Fintech, digital sustainability and the changing architecture of global power
For decades, international relations has been concerned with the movement of people, goods, resources and ideas across borders. Increasingly, however, we must add something else to that list:
Money moving through digital systems at the speed of technology.
The transformation of global finance is no longer simply an economic or technological question. It is becoming a question of international power.
The International Monetary Fund has warned that tokenisation – the process of representing financial assets and liabilities as digital tokens on programmable ledgers could fundamentally change the architecture of the global financial system. Unlike earlier forms of digitisation, tokenisation does not simply make existing processes faster. It can change how ownership, settlement, liquidity and trust are organised.
For International Relations students, this creates an important question:
What happens to international power when financial infrastructure itself becomes programmable?
From banks and borders to platforms and code
Traditional international finance is built around institutions.
Central banks issue money. Commercial banks hold deposits. Governments regulate financial markets. International organisations establish standards. Banks and financial institutions act as intermediaries between individuals, companies and states.
There are deliberate pauses and layers within this system. Transactions are processed, cleared, reconciled and eventually settled.
Tokenisation potentially changes this model
A tokenised asset can carry information about ownership and transfer directly within a digital infrastructure. Smart contracts can automate transactions, payments, collateral requirements and other financial processes. In some circumstances, activities that previously took days could occur almost instantaneously.
That sounds like an efficiency revolution.
But International Relations teaches us to ask a second question:
Who controls the infrastructure?
If financial transactions increasingly depend upon a small number of digital platforms, blockchain infrastructures or technology companies, power may begin to shift away from traditional financial institutions and towards those controlling the technological architecture.
The geography of finance could therefore become less about where a bank is located and more about who controls the digital rails through which money moves.
Digital sustainability: can faster finance also be better finance?
This is where fintech intersects with digital sustainability.
Digital sustainability asks us to consider not simply whether a technology works, but whether it creates systems that are economically, socially, environmentally and institutionally sustainable over the long term.
Tokenisation could potentially contribute to a more efficient financial system.
Transactions may become faster. Cross-border payments could become cheaper. Financial assets could become more accessible. Administrative duplication could be reduced. Compliance could increasingly be embedded within digital systems.
For emerging and developing economies, the IMF identifies potential benefits including faster cross-border payments and improved access to financial markets.
But sustainability requires us to look beyond efficiency
A system that moves money faster is not automatically a sustainable system.
What happens if faster transactions also mean that financial crises spread faster?
What happens if automated systems make decisions before human regulators have time to intervene?
What happens if the infrastructure becomes concentrated in a handful of powerful platforms?
And what happens to countries whose currencies and financial systems are weaker than the digital currencies circulating across their borders?
These are not merely questions for computer scientists or economists.
They are questions for diplomats, policymakers and International Relations scholars.
The new question of sovereignty
One of the most important concepts in International Relations is sovereignty: the ability of a state to exercise authority over its territory, institutions, population and economic system.
Digital finance complicates this.
Imagine a world in which an individual can transfer a digital asset across borders almost instantaneously, without using the traditional banking infrastructure of either country.
Now imagine that the asset is denominated in a currency that is not the currency of the country in which that person lives.
The transaction may be perfectly legal.
But the political implications are enormous.
The IMF highlights the possibility that rapid cross-border movement of tokenised money and assets could increase volatile capital flows, currency substitution and pressure on monetary sovereignty—particularly in emerging and developing economies.
This creates a new diplomatic problem.
How does a state regulate something that can cross its borders faster than its laws can respond?
Stablecoins and the politics of money
Stablecoins provide an especially interesting example.
They are designed to maintain a stable value relative to another asset, often a national currency such as the US dollar. Their programmability and global reach could make international payments easier.
But they also raise questions about who ultimately stands behind the money.
If people in countries around the world begin using privately issued digital currencies rather than their domestic currencies, what happens to the authority of national central banks?
Could a privately issued digital currency become sufficiently important to influence monetary policy?
Could technology companies become powerful financial actors without being states?
And if financial infrastructure becomes global while regulation remains national, who is responsible when something goes wrong?
These questions demonstrate why fintech has become an international-relations issue.
From diplomacy between states to diplomacy between systems
International diplomacy has traditionally involved governments negotiating with governments.
The digital financial environment is more complicated.
States increasingly have to negotiate and cooperate with:
- technology companies
- banks
- cryptocurrency and blockchain platforms
- central banks
- international financial institutions
- cybersecurity organisations
- payment networks
- standards-setting bodies
- investors and multinational corporations
The result is a much more complex international system.
