Global Discord

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In the context of today's fractured geopolitics, the sustainability of the international economic and legal system is at stake. Democracies are engaged in a prolonged struggle against authoritarian regimes, intertwining public policy with global security. The author outlines principles for maintaining a cooperative international framework, enabling democracies to engage with China and other illiberal states while upholding their core political values. Drawing from extensive experience as a central banker and regulator, the author applies these principles to the international monetary order, focusing on the U.S. dollar's role, trade and investment frameworks, and the financial system. By integrating insights from history, economics, and political philosophy, a fresh perspective on international relations emerges. The author critiques traditional intellectual frameworks from Hobbes, Kant, and Grotius, instead favoring concepts from David Hume, Bernard Williams, and modern mechanism-design economists. This new political realism underscores the importance of aligning incentives with values to ensure institutional longevity. Ultimately, the foundation for international cooperation should be legitimacy, fostering a world of concentric circles where collaboration is strongest with those we share the most and fear the least.