As the financial and technological sphere rapidly develops, it will increasingly impact the entire globe, including global governance structures, and the traditional system of international law. Particularly pressing is in the domain of crypto-assets, which contain huge resources and is simultaneously developing with a disregard for state borders. Hence, this sphere will inevitably place the international community in a position where adequate and exhaustive international regulation for this new phenomenon and its processes will be required. With this, a new financial landscape may prove to be a starting point for such significant changes. Thus, it seems imperative to consider the coming financial transformations that will shape the global agenda by 2035. This will also further bolster the need for effective crypto-asset regulation, which can inspire the world to alter the traditional system of international law.

Realities of International Law

In his book, “World Order”, Henry A. Kissinger, an American diplomat, Nobel Peace Prize laureate, and Honorary Doctor of the Diplomatic Academy of the Russian Foreign Ministry noted that “the political and the economic organizations of the world are at odds with each other. The international economic system has become global, while the political structure of the world has remained based on the nation-state” [1]. Today, this quote appears to be at odds with the reality of the world’s situation; the global environmental agenda has been comprehensively promoted, and many economic restrictions, including sanctions, have already been imposed. Additionally, a possible conflict scenario has been looming in the Asia-Pacific region. Certainly, all of these factors may negatively impact global economic growth. So, what exactly makes the world economic system truly be of “global character”?

At the same time, economic globalization has acquired new forms and has not ceased. Among other things, this is associated with the widespread use of cryptocurrencies and other crypto-assets, that completely disregard the notion of state borders, and function without any proper regulation. Moreover, the development of crypto-assets is not harmful to the environment. The only exception here are PoW- cryptocurrency mining schemes which generally use a lot of electricity, and tend be of “dirty” origin. This, however, is not because of a lack of technology, but rather because of human greed. If we prioritize the global environmental agenda, and omit certain harmful points in crypto-assets, then this new trend has great prospects.

There are two factors for why current international regulation on crypto-assets is often characterized by its legal flexibility. The first reason points to the dominance of “soft” law as a source for crypto-regulation. Some features of “soft” law include accepted formalities during the law-making process, its consultive nature, and special legal techniques, all of which enables the international community not only to develop regulations on a fundamentally new phenomena, but also to do so in a quick manner. However, “soft” regulation is far from comprehensive, as it is developed exclusively in the most concerning and troubling areas. The reason for such legal flexibility is due to the specificities of the international bodies that essentially shape the global financial landscape. For instance, the Financial Stability Board (FSB), the Bank for International Settlements (BIS), the Basel Committee on Banking Supervision (BCBS), the Financial Action Task Force (FATF), the Wolfsberg Group and others all have a hand in the global finance system. How? These groups focus on developing global “standards” with an atypical composition of representatives (or members): central banks (normally, not public authorities), finance ministries, financial intelligence units, global financial institutions, etc.

If to discuss the current international regulation on crypto-assets, G20 leaders appear to show their support for some “soft-law” approaches. This additionally ensures the implementation of these “soft-law” norms into a national legal space as well as predetermines the direction of the further development of international regulation. For example, the commitment to the Financial Action Task Force (FAFT) approaches in the G20 Osaka Leaders’ Declaration was consolidated as of June 29, 2019. In other words, the fundamentally new model of shaping international regulation through “soft” laws have become less consultative — not only de facto but also de jure.

Evolution of the Financial Sovereignty

The World Economic Forum predicts that by 2025, 10 per cent of the world’s GDP will be saved through blockchain technology [2]. Simultaneously, as calculated by the Financial Stability Board in early 2022, the capitalization of the crypto-assets’ market was $2.6 trillion. However, the economic data here is secondary. The emergence of crypto-assets, mainly cryptocurrencies, coincided with the crystallization of the “New Man”, and other social factors. Society and business communities are simply tired of excessive financial controls and the constant need to abide by unprecedented sanctions regimes. In the end, these artificial restrictions directly affect the speed of transactions and the amount of fees.

Today, the spread of cryptocurrencies poses a challenge to the monopoly of central banks (or in some cases governments) on money emissions, thus challenging individual and state financial sovereignty. Although it is hard to see a breach of sovereign state equality formulated by the norms of international law, these processes make us seriously reconsider the role of the state (as we understand the concept of “state” today) in the emerging world order. Traditional ideas that claim central banks (or governments) have the exclusive right to issue money are not only entrenched in national laws; with a few caveats, it is adopted as an axiom in international law. On the one hand, only central bank digital currencies (CBDC) are viewed as digital money that holds direct liability with central banks [the liability has exclusively legal content, but not economic — author’s note]. On the other hand, national currencies are recognized by the Bank for International Settlements as being more reliable than, for example, stablecoins. Notably, the rule applies regardless of real economic properties of national currencies.

