion to a new World Bank-administered fund for Ukraine. This transfer is part of a larger $50 billion loan package by the Group of 7 (G7) to support Ukraine’s “budgetary, military and reconstruction assistance.”
The funding package is backed by the future interest proceeds of nearly $300 billion in Russian sovereign reserves, which have been immobilized in Western financial institutions since the country’s invasion of Ukraine in February 2022.
The G7’s historic decision was finalized and announced in September of last year on the sidelines of the annual meetings of the International Monetary Fund and World Bank. The gatherings, which bring together the who’s who of global finance, perhaps best represent the Western-backed financial system that the G7 nations dominate.
At the same time, heads of state from across the Global South, including China and India, gathered more than 5,000 miles away in Kazan, Russia for the 2024 Brics Summit.
This summit, the first to be hosted by Russia since the invasion of Ukraine, convened the leaders of the growing BRICS bloc, now representing nearly half of the global population and a quarter of global economic activity.
Read the full article in The Banker.
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