The global economy is undergoing a profound transformation – one marked by fractured supply chains, disrupted cross-border payments, and growing economic fragmentation. How severe will the impact of deglobalization be for individual nations? What does it mean for the stability of national currencies? And could this shift, despite its challenges, actually spur new growth at a regional level? These pressing questions took center stage at Russian Ruble Day 2025, a conference hosted by the Moscow International Currency Association and the Commonwealth of Financial Market Professionals on July 1 at the Russian Chamber of Commerce and Industry Congress Center.
Time for a new paradigm
This is more than just a market adjustment – it’s a tectonic shift in how the world economy functions. The change appears inevitable, given the deepening imbalances in the global economy and financial system. For decades, globalization followed a predictable path, governed by free trade and the unimpeded flow of capital.
“The global financial system is losing its bearings; we are seeing breakdowns across almost all fronts,” notes Yegor Susin, Managing Director of Gazprombank Private Banking.
Mikhail Yershov, Chief Director of Financial Market Research at the Institute of Energy and Finance, concurs with this assessment. He points out that this trend is being actively discussed at the global level — for instance, one section of the recent Bank for International Settlements (BIS) report is even titled “From a Soft Downturn to Turbulence and Uncertainty.”
“According to estimates by Bridgewater Associates, the world’s largest hedge fund, we are currently witnessing the collapse of fundamental monetary, political, and geopolitical foundations,” remarks Mikhail Yershov.
Decades in the making
The transformational processes in the global economy did not begin yesterday — or even in 2020 as a consequence of the coronavirus pandemic.
“The so-called ‘’slowbalization’ — recession, stagnation, and the transition toward a breakdown in global trade — started much earlier, following the 2008 financial crisis. However, the pandemic radically accelerated this process, triggering an outright collapse of globalization,” says Artem Genkin, Professor and CEO of the Consulting & Analytical Union.
The issue extends beyond disruptions in global value chains to include the rise of economic nationalism and regional skepticism, the expert notes.
“The immediate effect has been a universal surge in inflation and costs, as well as a search for more sustainable growth models, including the transfer of global value chains within national economies, or onshoring” explains Artem Genkin.
Fractures in inclusivity
One of the key drivers accelerating deglobalization has been sanctions, particularly those targeting the financial sector. Until recently, the lack of inclusivity in the global financial system was primarily attributed to uneven access to digital tools for individuals and new regulatory approaches such as China’s social credit system or the coloring of digital money. Today, the problem has intensified at the national economic level due to cancel culture and sanctions.
New digital instruments, such as cryptocurrencies, are not alleviating the situation.
“There is a persistent belief that the crypto sector serves as a panacea against sanctions, but the reality is more complex. The major cryptocurrencies used in the market today actually enable several new forms of sanctions enforcement,” notes Artem Genkin.
Moreover, digital tools like central bank digital currencies could serve as catalysts for disrupting the existing financial system and fostering the emergence of new regional spheres of influence. For instance, the digital yuan may gain prominence on the global stage. While it is currently used primarily by individuals, its adoption could expand to business-to-business transactions in the future, including the repayment of substantial loans denominated in yuan.
Domestic implications
One of the key consequences of deglobalization in the global market is the rise of inflationary pressures. These effects can be partially mitigated by the appreciation of national currencies, a trend notably observed with the Russian ruble, reflecting broader disintegration dynamics.
“Strengthening the ruble is becoming the primary tool for combating inflation,” notes Vladimir Bragin, Director of Financial Markets and Macroeconomic Analysis at Alfa Capital Management Company.
In a context of declining imports, a strong national currency can serve as a driver of economic growth. While a weaker ruble may benefit the federal budget and export-oriented industries – particularly those in the raw materials sector – a stronger currency proves advantageous for many industrial sectors, notes Alexei Vedev, Head of the Laboratory for Structural Research at the RANEPA Institute of Applied Economic Research. He cites the assembly industry as an example, where production inputs play a significant role.
“For the $250 billion allocated annually to industrial assembly and investment programs, the ruble exchange rate plays a critical role. Claiming that an exchange rate of 100 rubles or more per dollar is acceptable for us is simply misleading,” says Alexei Vedev.
According to Vedev, an exchange rate in the range of 80–90 rubles per dollar would be optimal for the economy.
“With such a controlled floating rate, it becomes possible to support production-related imports and investment initiatives, whereas devaluation expectations have a harmful impact – driving inflation and suppressing overall economic activity,” he explains.
“A strong ruble is a necessary, though not sufficient, condition for ensuring economic growth,” adds Vladimir Bragin.
Geopolitical risks of disintegration
The sanctions policy pursued by major world economies is largely driven by their desire to preserve dominance on the international stage to the extent possible. Experts link the constantly increasing use of sanctions since 2008 to this objective. However, as the global economic order undergoes a major transformation, the emergence of new, potentially dominating power centers is becoming inevitable.
“All international alliances, regardless of their business foundation, are ultimately based on national interests – and this must be clearly understood,” notes Roman Prokhorov, Board Chairman at the Financial Innovations Association.
For instance, China’s efforts to develop and extensively promote its Cross-Border Interbank Payment System (CIPS) serve as a strategic alternative to the SWIFT network, addressing challenges in international financial transactions. Alongside this, China is advancing the use of the yuan in settlements within the SCO, which only reflects the country’s global stance, the expert emphasizes.
Vladimir Kozinets, President of Russian Association of Corporate Treasurers, also highlights China’s growing strength amid the global trend of economic disintegration. For Russia, the rapid ascent of China’s economy may present a direct challenge.
“Until we establish alternative economic ties, this situation will persist. I view these risks as substantial and global in scale,” Kozinets warns.
Navigating turbulence
What will follow the decline of the open, globally integrated economy? Artem Genkin believes that the future will favor regional alliances and neighborhood ties over universal cooperation. The format will prevail in all spheres and niches, with global trade giving way to a web of regional and interregional supply chains and the dollar-centric system gradually evolving into a decentralized, polycentric model.
“This trend is irreversible. While the US dollar still accounts for around 46% of global reserves, alternative reserve currencies and assets are gaining ground, and this balance will continue to shift,” Artem Genkin notes.
Deglobalization, however, poses a major threat to economic growth for all economies. The expert points out that the ongoing fragmentation of global markets leads to an estimated 5% annual loss in global GDP.
Yet, the current period of instability may ultimately result in a more resilient and secure global financial and economic system.
“The world is moving toward reducing exposure to single-point risks, advancing toward a system that is more predictable, and therefore reliable,” Artem Genkin concludes.