The abovementioned provisions may also be viewed in a different light. Under international law, “non-state” currencies have been recognized, whatever they may be, even without the same legal guarantees and with high-risk coefficients (when used by financial institutions).

By 2035, the formation of the global digital currency market will be completed. Despite the legal status of the national currency as the only legal tender, within the horizon of this forecast, central banks will enter into a real competition with other “issuers”, including non-state ones. Therefore, central banks will be additionally obliged to improve the attractiveness of national currencies. For instance, states may reduce regulatory costs and market commissions, increase the speed, and improve the quality of transactions. Perhaps some central banks will take more drastic measures, such as establishing mathematically sound emission mechanisms.

Prologue to the Supranational Financial Market Governance

Conceptual incompleteness of international crypto-asset regulation is also associated with the absence of adequate protections from fraud and other forms of unfair behavior in emerging financial markets. Although the concern has been directly expressed by the international community, the issue is currently in a legal void. As practice demonstrates, the real legal, intelligence, and investigative capabilities of states in combating crypto-asset scams are severely limited. This due to the fact that crypto-asset scams are often committed by transnational organized crime, making investigations very complicated, and attempts to find stolen property not always successful. Unfortunately, the issue does not lie solely in the theory of law; it has a great practical impact on many people around the world. Of course, there are forensic groups of global consulting companies that can assist in finding stolen assets. However, it does not diminish the vulnerability of states and the international community to transnational organized crime.

By 2035, humanity will realize the need to form a fundamentally new architecture for financial market governance, particularly by setting up supranational bodies with a special legal status. A body, such as a global “crypto-financial police” can be established, which will have the legal capacity to search for and return stolen crypto-assets and to bring perpetrators to justice. The organization may have representative offices in the most vital states and financial centers, cooperate with bar associations, financial institutions, professionals and global players in the market of forensic solutions. Procedurally, the organization’s findings may be assimilated to documents prepared by national law enforcement agencies.

Presumably by 2027–2030, another body may be set up within the Bank for International Settlements. Driven by macroprudential objectives, the body would be in charge of ongoing and exhaustive analyses of financial indicators related to stablecoins. Perhaps in the future, the body’s expertise may be broadened by other crypto-assets and particular cryptocurrencies. The results would be derived from “soft law” structures and provisions, including the legal methodology for classification of crypto-assets with different risk ratios. Today, if an international financial institution (i.e. a bank) carries out transactions with stablecoins then risk ratio should be determined based on an assessment of stabilization mechanism of the coin. The assessment should be carried out by the bank in relation to each stablecoin. Moreover, criteria for the assessment have yet to be legally adopted (and the newest version is open for discussion). On the contrary, the risk ratio for a tokenized form of traditional assets is at least equivalent to the baseline. In the case of other crypto-assets (i.e. Bitcoin), transactions are allowed but with a high-risk level (the fixed weight is an astronomical amount of 1.250 %).

Potentially, the approach for other crypto-assets will be amended in an analogous manner with stablecoins. Each significant crypto-asset will be analyzed in detail, and the level of risk will be assigned in accordance with the chosen economic indicators. Probably, in order to ensure a uniform application of standards, financial institutions will find it more efficient to transfer analytical functions or parts thereof to a supranational level. As opposed to a “crypto-financial police”, the set-up of a prudential body may not be widely announced. For example, it may take the form of an experts’ association — without formally representing states. Nevertheless, the recommendations and conclusions of the body will have a high standing in the world of finance.

Sustainability of the State-Centric Model of Financial Security

The absolute consensus point, with respect to crypto-assets, is the concern about anti-money laundering (AML) risks. Moreover, there is a somewhat unusual approach to this area in international practice. The assessment is not solely linked to the failure of finding any effective solutions to global problems at the national level. It would derive from the provisions of international law.

In developing AML/KYC regulations on crypto-assets, the international community has used a model that works successfully in terms of traditional types of assets, yet fails to account for “virtual” property features. To ensure financial security, the international community believed that a “virtual asset” could be identified as an anchor point. Simultaneously, in accordance to FATF, the concept of a “virtual asset” includes completely different types of assets: for instance, this includes cryptocurrencies (used mainly for payment purposes), some non-fungible tokens, or NFT (used for investment and hedonistic purposes), or ICO-tokens (used exclusively for investment purposes). Clearly, the purpose of transactions directly influences its frequency and nature, the number of intermediaries, actual asset values, validity of the value, etc.

