Architecture of the Global Financial System: Transformation vs Stability?

The paper discusses current development of the world financial system through the processes of transforming its architecture or stabilizing the existing model. The study is based on the data on international trade and international reserves of different countries of the world (both developing and developed), as well as on the structure of financial claims (assets) and obligations (liabilities) to external counterparties, emphasizing two key associations of countries – the five BRICS economies and the Group of Seven. It is shown that developing countries are the key initiators of transformation processes of the global financial system (including de-dollarization of international settlements and the shift to broader use of national currencies in cross-border payments, as well as increasing the share of monetary gold in their international reserves). At the same time, developed countries are rather traditional in their currency ‘preferences’. Such adherence emerges through far more pervasive dependence of the UK, Italy, Canada, Germany, France, and Japan (which constitute six of the Group of Seven countries) on the US throughout the last 15 years following the consequences of the 2008–2009 crisis, the European debt crisis, the COVID-19 pandemic, and growing geopolitical tensions in 2022–2024. Such increased dependence in developed countries does not simply prevent them from moving away from the US dollar in settlements, but, on the contrary, increases its importance there as a means of payment, accumulation, and a way to hedge risks. The conducted analysis has revealed multidirectional trends in the development of the financial systems of both developed and developing countries. The result of the global interaction among financial systems of different countries depends on a variety of factors and can contribute both to the transformation of the global financial system or to the sustenance of the current model