Geopolitical fragmentation
Updated
What it is
Geopolitical fragmentation describes the splintering of a once-unified, globally integrated economic and financial order into competing blocs aligned along geopolitical lines. International institutions including the IMF, World Bank, and BIS use the term to describe trends such as reshoring/friend-shoring of trade, parallel payment and reserve systems, and the use of financial infrastructure as a tool of statecraft.
Why it matters lately
By 2026 the dollar's share of global official FX reserves had fallen to about 56%, down from 71% in 1999, marking roughly eight consecutive quarters of decline per IMF COFER data — the longest such streak since Bretton Woods ended. IMF leadership has explicitly warned that a world already fragmenting in trade is likely to fragment in finance as well, a dynamic cited as a driver of interest in alternative settlement rails and reserve diversification.
Asymmetric Analytics view
Inference (AA): Accelerating reserve diversification away from the dollar is a structural tailwind for the correspondent-banking alternatives and tokenized settlement pilots tracked in this graph.