Currently, FATF experts themselves have realized that their approach is not fully adapted to the new types of property. There are a number of practical issues that are impossible to resolve at this point. We might see the consequences of these problems in calls for a broader interpretation of international regulations at the discretion of states; one example is FATF’s legal position on decentralized finance (DeFi). FATF points out that “a DeFi application (i.e. the software program) is not a Virtual Asset Service Provider [a VASP is an analogue of the conventional financial institution for the application of AML/KYC standards in the crypto-sphere — author’s note] under the FATF standards… however, creators, owners and operators or some other persons who maintain control or sufficient influence in the DeFi arrangements, even if those arrangements seem decentralized, may fall under the FATF definition of a VASP where they are providing or actively facilitating VASP services”. Although there are clear VASP criteria in international law, FATF calls on states to shape their own vision of the concept. These new standards call for at least a certain number of concepts to be established at the national legal level (including “maintenance of control”, “sufficient influence”, and “semblance of being decentralized”, and so on). It is clear that this provision infringes upon the universal spirit of international law and significantly reduces its effectiveness.

Meanwhile, according to the Financial Times, US$100 billion was locked up in DeFi-mechanisms globally (by the end of 2021). This figure is an economic confirmation of the foregoing conclusions.

Furthermore, by 2027–2030, a new DeFi-mechanisms will emerge with artificial intelligence being a key player in them. This phenomenon may be referred to as the dark DeFi, the deep DeFi, or the AI-DeFi. The mechanism will continuously analyze financial institutions’ and VASP’s compliance policies, suspicious transactions’ methodology, market data, and sanctions’ lists. Therefore, it will allow transactions to circumvent restraints on a modest fee. It is difficult for the author to speculate on how the Deep DeFi may be regulated under the current legal paradigm.

By 2035, the current architecture of international financial security based on national financial intelligence units, or national FIUs (FinCEN in US, UK FIU (NCA) in UK, FIA in BVI, TRACFIN in France, MROS in Switzerland, SICCFIN in Monaco, Rosfinmonitoring in Russia, JFIU in Hong Kong, AMLB (PBC) in China, and so on) may be transformed into something unprecedented and new. While national FIUs will undoubtedly continue to develop key functions, their international importance as a basis of the global AML/KYC system could be significantly diminished.

There is an extremely low probability that in 2035 humanity will enter a state of “worldwide financial anarchy”. In the scenario, humanity would reflect on inefficiencies in the traditional structure of international law, including many standards related to AML/KYC and sanctions. Even today, these restrictions have an adverse effect on the cost and speed of transactions and, consequently, on the professional and personal capacities of human beings. Thus, this can lead humankind to massively reject “state” money in favor of decentralized currencies. If we develop this idea, AML/KYC requirements will be drastically reduced, and the powers of national FIUs will mainly be transferred to global companies.

To Adapt or to Fall in Oblivion?

Without a doubt, international law is at the heart of international relations today. It reflects the consensus of international powers, and in this sense, constitutes the future agenda. Disregarding the profound changes taking place in today’s international law seems unacceptable. Furthermore, this indifference can encourage individuals to reconsider the effectiveness and timeliness of some institutions.

As global processes become more complicated and the epicenter of international tension moves towards its climax, for future reasons, states should be interested in adhering to all international obligations, including non-conventional obligations. It would be in the interest of states to complete the national legal regime on crypto-assets and synchronize it with the spirit of the time.

If we assume this article proves accurate, all these tendencies are twofold in nature. Aforementioned tendencies present both existential threats and unparalleled opportunities, not only for Russia but also its allies. In this sense, the development of the global digital market will adversely affect the dominance of certain global currencies (particularly taking into account the burden of mass sanctions). On the other hand, it will offer tremendous opportunities to states that have yet to obtain their optimal preferences from the previous wave of globalization.

