Geneva Report launch: Changing Structure and Challenges of the International Financial System

The Geneva Report on the changing structure and challenges of the international financial system highlights the evolving landscape of global economic power. Global imbalances remain significant, driven largely by China’s industrial policy and domestic demand constraints, while the U.S. dollar persists as the central operating system of global finance despite ongoing geopolitical tensions. The shift from bank-based to market-based intermediation, particularly through non-bank financial institutions, has created a complex, tightly coupled system that relies on the Federal Reserve as a critical backstop. Geopolitical factors, including the weaponization of economic tools and the rise of protectionism, increasingly influence macroeconomic policy, forcing nations to prioritize resilience over traditional growth models. Ultimately, the global economy faces a trilemma between expanding debt, constrained dealer balance sheets, and the expectation of smooth market functioning, necessitating a focus on domestic policy reforms to navigate these structural shifts.