The Transformation of the Global Monetary and Financial System Under Tokenization

The signing of the Guidance and National Innovations for Uniform Stablecoins Act (GENIUS) in the United States directly affects the ongoing transformation of the global monetary and financial system (GMFS). On the one hand, the law legalizes the financing of U.S. government debt through the issuance of private money, creating an alternative to the money of commercial and central banks. On the other hand, stablecoins may strengthen the international position of the dollar thanks to the technological opportunities emerging from the universal tokenization of financial and real assets at the global level. Key global financial institutions—whose investment portfolios consist predominantly of dollar-denominated assets—are deeply interested in preserving the dollar’s role as the monetary axis of the current international currency order. The paradox, however, is that the dollar is already quite “worn out” in its role as a global currency, but there is no viable replacement for it.

Global banks and the business-support institutions closely aligned with them (audit, analytical, and consulting firms, as well as rating agencies) are predicting a rapid increase in the capitalization of digital financial assets (DFAs). Meanwhile, the actual figures for tokenization remain far more modest than the potential.

The still-modest progress in financial asset tokenization is driven by numerous regulatory, operational-interoperability, and liquidity challenges surrounding DFAs, all of which constrain their issuance and circulation. However, despite the many technical and regulatory problems, the main barrier to large-scale financial asset tokenization is the global monetary and financial system itself. More precisely, it is the resistance of its two fundamental pillars—credit money and banking intermediation.

In a tokenized GMFS, transactions can be carried out without intermediaries and on a non-monetary (non-credit) basis through smart contracts with programmable logic. On the one hand, such a setup could put an end to the system of global financial intermediation built around U.S. interests. On the other hand, U.S. banks could preserve—and even strengthen—their influence within the GMFS if they succeed in bringing the further modernization of blockchain, the key digital technology, under their own control.

Returning to the GENIUS Act, linking stablecoins to the financing of U.S. government debt carries the risk of dollarizing the financial systems of competing economies. It is evident that neither the eurozone nor China will be able to offer an adequate digital response at the global level, given the limited demand for the euro and the yuan in the global banking industry and the fact that more than 99% of all stablecoins are denominated in U.S. dollars.

A potential response to the U.S. challenge could be the issuance of central bank digital currencies (CBDCs) by countries of the Global Majority on distributed-ledger platforms. For example, such currencies could be integrated into a unified digital platform compatible with national payment systems (CIPS, UPI, SPFS, SEPAM, QRIS, PIX). However, implementing such initiatives would require the participating parties to possess a certain degree of technological superiority in order to guarantee immunity against sanctions.

The global monetary and financial system is highly dependent on the technological solutions that mediate international monetary circulation. However, not all technologies have a stabilizing effect. The current crisis of the GMFS is rooted in the inadequacy of the existing framework of credit money and financial intermediation—both of which have slipped beyond any national or supranational control. The United States is seeking to prolong its dominance in the GMFS by digitizing assets in the financial and real sectors of the economy and by establishing control over blockchain ecosystems. The countries of the Global Majority face a limited set of choices: either follow in the wake of the digital paradigm being imposed on them, or develop their own conceptual approaches that are independent of U.S. technologies for money creation and global financial intermediation.

The signing of the Guidance and National Innovations for Uniform Stablecoins Act (GENIUS) in the United States directly affects the ongoing processes transforming the global monetary and financial system (GMFS). On the one hand, the law legalizes the financing of U.S. government debt through the issuance of private money, creating an alternative to the money of commercial and central banks. On the other hand, stablecoins may strengthen the international position of the dollar thanks to the technological opportunities emerging from the universal tokenization of financial and real assets at the global level. Key global financial institutions—whose investment portfolios consist predominantly of dollar-denominated assets—are deeply interested in preserving the dollar’s role as the monetary anchor of the current international currency order. The paradox, however, is that the dollar has become rather “worn out” in its role as the world’s currency, yet there is no viable replacement. The euro’s claims to global status have not materialized. The euro is the currency of twenty independent states that are not prepared to relinquish their national sovereignty or unify their banking, financial, fiscal systems, and capital markets. The economies of Japan and the United Kingdom are not large enough to inspire confidence in the global roles of the yen or the pound sterling. China cannot ensure full convertibility of the yuan on external markets due to concerns about destabilizing domestic development. The absence of worthy “successors” in the GMFS also stems from two important features of how the system functions. First, the modern GMFS is a system of credit money. Second, its functioning is built on cartel-type financial intermediation. Now, to examine these two features in more detail.

Credit-Based Money

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Formally, the U.S. dollar was recognized as global money at the intergovernmental level in 1944. It was then that the current format of the GMFS was agreed upon by sovereign states that signed the Articles of Agreement of the International Monetary Fund. However, the concept of “global money” emerged long before the Bretton Woods Conference and even before the term itself existed. In practice, global money has existed ever since a currency performs the functions of a measure of value and a medium of exchange (or payment) beyond the jurisdictions that issue it.