From our partner RIAC

1. Kissinger, Henry. World Order. L.: Penguin Books. 2015.

2. Schwab, Klaus. The Fourth Industrial Revolution. World Economic Forum. 2016.

“First time in history we all contribute to accumulation of a cloud capitalism, which became the production of a behavioral modification.” Yanis Varoufakis, Geneva, February 2023

His Excellency Yanis Varoufakis is a world renewed academic economist and politician, former finance minister of Greece, who was trying to renegotiate national depth within EU. He was a cofounder of an international grassroots movement, DiEM25, campaigning for the revival of democracy in Europe. He is an author of the international bestsellers, such as Adults in the Room, And the Weak Suffer What They Must?, The Global Minotaur and others. After teaching for many years in United States, Great Britain, and Australia, he is currently a professor of economics at the University of Athens and Member of the Hellenic Parliament. He is also an ideologist with millions of fans worldwide, and passionate free time motorbiker.

He is one of the contemporary masterminds, writing a history on contemporary global financial and economic issues. Issues tackled are de-dollarization, (non)sustainable deficit, cloud capitalism, modern colonialism, behavioral modification, techno-feudalism, financialization, moral hazard, global austerity, etc. 

Biographical junctions

Ioannis “Yanis” Varoufakis was born in Athens in Greece. As a son of revolutionary successful father Georgios and a beautiful activist for women’s rights and politician Eleni, this boy was growing into a thoughtful young man. He was only six years old when the military coup d’état of April 1967 took place. Varoufakis later said that the military junta showed him a “sense of what it means to be both unfree and, at once, convinced that the possibilities for progress and improvement are endless”.

Later on an “initial urge was to study physics” but he decided that “the lingua franca of political discourse was economics”. He studied mathematics and economics at the University of Birmingham and the University of Essex, where he obtained a PhD. He then taught economics in the United Kingdom and at the University of Sydney, before returning to Greece in 2000 to teach at the University of Athens.

As a Greek economist, politician and academic, he led Greek Ministry of Finance from January to July 2015 under Prime Minister Alexis Cipras and negotiations with Greece’s creditors during the government-debt crisis. However, he failed to reach an agreement with the European troika (European Commission, European Central Bank, and International Monetary Fund) leading to the bailout referendum. The referendum rejected the troika bailout terms and the day afterwards Varoufakis resigned as Minister of Finance.

In February 2016, he launched the Democracy in Europe Movement 2025(DiEM25) and subsequently backed a Remain vote in the 2016 United Kingdom European Union membership referendum. In March 2018, as a former member of Syriza, he founded MeRA25, the “electoral wing” of DiEM25 in Greece, a left-wing political party. In the next legislative elections it was the sixth most voted-for party, amassing nine parliamentary seats, with Varoufakis himself returning to the Hellenic Parliament.

Bestsellers

Since the beginning of his political career, Varoufakis appears in numerous debates, lectures and interviews worldwide, describing himself as a “libertarian Marxist”.

His collection of excellent and world popular Books is something to be admired: Talking to My Daughter is The Sunday Times Bestseller, in which Varoufakis writes to his daughter to teach her the hazards of capitalism. ‘Why is there so much inequality?’ asked Xenia to her father. Taking from memories of her childhood and a variety of well-known tales – from Oedipus and Faust to Frankenstein and The Matrix – Varoufakis turns Talking To My Daughter into an enjoyable and engaging read, without ever shying from the harder truths. He explains everything you need to know to understand why economics is the most important drama of our times. In answering his daughter’s simple questions, he disentangles our troubling world with remarkable clarity and child-like honesty, as well as inspiring us to make it a better one. His expression is a beginning of a new language that everyone can understand, where punctures myth after myth.

Global Challenges

So, as in our Chatham house debates under the auspices of the Executive Program so uniquely designed and concepted by professor Anis H. Bajrektarevic the format is very simply: Professor adds the flair to the cradle of diplomacy, city of Geneva, and its historic chateau as our exclusive venue place – the top format of guests to discuss the top topics of the day, for one whole day.

Among thoroughly elaborated and explained items on that special day were: financial crisis (global minotaur, origins and cyclicality), techno-feudalism and regression of human society, economic and political architecture of Europe and the world, preventing the collapse of a contemporary global society as the last historical civilization. Excellency Vroufakis remaked what is an alternative history of our future and what can and should be done better.

Humanity is facing multiple crises, we are driving towards de-globalization, poverty and debts are back to developing societies, a new cold war between the biggest powers is on the way, climate changes are irreversible, international institutions and relations shall be reinvented, some societies are recently facing natural disasters – our speaker stated.

