New Article: Geofinance of payment infrastructures

What if the real weapon of contemporary conflicts was neither military nor technological, but financial?
From payment networks to interbank settlement systems, the circulation of money has become a strategic area in its own right. Long considered to be simple technical infrastructures, these invisible architectures now structure international power relationships and condition the effectiveness of economic sanctions.

It is this reality that is still largely unknown that we are interested in Julien Pincet, Head of research for the Geofinance project ofLouis Bachelier Institute, in an article devoted to the weaponization of global payment systems. This analysis is an extension of the issue No. 31 (September 2024) From the collection Opinions & Debates, “Geofinance, the intertwining of finance and geopolitics”, co-written with André Lévy-Lang, President of the Louis Bachelier Institute.

Finance as a powerful tool

The article analyzes in depth a central phenomenon of contemporary power relationships:weaponization of financial infrastructures, and in particular interbank payment and messaging systems. Long perceived as purely technical tools, these infrastructures have become major strategic instruments in a context of heightened geopolitical tensions.

SWIFT, Fedwire, CHIPS and even bank card networks play a key role in the global flow of financial flows. Their control — direct or indirect — gives the United States and the European Union considerable power, in particular through the application of extraterritorial financial sanctions. The exclusion of certain Iranian banks in 2012, and then Russian banks from 2022, is a striking illustration of this geofinancial dimension.

Towards a fragmentation of payment systems

Faced with this dominance, many countries seek to strengthen their financial autonomy. The article by Julien Pincet provides a precise overview of these counter-movements:

• Europe, with SEPA and the T2, TIPS or EURO1 infrastructures, which reduce dependence on SWIFT for payments in euros.
• China, which is developing CIPS, the e-yuan and domestic foreign currency systems to support the internationalization of the renminbi.
• Russia, forced to accelerate the establishment of SPFS, the Mir card network and the NSPK platform after the first sanctions in 2014.
• Brazil and India, whose Pix and UPI systems illustrate the success of domestic instant payments, while gradually paving the way for cross-border uses.

These dynamics are gradually drawing a multipolar world of payments, marked by the rise of settlements in local currencies, regional infrastructures and, more recently, cryptocurrencies and stablecoins.

Read the full article on the Caisse des Dépôts website: https://www.caissedesdepots.fr/eclairage/blog/articles/geofinance-des-infrastructures-de-paiement

Geofinance: a new field of strategic research

As pointed out by the OOpinions & Debates #31, the combination of an increasingly conflicting geopolitical context and globalized finance inherited from the waves of deregulation in the 1980s is leading to the emergence of a new discipline: Geofinance.
This field of research analyzes the close intertwining between power relationships, economic sanctions, monetary dominance — especially the dollar — and financial innovations.

Created in early 2024 by the Louis Bachelier Institute, the Geofinance research program aims to unite researchers, companies and institutions around these major challenges. This number ofOpinions & Debates, just like the article by Julien Pincet, constitutes a structuring brick.

👉 To go further, find the full issue “Geofinance, the intertwining of finance and geopolitics” — Opinions & Debates No. 31 (September 2024), written by André Lévy-Lang and Julien Pincet, as well as the other publications in the collection Opinions & Debates on the Louis Bachelier Institute website: https://www.institutlouisbachelier.org/au-programme/opinions-debats

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