Changing Roles of US Dollar and Treasuries... Growing Need for International Cooperation

Structural Shifts in the Global Financial Order
Rising Uncertainties Highlight the Need for Joint Action

As the international trade and financial order undergoes changes, there are growing assessments that not only the US dollar but also US Treasury bonds are weakening in their roles. Experts point out that, given the difficulty for any single nation to respond to these uncertainties alone, international cooperation and solidarity are essential.

Participants are taking a commemorative photo at the "2025 G20 Global Financial Stability Conference" held on the 3rd at The Plaza Hotel in Jung-gu, Seoul, hosted by the Ministry of Economy and Finance and the Korea Development Institute (KDI). Photo by KDI

The Ministry of Economy and Finance, together with the Korea Development Institute (KDI), held the "2025 G20 Global Financial Stability Conference" on September 3 at The Plaza Hotel in Jung-gu, Seoul, under the theme "Strengthening Financial Stability and Enhancing Resilience in an Era of Structural Change and Uncertainty."

The conference was attended by more than 300 prominent domestic and international figures, including Lee Hyungil, First Vice Minister of Economy and Finance, Cho Dongchul, President of KDI, Maurice Obstfeld, Senior Fellow at the Peterson Institute for International Economics, and Markus Brunnermeier, Professor at Princeton University.

In their opening remarks, Vice Minister Lee and President Cho noted that the global financial environment is currently in a transitional phase where short-term uncertainties and structural changes are intensifying simultaneously. They emphasized in unison that, as these are issues no single country can resolve alone, solutions must be sought through international cooperation and solidarity.

During the keynote speeches, it was pointed out that the roles of the US dollar and US Treasury bonds are diminishing. Obstfeld assessed that the role of the dollar is weakening due to the de-Americanization of trade and finance. He also explained that, as the global economic order-previously provided as a global public good by the United States-undergoes structural change, international cooperation is essential to respond to these shifts.

Another keynote speaker, Professor Brunnermeier, noted that the existing multilateral norm-based system is shifting toward a bloc-based system centered on major powers. He also highlighted that, in this era of political uncertainty, the status of US Treasury bonds as global safe assets is changing, suggesting the possibility of diversifying the supply of global safe assets.

Subsequent sessions discussed the increasing volatility of overseas direct investment, the expanding role of non-bank financial institutions (NBFIs), and the opportunities and risks associated with artificial intelligence (AI) and stablecoins. The impact of global and national debt, as well as demographic changes such as population aging, was also addressed.

The Ministry of Economy and Finance plans to thoroughly review the policy recommendations discussed at this event. Efforts will be made to ensure that these recommendations are reflected in international discussions through the G20 International Financial Architecture Working Group (IFA WG), for which Korea serves as co-chair, and at the upcoming G20 Finance Ministers and Central Bank Governors’ Meetings scheduled for next month.