Is the EU construct still relevant and prevalent within its original role? What about the crises such as Ukraine war, life in post-pandemic local societies, depending on eurozone economic centers, digitalization and cyber terrorism? And America’s hegemony and a new cold war with China on the other side? How to prevent corporations cannibalizing the political sphere and turn your dreams – in which capital and labor no longer struggle against each other – into reality? Why the West is taking Democracy for granted…while capitalism is obviously eating it? Are we intellectually and spiritually developed enough to accept the so-called authentic democracy in an extremely unauthentic modern world? And start investing into much needed green transition? And at last but not least, what is your view about the importance of a gender balance in 21st Century?

It was immensely beneficial to learn first-hand about the 2023 world vision, and further in the next decades to prevent collapse of a contemporary global society as the last historical civilization? What is an alternative history of our future, that we can do better? The floor was his. And the rest could be our vision.

Attacked, but sharper

During last weeks his excellency Yanis Varoufakis was campaigning against poverty, inequality, armament. Thus, he has obviously again provoked more fanatism and intolerance from his opponents, reported as five masked assailants. A short while ago, he was the victim of a cowardly attack. He was at an Athens restaurant with DiEM25 members from all over Europe, when a small group of thugs stormed the place and got attacked.

Being a worldwide exposed fighter for human rights and recovering from the recent riot he sent his gratitude with a clear message: “We are not afraid, we will not retreat, and we will not flinch in the face of intimidation. MERA25 Greece and DiEM25 will continue to face up to lies and speak up for common people in Greece. Let us please stay focused: We are mourning the 57 victims of rail privatization. We support the spontaneous youth rallies, the greatest hope that Greece can change. See you at the demonstrations.” 

The Asian century is a bitter reality and it is undermining other economic powers in this world order. A diminishing influence of the institutions of Washington consensus gives room for another economic actor to open wings in the competitive world. And this revisionist economic power is balancing out the sole dominancy of the US in economic affairs by the inclusion of regional states under its shadow and challenging the existing global economic order.

New world order

The dictionary.com defines “the post-Cold War organization of power in which nations tend to cooperate rather than foster conflict.”

The New World Order is a term used to describe a global system of socio-economic, political, and spiritual principles that promote universal peace, justice, and cooperation. It is based on the principles of freedom, equality, and unity among all people, cultures, and nations. The New World Order seeks to create a world where all humans are treated with respect, dignity, and justice regardless of their gender, ethnicity, religion, nationality, or any other factor. It is a movement to bring about a more equitable, sustainable, and prosperous global society (Bahai teachings)

Overview of existing global economic governance

Global economic governance is a process by which governments, international organizations, and other stakeholders collaborate to shape global economic policies, regulations, and outcomes. Established in the aftermath of World War II, global economic governance has become increasingly complex as the global economy has grown and diversified.

Today, the global economic governance system consists of a variety of institutions, processes, and initiatives. At the top of the system is the United Nations (UN), which is responsible for setting out general guidelines and principles. The UN is supported by several specialized agencies, including the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO).

These organizations are responsible for developing, negotiating, and implementing international economic policies and regulations. In addition, they also provide financial assistance to developing countries and resolve disputes between states.

At the regional level, there are several economic groupings, such as the European Union, the African Union, and the Association of Southeast Asian Nations, which each have their economic objectives and institutional mechanisms.

Finally, there are several international initiatives and forums, such as the G20, the OECD, and the Bretton Woods institutions, which have been established to improve global economic governance and promote economic integration.

US economic governance

The US model of economic governance is based on free-market capitalism and open global markets. This model promotes economic efficiency by allowing businesses to compete for customers and resources. It also encourages innovation by providing incentives for investment and risk-taking. The US government is committed to maintaining an open and competitive global economy and has been a strong advocate for policies that support free trade and open access to global markets. The US government also works to ensure that the global economic environment is stable and secure and that countries follow sound fiscal and monetary policies that promote economic growth, job creation, and investment. Additionally, the US is committed to a fair and equitable international economic system, where countries are free to pursue their economic policies while respecting the rights of others. The instruments for controlling global economics are the US-based institutions that create liberal institutional order.

Washington Consensus

The Washington Consensus refers to a set of economic policy prescriptions that developed countries, such as the United States, have sought to promote to foster economic growth and development in developing countries. The consensus emphasizes fiscal discipline, openness to foreign investment and trade, market-based macroeconomic policy, and the privatization of state-owned enterprises. The three institutions are the IMF, the World Bank, and the U.S. Department of the treasury. It is sometimes referred to as the “Bretton Woods Consensus” due to its close association with the Bretton Woods system of international monetary management, which was established in the aftermath of World War II.US also surrounded the WTO by Washington consensus.

