{ "title": "Geoeconomics, Rediscovered", "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky", "canonical": "https://www.imf.org/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky", "overlayPath": "/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky/index.md", "summary": "Around the world, the line between economic policy and national security is disappearing", "sections": [ { "heading": "Definition and core thesis", "content": "- Geoeconomics = \"the combination of finance and national security.\" (author's formulation)\n- For many countries, separating national security and economic policy \"makes little sense\" (examples: India, Türkiye, Brazil).\n- Today's geoeconomics \"lies at the intersection of finance, national security, and macroeconomics\" and \"is about how trade and capital flows are reshaped in real time by strategic rivalry.\"\n- Atlantic Council's three pillars of geoeconomics:\n - The future of capitalism and trade.\n - The future of money (stablecoins, cryptocurrencies, central bank digital currencies, and payment systems).\n - Economic statecraft (sanctions, export controls, and tariffs)." }, { "heading": "Historical precedents and institutional examples", "content": "- Coordinating Committee for Multilateral Export Controls (COCOM) launched in 1949; sister project CHINCOM launched in 1952 (stricter controls on advanced computing exports to China).\n- Society for Worldwide Interbank Financial Telecommunication (SWIFT) development in the early 1970s as a cross-border messaging standard; headquartered in Belgium to avoid dominance by a single US institution.\n- Bretton Woods conference in 1944 (held six weeks after D-Day) presented as a quintessential geoeconomic creation." }, { "heading": "Key contemporary drivers and statistics", "content": "- The US economy context:\n - Finance accounts for \"about a quarter of corporate profits.\"\n - The US \"roughly $30 trillion Treasury market anchors the global financial system.\"\n- Manufacturing shares:\n - \"China now produces roughly 30 percent of global manufacturing output, compared with about 16 percent for the US.\"\n- Recent policymaking signals:\n - In 2020, a request by President Joe Biden’s national economic council director to deliver a speech on a \"new industrial policy\" marked an early signal of the shift in US policy.\n - A 2025 study for the European Parliament warned that \"continued dependence on non-EU payment networks, particularly Visa and Mastercard, represents a structural vulnerability for both European banks and the Union’s financial sovereignty.\"\n- Post-2022 developments:\n - \"More than $300 billion in Russian central bank assets was immobilized\" following the G7 decision in February 2022.\n - Atlantic Council research shows a \"100 percent increase in the number of pilot cross-border payment system projects (nearly all designed outside the dollar and euro systems)\" since the G7 sanctions response." }, { "heading": "The 2022 turning point", "content": "- G7 action in February 2022: coordinated blocking of access to a G20 country's sovereign assets (Russia) after the full-scale invasion of Ukraine.\n- Characterized as \"the single most important geoeconomic decision of the decade so far.\"\n- Described as opening \"a Pandora’s box\" that demonstrated allies could \"jointly weaponize payment systems at a moment’s notice\" to advance national security goals." }, { "heading": "Risks, trade-offs, and potential harms", "content": "- Risks of invoking geoeconomics too broadly:\n - Loss of predictability for business and investment.\n - Shift toward crony capitalism; \"Money is wasted. Jobs are lost.\"\n - Greater fragmentation and protectionism with a high price tag.\n- Danger of expansive definitions: tension between \"Economic security is national security.\" and the reframing \"National security is whatever we say it is.\"" }, { "heading": "Policy implications and recommendations", "content": "- The challenge is to \"adapt [the existing system] no longer fit for purpose\" rather than to build a wholly new system.\n- Rediscovering geoeconomics \"the right way\" requires recognizing past progress and altering—but not abandoning—the rules that enabled trade, investment, and technology diffusion that produced major poverty reduction and rising living standards.\n- Practical policy and institutional shifts suggested by the analysis:\n - Economists must understand \"great-power rivalry.\"\n - Foreign policy professionals should train in macro- and microeconomics as a prerequisite for their jobs.\n - Policymakers need to balance strategic economic measures (industrial policy, export controls, sanctions) with preserving the rules-based system that supported recent decades of global gains.