Navigating Global Financial System Fragmentation States are increasingly using the global financial system to advance geopolitical objectives. These types of geoeconomic statecraft policies, combined with industrial policies like subsidies and domestic capacity-building measures are influencing trade and capital flows, investment patterns, asset returns and the cost and availability of capital across borders. In response, the Forum launched the Navigating Global Financial System Fragmentation initiative, estimating that unchecked fragmentation could cost up to $5.7 trillion. The initiative seeks to promote understanding of the global financial system, raise awareness of the consequences of fragmentation and develop frameworks that protect the financial system during a period of rising geopolitical tensions. At the core of this effort is a commitment to eight foundational principles that underpin the global financial system, ranging from respect for the rule of law and property rights to the independence of fiscal and monetary policy, institutional integrity and interoperable financial infrastructures. Violating these principles could undermine the very integrity of the financial system and drive fragmentation, which would weaken trust, reduce efficiencies and jeopardize economic growth.Over the reporting period, the initiative convened leaders from the public and private sectors to generate insights, encourage cooperation and advance shared priorities such as combatting illicit finance. The initiative also presented a positive vision for the financial system as a potential venue for renewed global collaboration on issues of geoeconomic consensus. To broaden its impact, the initiative also engaged wider audiences through outreach focused on the costs of fragmentation, its upward pressure on inflation and the benefits of integration. Drawing on its research and consultations, the initiative introduced two strategic frameworks in less than one year, which were validated by more than 25 global CEOs and chairpersons: the Principles to Safeguard the Global Financial System from Fragmentation and the Rules of Engagement for Responsible Economic Statecraft. The former defines the conditions needed to maintain essential financial system operations and confidence; the latter provides guidance for policy-makers to pursue geoeconomic policies without destabilizing global markets and economic prosperity. Learn more here Annual Report 2024-2025 Our Impact12

Annual Report 2024 2025