WTO and global governance

The World Trade Organization (WTO) is an international organization that works to promote global governance of trade and to establish rules, regulations, and agreements to govern global trade. The WTO works to ensure that countries abide by trade commitments and to create a fair and equitable system of global trade, while also working to reduce trade barriers and promote economic development. The WTO provides a forum for countries to negotiate and resolve trade disputes and to work together to promote economic growth and development. The WTO also works to promote global economic integration by promoting free trade and the liberalization of markets. The WTO also works to ensure that all countries have access to markets, protect intellectual property rights, and ensure a level playing field for trade. In addition, the WTO works to promote transparency and to ensure a level playing field for all countries. Finally, the WTO works to ensure that countries comply with their trade obligations, and to provide technical assistance to countries in need.

WTO has been criticized for not adequately representing the interests of developing countries and for lacking effective enforcement mechanisms.

Overview of the emergence of an “Asian century”

The concept of an “Asian century” has been gaining attention in recent years due to the rapid economic growth in some Asian countries, such as China and India. This growth has enabled many of these countries to become economic and political powerhouses, and the region is increasingly seen as a viable alternative to the West for economic and geopolitical dominance. This has been further bolstered by the rise of Asian companies such as China’s Alibaba and India’s Reliance Industries, which have become major players in the global economy. This has led to an increased focus on the region, and many experts have predicted that Asia could become the dominant economic and geopolitical force in the 21st century. In addition, the rise of new technologies, such as mobile and digital payments, has further enabled the region to become a major player in the global economy. As such, the emergence of an “Asian century” is likely to continue in the years ahead.

The article discusses the potential of the “Asian century,” in which the region is set to become the leading global economic force. It points to the increased economic growth and integration of Asia, as well as the rise of the Chinese and Indian economies, as key drivers of the shift. It also outlines the various challenges the region will face to fully realize the potential of the Asian century, such as infrastructure, education, and health systems, as well as the need to foster greater trust and cooperation between countries. The article concludes by noting that the Asian century is still in its early stages and that creating a successful narrative for the region will be crucial for its success.

Fall of Washington Consensus

The Washington Consensus was a set of 10 economic policy prescriptions developed in the late 1980s by a group of economists and policymakers in response to the Latin American debt crisis. It emphasized the need for fiscal discipline, the liberalization of markets, and the strengthening of the rule of law. However, by the early 2000s, the Washington Consensus had come to be seen as inadequate for addressing the needs of developing countries. In response, China proposed the Beijing Consensus, which emphasized the importance of state-led development, a focus on economic growth, and the gradual liberalization of markets. The Beijing Consensus was an important alternative to the Washington Consensus and is credited with helping to propel Asia to a position of global leadership in the 21st century. However, the Beijing Consensus has also been criticized for its lack of transparency and its focus on economic growth at the expense of other issues, such as human rights.

Rise of the Beijing Consensus

The Beijing Consensus is a term coined to describe the development strategies and policies employed in China since the late 1970s. The term is often used to contrast the Western-style, neoliberal model of development with the more state-centric, authoritarian model pursued in China. The Beijing Consensus has been credited with helping to lift millions of people out of poverty and providing a viable alternative to the Washington Consensus. The brief outlines the main elements of the Beijing Consensus, including central government control over the economy, a focus on human capital development, and a commitment to long-term economic growth.

Beijing Consensus gave a set of policy guidelines under the United Nations and these guidelines are implemented through BC institutions, which are considered regional institutions.

Shanghai Cooperation Organization (SCO), Conference on Interaction and Confidence Building Measures in Asia (CICA), Asian Infrastructure Investment Bank (AIIB) Special Reserve Fund (SRF).

Challenges to existing economic governance structures

It is a well-known fact that since 1945, the economic governance structures were designed in such a way that they were West-centric. The introduction of the Bretton woods system in 1944 was designed in such a way that it ensured the interests of the West and the United States. For example, in recent times International Monetary Fund (IMF) and World Bank strengthened the economic governance structures of the West. Because the structure of economic hegemony is linked directly with the political hegemonic structure. But, in the last few decades, the existing economic structures are facing numerous challenges that would be highlighted.

The rise of China is the latest and the most lethal challenge to the existing economic structure. The making of Shanghai Cooperation Organization (SCO) and Asian Infrastructure Investment Bank (AIIB) are thought to be replacements for IMF for developing and Third World Countries. In simple words, the next clash would be Beijing Vs Washington.