\n- Implicit recommendation: design geoeconomic tools to minimize mass disruption at home and abroad while protecting national security objectives." }, { "heading": "Broader observations and context", "content": "- The post–Cold War exception: For much of the post–Cold War era—until the pandemic and Russia’s invasion of Ukraine—the US and Europe often separated economic policy from national security; that separation is now ending.\n- Many emerging markets have for years prepared for geopolitical shocks by \"building foreign exchange reserves, diversifying suppliers, and signing regional currency swap agreements.\"\n- The present era is characterized as \"more complicated and dangerous\" than the Cold War due to the scale of China’s manufacturing and the interdependence of modern finance.\n\nContent summarized from \"Geoeconomics, Rediscovered\" by JOSH LIPSKY, F&D Magazine, June 2026.\n\n---\n\n Content in this bundle\n\n- Geoeconomics, Rediscovered\n - Geoeconomics, Rediscovered (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Geoeconomics, Rediscovered (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky" } ], "bullets": [ "[Markdown version](/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky/index.md)", "[Structured JSON version](/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky/index.json)", "[Bundle manifest](/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky/bundle-manifest.json)", "Authors: JOSH LIPSKY", "Published: June 2, 2026", "Geoeconomics = \"the combination of finance and national security.\" (author's formulation)", "For many countries, separating national security and economic policy \"makes little sense\" (examples: India, Türkiye, Brazil).", "Today's geoeconomics \"lies at the intersection of finance, national security, and macroeconomics\" and \"is about how trade and capital flows are reshaped in real time by strategic rivalry.\"", "Atlantic Council's three pillars of geoeconomics:", "Coordinating Committee for Multilateral Export Controls (COCOM) launched in 1949; sister project CHINCOM launched in 1952 (stricter controls on advanced computing exports to China).", "Society for Worldwide Interbank Financial Telecommunication (SWIFT) development in the early 1970s as a cross-border messaging standard; headquartered in Belgium to avoid dominance by a single US institution.", "Bretton Woods conference in 1944 (held six weeks after D-Day) presented as a quintessential geoeconomic creation.", "The US economy context:", "Manufacturing shares:", "Recent policymaking signals:", "Post-2022 developments:", "G7 action in February 2022: coordinated blocking of access to a G20 country's sovereign assets (Russia) after the full-scale invasion of Ukraine.", "Characterized as \"the single most important geoeconomic decision of the decade so far.\"", "Described as opening \"a Pandora’s box\" that demonstrated allies could \"jointly weaponize payment systems at a moment’s notice\" to advance national security goals.", "Risks of invoking geoeconomics too broadly:", "Danger of expansive definitions: tension between \"Economic security is national security.\" and the reframing \"National security is whatever we say it is.\"", "The challenge is to \"adapt [the existing system] no longer fit for purpose\" rather than to build a wholly new system.", "Rediscovering geoeconomics \"the right way\" requires recognizing past progress and altering—but not abandoning—the rules that enabled trade, investment, and technology diffusion that produced major poverty reduction and rising living standards.", "Practical policy and institutional shifts suggested by the analysis:", "Implicit recommendation: design geoeconomic tools to minimize mass disruption at home and abroad while protecting national security objectives.", "The post–Cold War exception: For much of the post–Cold War era—until the pandemic and Russia’s invasion of Ukraine—the US and Europe often separated economic policy from national security; that separation is now ending.", "Many emerging markets have for years prepared for geopolitical shocks by \"building foreign exchange reserves, diversifying suppliers, and signing regional currency swap agreements.\"", "The present era is characterized as \"more complicated and dangerous\" than the Cold War due to the scale of China’s manufacturing and the interdependence of modern finance.", "**Geoeconomics, Rediscovered**" ], "related": [ { "title": "Geoeconomics, Rediscovered", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2026/06/lipsky.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2026/06/lipsky.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2026/06/lipsky.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky/index.md", "json": "/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky/index.json", "bundleManifest": "/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky/bundle-manifest.json" }, "generatedAtUtc": "2026-09-15T20:28:16.718Z" }