The first such experience dates back to the reign of Darius the Great (522–486 BCE), who not only extended the circulation of his own minted coinage across the vast territories of the Persian Empire, but also became the first to collect taxes in that currency from conquered lands—something akin to a modern system of international reserves and credit. The initiative was later taken up by Alexander the Great (356–323 BCE), whose gold staters (“philippics”) enjoyed strong international demand for roughly 150 years, increasing the revenues of the Greek metropolis. Meanwhile, the secret of monetary enrichment had been uncovered even earlier, in the 7th century BCE, by Croesus, the Lydian king famed for his extraordinary wealth. His prosperity was due not only to the fact that he is believed to have been the first (in 635 BCE) to mint coins from gold and silver [1], but also to the practice of reducing the precious-metal content in the coins, appropriating the difference between their nominal and actual value.

Croesus’s technique for generating income from money issuance remained in use among European sovereign and private issuers up until the 12th century, when the Venetian Bank revolutionized the practice by recording the value of deposited metal coins as credit in its accounting books [2]. This is how modern money first emerged—not from any metal or paper, but because a bank issued it as credit. Today, credit (non-cash) money created by commercial banks dominates global monetary circulation. The ratio of commercial-bank non-cash money to cash issued by central banks is 88% to 12% in the United States and 97% to 3% in the United Kingdom [3]. For example, international transactions conducted through the SWIFT system use exclusively the non-cash money of commercial banks. Thus, the fiat money that serves the modern global monetary and financial system has no intrinsic value; it is created on the basis of deposits and relies entirely on trust in the credit institutions that issue it.

The Global Banking Cartel

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For a while, trust in credit institutions was extremely low. Bank failures were a routine occurrence. It is enough to recall that with the onset of the Great Depression in 1929, as many as 17,000 banks went bankrupt in the United States alone [4]. The problem of insolvency among credit institutions stemmed from the absence of a mechanism of mutual guarantees. Such a mechanism first appeared in the United States in 1933 [5] with the passage of the Banking Act (the Glass–Steagall Act), which mandated the creation of a federal deposit insurance system, thereby guaranteeing the viability of every commercial bank. Another mechanism of cartelization was the establishment of a zero interest rate on demand deposits and limits on maximum interest rates for time deposits (Regulation Q). In addition, commercial banks were prohibited from engaging in investment activities related to the issuance and placement of securities and other investment products. Banks that violated these provisions faced substantial fines, up to and including the revocation of their licenses.

All these restrictions encouraged U.S. banks to expand into global markets, transferring their cartelization practices to the international level. Gradually, U.S. banks came to dominate all major nodes of the GMFS. For example, today two-thirds of all transactions on the interbank foreign exchange market—whose daily turnover exceeds $9.5 trillion—are conducted through the CLS payment system, which is supervised by the U.S. Federal Reserve. The largest U.S. banks, either directly or through affiliated investment companies (non-bank institutions), manage trillions in financial assets. For instance, BNY Mellon is the largest traditional custodian bank in the world, managing $43 trillion in assets.

The cartel-like nature of U.S. banks is also evident in the fact that they are the principal participants (market makers) in the foreign exchange market, setting currency rates (quotations), as well as major dealers on stock and commodity exchanges where key financial assets and strategically important goods are traded. As a result, the U.S. banking cartel exerts direct influence on global price formation in markets for both financial assets (currencies, stocks, bonds) and real assets (oil, gold, grain), whose value is expressed predominantly in the national currency of the United States. Within a market paradigm, price formation is not subject to government regulation, which gives banks wide latitude to manipulate prices. In practice, this means that prices for real goods may be artificially depressed, while prices for financial assets may be inflated. Evidence of such abuses can be seen in the persistent gap between the price dynamics of real assets—chronically lagging behind the price dynamics of financial assets—even though the production costs of the former are far higher than the issuance costs of the latter. Such an arrangement places producers of goods and raw materials in an insurmountable position of dependence on the global financial industry.

Now, to turn to an analysis of the opportunities and risks associated with the tokenization of the global monetary and financial system.

The Potential of Tokenization

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Tokens are a digital representation of the value of an asset (cash, securities, real estate) within a distributed ledger or blockchain. Unlike in the traditional financial system, a tokenized system combines the record of transactions with the location where they occur. Asset tokenization is believed to help potential investors overcome institutional barriers such as minimum capital requirements, limitations on access to borrowed funds, and other regulatory constraints.

Formally, digital financial assets can be compared to derivative financial instruments, since their value is also based on an underlying asset (a currency, a stock, or a commodity). For this reason, the growing investor interest in tokenized assets is primarily driven by the enormous size of existing asset markets. In 2024, the capitalization of the global stock and bond markets reached $271.8 trillion. In addition, the rapidly expanding markets for private investment and private credit can be added, amounting to $6 trillion and $2 trillion, respectively. An alternative to investing in securities markets is the exchange-traded commodities market, which serves as a tool for portfolio diversification and risk hedging. In 2024, the notional value of contracts in this market was estimated at $121 trillion. However, all of these figures pale in comparison to the potential for tokenization in residential and commercial real estate markets, whose value in 2024 was estimated at $634 trillion. Thus, the total volume of assets with tokenization potential exceeds one quadrillion dollars.