Similarly, the Rise of India along with China in the Asian region as contenders of upcoming hegemons, supported by resources and workforce can surely challenge the existing economic structures of governance. The rise of India and China in terms of economy and geo-strategic importance has questioned the “Euro-centrism” of every aspect whether it is economy, power, or decision-making ability.

Moreover, the rise of Eastern Europe along with the Central Asia n region has massive potential to challenge these governance structures, Russia had been a great power but if it cooperated with Beijing then Beijing with the support of Moscow can challenge as well as replace the existing economic governance structures.

Impact of an Asian century on global economic governance

Overall, the emergence of the Asian century has had a significant impact on global economic governance. This has been seen in the increased influence of Asian countries in international trade and investment, the emergence of new regional economic organizations, and the increased recognition of the importance of regional integration.

First, the emergence of the Asian century has led to the increased influence of Asian countries in international trade and investment. As Asian economies have become increasingly integrated and open, so too have their interests in international markets. This has led to an increase in the number of Asian countries involved in the World Trade Organization (WTO) and other international trade and investment agreements. For instance, China and India have become major players in the WTO, while other countries such as South Korea, Vietnam, and Indonesia have also become more active in international trade.

Second, the emergence of an Asian century has also led to the emergence of new regional economic organizations. Examples of these include the Association of Southeast Asian Nations (ASEAN) and the Shanghai Cooperation Organization (SCO). These organizations have allowed for increased economic integration within Asia, as well as increased cooperation between Asian countries and the rest of the world.

Third, the emergence of an Asian century has also led to increased recognition of the importance of regional integration. This has been evidenced by the creation of the Asia-Pacific Economic Cooperation (APEC) forum, which has helped to facilitate increased economic ties between Asian countries. Additionally, the establishment of the Regional Comprehensive Economic Partnership (RCEP) agreement has helped to further integrate the economies of Asian countries.

Potential implication for global economy after Russian invaded Ukraine

The Russian invasion of Ukraine created a significant impact on the global economy. ‘As the war between the two major agricultural states, has various negative socio-economic impacts that are now being felt all across the world, the food and energy crises will worsen the situation for countries especially in Middle East, North Africa and Europe’ (Ben Hassen 2022). ‘Earlier in February and March, the Russian annexation to the Crimea has led Europe to one of deadliest crises after cold war’ (Russia’s latest land grab: How Putin won Crimea and lost Ukraine 2014). ‘The main supplier of gas to Europe is Russia. In 2019, it met 34% of the gas needs of the EU27 plus Great Britain. These shipments might be stopped as a result of Russia’s invasion of Ukraine, posing a threat to Europe’s energy supplies’ (Pedersen 2022). ‘Multiple international sanctions were placed on Russia as a result of the Russia-Ukraine war in order to persuade Russia to de-escalate the issue, although the sanctions imposed on Russia were designed to harm Russia, they had a negative impact on the global economy, primarily through disrupting global supply chains’ (Ozili 2022). ‘Russia’s invasion of Ukraine has caused a horrific humanitarian disaster and jeopardized the stability of geopolitical connections, also the battle has heightened fears of a significant slowdown in global economy, an increase in inflation and debt, and a spike in poverty. The economic impact of violence has reverberated across different worldwide channels, including commodities and financial markets, trade and migration linkages, the economic impacts of the war on the Globe is affecting the three main channels including financial sanctions, hike in the products prices, and disturbance in the supply chains’ (Orhan 2022). ‘On the day of the invasion, the worldwide stock market index fell and the Euro zone manufacturing purchasing managers’ index (PMI) fell in the month of the invasion. Furthermore, the transportation component of the consumer price index climbed in the month of the invasion due to a scarcity of energy and fuel supplies, which resulted in a spike in the price of gasoline for transportation throughout the Euro zone, also Ukraine was hit worse by the invasion than Russia and the rest of Europe’ (Ozili 2022). This crises have also impacted environment, war has affected the water soil and agricultural land along with the ecosystem. ‘This crises would lead to inflation all across the globe, Reduced household consumption due to higher prices (for oil, gas, wheat and minerals), supply chain disruptions, unpredictability, impediments to economic growth, declining investment and stock market volatility globally and particularly in Europe Nations are heavily exporting to this continent. It is therefore crucial that  decision-makers in these countries, which are heavily dependent on Russia for importing basic goods, begin to discuss alternative livelihoods should Russia decide to punish and support the West with export restrictions in  “Own” Manufacture of such essential products when this is a viable option’ (Mbah 2022). ‘This scenario’s wide consequences are reminiscent of the 1970s energy crisis, when OPEC countries effectively hiked the price of oil, and subsequent oil price shocks. Rising pricing and supply constraints significantly affected global economic activity, leading to higher inflation, which increased the cost of living and might further compress family spending. US asked KSA to produce more oil but King Salman refused to produce more oil, as KSA is a member or OPEC plus. UK is facing huge energy crises. Not only UK the whole Europe is facing the energy problems, due to shortage of gas and energy, European markets have started woods in the malls’ (Liadze n.d.).  The consequence of sanctions over Russia is felt by the whole world especially by the Europe. Due to economic linkages and huge dependency of Europe on Russian gas and oil Europe is most affected region of the world due to this war According to a report published by National Institute of Economic and Social research the economic cost of Russia Ukraine conflict might cut global GDP by 1% roughly 1 trillion by 2023. Both countries are the suppliers of rare earth metals like Titanium, Palladium, also the wheat and corn and supply chain issue will further increase the problem for the user around the world. Russia on the other hand increased the prices of oil and gas to recover its economy affected by the sanctions. The war in Ukraine not only impacted the Russian economy but also it has affected the other countries especially European countries. The potential implications of Russia Ukraine war on the local economies and the global economy that war leads to the economic consequences such as inflation, supply chain disturbance, and energy crises. In this way this war not only impacted regionally but also affected the global economy.

