Global Financial Governance at a Crossroads: The G20 Summit and the Reconstruction of the Future International Financial Order

The recently held G20 Finance Ministers and Central Bank Governors Meeting, along with the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (held in autumn), have provided a crucial window for observing the future trajectory of the international financial landscape. These high-level forums not only assessed the current state of the global economy but also shed light on the underlying forces and potential risks shaping the future financial order.

Undoubtedly, tensions in global trade remain the top concern in the financial world. In its latest World Economic Outlook Report, the IMF revised up its 2025 global economic growth forecast to 3.2%, yet explicitly warned that uncertainties surrounding trade policies are suppressing consumption and investment. Trade may undergo permanent restructuring, undermining global efficiency. This uncertainty, like a low-pressure system hovering over global financial markets, has made investors more hesitant when making long-term capital allocation decisions. At a post-G20 press conference, Kazuo Ueda, Governor of the Bank of Japan, also noted that while the global economy has demonstrated resilience, it continues to face complex challenges such as high uncertainty and trade tensions. When trade flows are disrupted, related financial activities—including cross-border credit, trade finance, and exchange rate risk management—are all affected, increasing the operational costs and potential frictions of the international financial system.

Beyond traditional financial risks, the rapid expansion of the crypto-asset market has raised heightened alert among regulators. A review submitted by the Financial Stability Board (FSB) to the G20 revealed significant gaps in global crypto regulation, with inconsistent progress across countries in translating agreed-upon standards into national laws. Over the past year, the total market capitalization of the crypto market has roughly doubled to approximately $4 trillion, while stablecoins have risen by around 75% to nearly $290 billion—a trend that has amplified contagion risks. The warning from John Schindler, Secretary-General of the FSB, merits serious consideration: he pointed out that these crypto assets can flow cross-border far more easily than other financial assets. This high mobility, combined with fragmented regulation, creates opportunities for regulatory arbitrage, complicates cross-border law enforcement, and may quickly escalate localized risks into systemic ones. As the FSB concluded, fragmented approaches across jurisdictions could exacerbate financial stability risks. Without the timely establishment of a coherent regulatory framework for stablecoins, the spillover effects of isolated failures may trigger broader market risks as the industry grows.

Equally pressing is the concern over the sustainability of global fiscal positions. The IMF has warned that many governments—including some major advanced economies—have made limited progress in addressing fiscal pressures. U.S. public debt has failed to stabilize, with its ratio to gross domestic product (GDP) projected to rise from 122% in 2024 to 143% by 2030. This debt accumulation not only limits governments’ ability to use fiscal policy to respond to future crises but may also trigger widespread doubts about the sustainability of sovereign debt in global financial markets. The challenge is particularly acute for countries already grappling with severe economic hardships, such as Lebanon, which faces high fiscal deficits and public debt. Amid unfavorable global financing conditions and heavy debt burdens in Western countries, substantial support for such nations remains elusive. If fiscal pressures are not effectively managed, they could evolve into debt crises in the future, spreading rapidly through the international financial system.

Financial stability risks arising from the AI investment boom have also begun to attract regulatory attention. The IMF report noted that the current surge in AI-related investment evokes parallels to the late-1990s dot-com bubble. Optimism has driven tech investment, inflated stock market valuations, and stimulated consumption through capital gains. However, a latent risk persists: if AI fails to deliver on lofty profit expectations, markets may undergo a sharp repricing—eroding wealth, dampening consumption, and triggering a cascade of adverse effects. Such asset price volatility, driven by expectations of technological change, reminds us that the vulnerability of financial markets stems not only from shifts in traditional economic fundamentals but also from extreme swings in expectations surrounding emerging technologies.

These meetings compel us to envision the future of international finance: we are in a transitional phase, where established orders and rules face pressure, and a new balance is still taking shape. Multilateral coordination mechanisms play an irreplaceable role in addressing trade tensions, debt accumulation, the expansion of crypto assets, and AI-driven market bubble risks. Liao Min, Vice Minister of Finance of China, emphasized at the meetings that all parties should firmly uphold multilateralism and free trade, and support inclusive economic globalization. Meanwhile, emerging market economies are seeking a greater voice in the international financial system. During a meeting with senior officials from emerging market economies, Pan Gongsheng, Governor of the People’s Bank of China, stated that China stands ready to strengthen macroeconomic policy coordination with all parties and enhance the influence of emerging market economies in the international financial system. This gradual adjustment of the governance structure will profoundly shape the future direction of international capital flows and risk management models.

The future landscape of international finance will be shaped by the interplay of multiple forces: on one hand, pressure for market fragmentation stemming from trade protectionism and geopolitical tensions; on the other, the rapid blurring of financial boundaries driven by new technologies such as crypto assets and AI. On one side, fiscal constraints imposed by rising national debt; on the other, the massive capital mobilization required to address global challenges. Amid this tension, financial stability will depend on whether countries can, while respecting the laws of finance, bridge regulatory divides through sustained dialogue and build a more inclusive and resilient global financial architecture. This path is fraught with challenges, yet it represents an unavoidable and necessary choice for the sustainable growth and financial security of the global economy.