So, how realistic is the transformation of traditional financial assets into digital ones?

Global banks and the business-support institutions closely aligned with them (audit, analytical, consulting firms, and rating agencies) predict a rapid increase in the capitalization of digital financial assets (DFAs). Meanwhile, the actual pace of tokenization remains far more modest than its potential. By mid-June 2025, the market capitalization of tokenized stocks was about $424 million, representing just 0.0003% of the global market capitalization of traditional equities. As of 2024, 60 tokenized bonds had been issued with a total value of $8 billion, including bonds from corporations, sovereign issuers, and international organizations—the equivalent of 0.006% of the global market capitalization of traditional bonds.

The still-limited progress in tokenizing financial assets is largely due to numerous regulatory, operational-interoperability, and liquidity challenges surrounding DFAs, all of which constrain their issuance and circulation. However, despite the many technical and regulatory issues, the main obstacle to large-scale tokenization of financial assets is the global monetary and financial system itself—or, more precisely, the resistance of its two fundamental pillars: credit money and banking intermediation.

In a tokenized global monetary and financial system, transactions can be carried out without intermediaries and on a non-monetary (non-credit) basis through smart contracts with programmable logic. On the one hand, such an arrangement could spell the end of the system of global financial intermediation built around U.S. interests. On the other hand, U.S. banks could preserve—and even strengthen—their influence within the GMFS if they succeed in bringing the further modernization of blockchain, the key digital technology, under their own control. Evidence of such intentions can be seen in the current investments made by system-forming U.S. banks not so much in cryptocurrencies themselves as in the blockchain ecosystems associated with them, such as Axoni, Metamask, Coinmetrics, Chainalysis, Digital Asset, CertiK, Consensys, and others.

Returning to the GENIUS Act, linking stablecoins to the financing of U.S. government debt carries the risk of dollarizing the financial systems of competing economies. It is clear that neither the eurozone nor China will be able to provide an adequate digital response at the global level, given the limited demand for the euro and the yuan in the global banking industry, as well as the fact that more than 99% of all stablecoins are denominated in U.S. dollars. At the same time, investing in stablecoins does not protect investors from the risks associated with using this instrument [6]. First, the liquidity of stablecoins is lower than that of fiat currencies when conducting conversion operations. Second, the inability to verify the actual backing of stablecoins increases the risk that issuers may fail to meet their obligations to DFA holders. Third, the circulation of stablecoins within U.S.-controlled operating systems creates the danger that unfriendly measures could be applied against other states.

A potential response to the U.S. challenge could be the issuance of central bank digital currencies (CBDCs) by countries of the Global Majority on distributed-ledger platforms. For example, such currencies could be integrated into a unified digital platform compatible with national payment systems (CIPS, UPI, SPFS, SEPAM, QRIS, PIX). However, implementing such initiatives would require participating states to possess a certain degree of technological superiority to guarantee immunity from sanctions. A case illustrating technological vulnerability is the mBridge project—a digital platform developed by the Bank for International Settlements (BIS) for conducting settlements in digital currencies among the monetary authorities of China, Hong Kong, Thailand, the UAE, and Saudi Arabia, without relying on the U.S. dollar or global payment infrastructure. Today, the project’s implementation is in question due to the BIS’s withdrawal following sanctions imposed on BRICS countries. More broadly, vulnerability to sanctions is characteristic of many international financial institutions created by the countries of the Global Majority (the NDB, AIIB, CRA, BRICS Pay), which have not yet been able to fully realize their potential.

Conclusion

The global monetary and financial system (GMFS) is highly dependent on the technological solutions that mediate international monetary circulation. However, not all technologies have a stabilizing effect. The current crisis of the GMFS is rooted in the inadequacy of the existing framework of credit money and financial intermediation—both of which have slipped beyond any national or supranational control. The United States is seeking to prolong its dominance in the GMFS by digitizing assets in the financial and real sectors of the economy and by establishing control over blockchain ecosystems. The countries of the Global Majority face a limited set of choices: either follow in the wake of the digital paradigm being imposed on them, or develop their own conceptual approaches that are independent of U.S. technologies for money creation and global financial intermediation.

Literature

1. Bernstein, P. The Power of Gold: The History of an Obsession. Moscow: Olimp–Biznes, 2004. Pp. 29–38.

2. Homer, S., Sylla, S. A History of Interest Rates. 4th ed. Hoboken, New Jersey: John Wiley & Sons, Inc., 2005. Pp. 134–135.

3. Bjerg, O. How Is Money Made? The Philosophy of Post-Credit Capitalism. Moscow: Ad Marginem Press, 2023. P. 190.

4. Rothbard, M. A History of Money and Banking in the United States: From the Colonial Era to World War II. Chelyabinsk: Sotsium, 2005. P. 303.

5. Ibid. P. 328.

6. Mechanisms of the Russian Federation’s International Financial Relations Under Sanctions. Ed. by E.S. Sokolova and A.V. Kuznetsov. Moscow: KNORUS, 2026. P. 127.