Research Question

Will this shift in economic governance and the rise of the Asian century lead to the creation of new world order?

A world order is a set of ideas, and rules about how the world should be and a roadmap for any country’s foreign policy. If we take a step back to the era of empires, according to Henry Kissinger there were different world orders in the form of empires and civilizations. Globalization has flourished under the umbrella of colonialism and mutual trade. After the cold war, there is the American world order which is a liberal order, and institutions play important role in predicting a country’s behavior under the supreme UN. The critics of Dependency theory and World system theory on this world order, that this system produced classes and core countries exploit peripheral countries. Therefore, they suggested trade within the region will ultimately make developing countries progress. The enormous innovation in science-tech makes it possible to decentralize globalization which ultimately breaks the hegemony of one country and this lead to regionalism.

Waltz contends that this decentered globalization is beneficial because it allows countries to pursue their own interests without having to rely on any single power. This increased autonomy has enabled countries to establish stronger bonds with their neighbors and to collaborate more effectively in areas such as trade and security. Additionally, it has allowed countries to develop more freely and pursue their own paths toward economic and social development.

Barry Buzan’s view on decentered globalization is that the world has become increasingly interconnected and complex, with the emergence of new technologies, economic structures, and political power. He argues that this process of globalization has created a new type of global governance, which is characterized by a more decentralized, networked, and cooperative system of international relations. This system is marked by a proliferation of multiple centers of power, with states, international organizations, and non-state actors all contributing to global governance. According to Buzan, this new form of global governance is more effective than the traditional Westphalian system of international relations, as it allows for more flexibility and responsiveness in the face of global challenges. Buzan believes that the decentered model of global governance provides a more effective way of managing global issues, as it allows for greater flexibility and responsiveness, while also recognizing the different interests of all actors.

Kawakita, looks at the history of Asian nations and their growing influence in international affairs, citing the increasing economic power of countries such as China and India in particular. He also looks at the potential political implications of an Asian Century, arguing that the region could soon become a major force in international security and diplomacy. Kawakita concludes by noting that while an Asian Century is a distinct possibility, it is still too early to tell whether the region will be the dominant power in the coming decades.

The international order under the United Nations institutions is going to be decentered and the power shifting from sole liberal institutions influenced by democratic values to emerging Asian economic giants, which leads to an increase in the importance of regionalism once again. By which regions compete with each other, the Asian region might challenge the west, and the Asian century could be the regional economic hegemony but not create a separate world order.

Conclusion

The current world order in which America enjoys its hegemony through institutions in all spheres of life is now under challenge from the Asian century, especially in China, Japan, and India, now this Asian region is influencing global economic decision-making through the development of new institutions. These institutions replaced the American order and set themselves in a new institutionalization process, which not only focused the economic development but also on environmental sustainability, poverty eradication, and improving infrastructure. In this century china is taking lead through the Beijing consensus and becoming an active member of regional organizations. Hence by seeing the arguments of different social science experts, we can deduce that the world is once again going from unipolar to multipolar and this time it is regionalism and regions cooperating for common regional good, EU, ASEAN, etc. are examples of it but in economic means, Asian century is emerging as an economic global hegemon.