Fragmentation of Global Monetary and Financial System: Problems and Opportunities

Abstract

After the global financial and economic crisis of 2008–2009 the process of deglobalization of the world economy and world finance is gaining momentum. Deglobalization, according to the experts from the International Monetary Fund (IMF), can lead to fragmentation of the global monetary and financial system (GMFS) and the formation of various regional and interregional blocs that will create own settlement, payment, trade, investment and other infrastructures to ensure its autonomy and independence. As a result, there may be a serious threat of disruption to global financial stability. The article provides an analysis of the problems associated with the increasing fragmentation of the GMFS, and identifies new opportunities emerging for those countries that were previously dependent on the most developed countries in the world. Based on the analysis of the impact of geopolitical tensions on financial stability and on the cross-border movement of capital, as well as the study of regional features of the impact of geopolitical tensions and financial fragmentation on macro-financial stability, the authors conclude that the current global process means the beginning of another transformation of the world economy. The politicization of public administration associated with deglobalization requires all participants in the world community to review their domestic and foreign policies in order to form new approaches to international cooperation. The fragmentation of the GMFS is likely to be quite painful and will not do without crises of various sizes, associated with the destruction of old ties and the violation of macroeconomic stability. However, this process will lead to the creation of a more sustainable polycentric GMFS and will set conditions for the progressive development of all countries of the world, taking into account their national features and strategic priorities.