A government may have political authority over its territory, but a technology company may control infrastructure used by millions of people across dozens of countries.
This creates a new form of diplomacy:
The diplomacy of digital infrastructure
International cooperation therefore becomes essential.
The IMF argues that tokenisation requires policy decisions concerning interoperability, legal frameworks, code governance, liquidity backstops and the relationship between public and private money.
In other words, the future of finance cannot be designed entirely within national borders.
When code becomes regulation
There is another profound change.
Traditional regulation is written in laws, policies and institutional procedures.
Tokenised finance increasingly allows rules to be written into code.
A smart contract can automatically execute a financial condition. Collateral can be triggered automatically. Payments can be released automatically. Transactions can occur without a person manually authorising every stage.
This raises a fascinating question for future diplomats:
Can code become a form of governance?
If the answer is yes, then International Relations must begin to think about who writes the code, who audits it, who controls it and what happens when the code produces an unintended consequence.
The IMF has suggested that oversight may eventually need to extend beyond financial institutions to the critical smart contracts and infrastructure on which the system depends.
The political question is therefore no longer simply:
Who governs the banks?
It becomes:
Who governs the systems that govern the banks?
Efficiency versus resilience
There is a philosophical tension at the heart of digital finance.
We generally assume that faster is better but financial systems sometimes need friction.
Traditional settlement periods, reconciliation processes and institutional checks can create time for mistakes to be identified and for regulators to intervene.
Tokenisation could remove many of those delays.
But removing friction can also remove buffers.
The IMF warns that instantaneous settlement could cause liquidity demands and financial stress to materialise much more rapidly. Risks that were previously distributed across financial institutions could become concentrated in the platforms and code supporting tokenised transactions.
This creates an important lesson for digital sustainability:
A sustainable system is not necessarily the fastest system.
It is a system capable of surviving pressure.
That means resilience may ultimately matter just as much as efficiency.
The geopolitical future of fintech
The rise of tokenisation also has geopolitical implications.
Countries are competing not only for economic influence but increasingly for influence over digital standards, payment infrastructures, data systems and financial technologies.
The architecture of tomorrow’s financial system could influence:
Who controls capital.
Who controls data.
Who controls digital currencies.
Who sets technological standards.
Who has access to global markets.
Who can impose sanctions.
Who can monitor transactions.
And who can respond when financial crises occur.
This means fintech should no longer be treated as a specialist subject sitting outside International Relations.
It belongs directly within it!
A new responsibility for International Relations students
The most important lesson is perhaps that technology does not remove politics.
It changes where politics happens.
A blockchain may appear decentralised, but somebody designs its architecture. A stablecoin may operate globally, but somebody controls its reserves. A smart contract may execute automatically, but somebody writes its rules. A payment system may operate across borders, but governments still determine its legal environment and a financial crisis may move at machine speed, but societies still have to decide who carries the consequences.
For the next generation of International Relations students, understanding these systems will therefore be increasingly important.
The diplomat of the future may need to understand not only treaties, borders and international law, but also blockchains, digital currencies, cybersecurity, artificial intelligence, financial infrastructure and data governance.
The central question is no longer whether technology will transform international relations.
It already is!
The question is:
Can we design a digital financial system that is not only efficient, but sustainable, inclusive, resilient and accountable?
And perhaps the deepest question of all is this:
When financial power moves from institutions into code, who should have the power to write the code?
Think Like an International Relations Student!
Consider the following:
- Sovereignty: If digital currencies can cross borders instantaneously, does this weaken the economic sovereignty of states?
- Power: Could technology companies eventually possess as much influence over global finance as some governments?
- Diplomacy: Should digital financial infrastructure become a central subject of international treaties and diplomatic negotiations?
- Digital sustainability: Is a financial system truly sustainable if it is efficient but vulnerable to cyberattacks, technological concentration or rapid contagion?
- Ethics: Who should be responsible when an automated financial system makes a decision that harms individuals or entire economies?
- Development: Could tokenisation help developing economies overcome existing financial barriers—or could it expose them to new forms of dependency?
- The future of IR: Should fintech and digital finance now be considered core subjects within International Relations education?
Final challenge
Imagine you are advising the United Nations, the IMF or a national government in 2035.
What three principles would you establish to ensure that the digital financial system serves people and states rather than allowing technological infrastructure to become a new concentration of global power?
You don’t have to feed back your answer however, if you wish to comment below, your share will be fed on our social channels anonymously for feedback!
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