# About


## Our goal is to define the principles required to protect the global financial system amidst rising geopolitical complexity

The initiative assesses the qualitative and quantitative risks of violating these principles by sizing the potential costs in economic and financial market terms, and engages with various stakeholders.


**$5.7tn** Potential cost to the world economy of fragmentation

**13%** Decline in the dollar share of global reserves since 1999

**80%** Of major economies in recent OECD report which have implemented investment screening


## Why does the Navigating Global Financial System Fragmentation initiative matter?

Countries are increasingly deploying geo-economic statecraft measures and attempting to bolster domestic resilience, exacerbating geopolitical tensions and fragmentation.


### Deployment of geo-economic statecraft measures

Ongoing geopolitical conflicts have caused disruptions throughout the global financial system and could create further turbulence as states engage in geo-economic statecraft, the use of economic and financial tools to advance foreign policy priorities.


### Pursuit of economic resilience

Global disruptions like COVID-19 supply chain breakages and climate change have led states to pursue a dual strategy to bolster domestic resiliency: strengthen domestic production capacities and reduce reliance on global supply chains.


## Timeline

Key events mark the evolution of the global financial system over time.


## Timeline

*Chronological events and milestones*


## Macroeconomic impact

Our analysis uses four scenarios to quantify the potential impact of financial system fragmentation on different blocs of countries (East, West, and Neutrals) and on the world as a whole. We find that fragmentation could have a negative impact on the global economy of up to $5.7tn in the worst-case scenario, greater than the impact of the Great Recession or the COVID-19 pandemic.


### Scenario 1: Low Fragmentation

Countries restrict capital and trade flows only in certain sensitive areas and encourage unimpeded activity in all other parts of the economy.


### Scenario 2: Moderate Fragmentation

Countries introduce economic statecraft restrictions on all economic exchanges between the three blocs, with less severe measures between Neutrals and the other two blocs.


### Scenario 3:High Fragmentation

Eastern and Western blocs cease all economic exchanges. Neutral countries are subject to moderate restrictions but maintain their financial linkages and supply chains with the East and West.


### Scenario 4: Very High Fragmentation

All financial and economic activity stops between East and West, and the Neutrals are compelled to choose the side of their largest trading partner.


## Impact on financial institutions

Fragmentation could impact private financial institutions across a broad range of risk categories.


## Frequently Asked Questions

*Common questions and answers*


## How to engage

The initiative has two governance bodies through which Forum partners engage.


### Steering Committee

Select World Economic Forum partner organization chief executives and chairpersons are invited to the Steering Committee to shape the initiative's agenda and offer strategic guidance.


### Working Group

Steering Committee members are encouraged to nominate a representative to join the initiative’s Working Group, which executes and delivers on the vision and strategy of the Steering Committee.


### Get involved today

Learn about how your organization can engage with the Navigating Global Financial System Fragmentation initiative.

[Get involved](https://initiatives.weforum.org/global-financial-system-fragmentation/get-involved)