Navigating Global Financial System Fragmentation 2025

Policy recommendations to establish guardrails By strengthening and reforming the system, policy- makers can ensure its integrity and guarantee that all actors, including EMDEs, have the ability to conduct business across jurisdictions. As global population and economic dynamics shift, global governance systems must adapt to ensure the financial system delivers maximum benefits. This report offers a pragmatic approach to translate the proposed frameworks into action that supports economic growth. Core policy recommendations include: anchoring guardrails through voluntary norms, which build on those outlined in this report; developing mutual recognition frameworks and interoperability between regulatory regimes; and countering fragmentation with new or strengthened patterns of economic cooperation and policy coordination. Design and implement targeted and well-aligned statecraft measures to minimize the risk of unintended consequences and reduce the private sector’s administrative burden (e.g. carry out cost–benefit analyses, provide clear implementation guidance, and assess and reinforce existing regimes)Rule 1 Collaborate on areas of geoeconomic consensus, including combatting financial crime, terrorist financing and the energy transition, recognizing the need for collective action to address these global financial challengesRule 5 Establish public–private consultation mechanisms to promote transparency in decision-making regarding the impact of economic statecraft measures on the financial system Rule 2 Promote global financial stability through heightened coordination among major financial powers via transparent data sharing and inclusive decision-making to minimize negative spillovers and prevent system fragmentationRule 6 Protect populations, sectors, industries and supply chains for humanitarian purposes through exemptions and carve-outs to avoid collateral damage and ensure their continued access to the global financial system Rule 3 Reform the global financial system to reflect 21st-century geopolitical and macroeconomic dynamics and provide greater benefits to EMDEs, promoting inclusive economic growth and stabilityRule 7 Prioritize the use of economic inducements, including trade agreements compliant with international law, and other financial instruments that foster mutual gain and cooperation over those designed to cause economic painRule 4 Protect the ability of firms to engage with actors across the geopolitical spectrum by structuring statecraft measures, standards and regulations on a multilateral basis, whenever possible Rule 8Rules of Engagement for Responsible Economic Statecraft FIGURE 2 Source: World Economic Forum and Oliver Wyman The Rules of Engagement for Responsible Economic Statecraft proposed in Figure 2 operationalize these principles. They outline how policy-makers can deploy economic statecraft to protect national security and sovereignty without reducing global prosperity. Navigating Global Financial System Fragmentation 7