Trust: the currency that sustains the global financial system

By Tameea Lock, University of Sydney World Bank + IMF 2025 Fellow

The global financial system is a vast and intricate network that moves capital across borders,

but the forces that sustain it remain largely unseen. Trust operates quietly in the background,

giving people confidence that commitments will be honoured, rules applied consistently, and

cooperation sustained beyond immediate self-interest. It is trust that enables financial

markets and institutions to function amid uncertainty, lending stability to a system otherwise

highly exposed to political and economic shocks. At the 2025 IMF and World Bank Annual

Meetings in Washington, D.C., trust emerged as a central concern as leaders grappled with

an economy increasingly influenced by geopolitical tensions and rapid technological change.

The Annual Meetings opened amid a period of heightened uncertainty. While the global

financial system has largely recovered from the acute shocks of the COVID-19 pandemic,

IMF Managing Director Kristalina Georgieva emphasised that “uncertainty is the new

normal.” Although global economic growth has proven more resilient than many expected, it

remains fragile and uneven. Her cautionary remarks came against a backdrop of volatile

U.S. trade policy, escalating regional conflicts, and rising public debt - shifting dynamics that

continue to shape economic conditions worldwide. In a world where uncertainty is

increasingly structural rather than episodic, sustaining trust becomes more difficult but

remains essential.

This challenge of sustaining trust is felt at every level of the financial system. It underpins

interactions between households and banks, investors and governments, and states and

multilateral institutions. As Kenneth Arrow observed decades ago, “virtually every

commercial transaction has within itself an element of trust” (Arrow, 1972). When that trust

erodes, volatility quickly follows. The 2008 Global Financial Crisis remains a defining

example of how swiftly confidence can collapse, and how costly and prolonged its

restoration can be.

The importance of trust was particularly evident in discussions of financial innovation.

Stablecoins, a form of cryptocurrency backed by fiat currencies or government securities,

were described by Georgieva as the “future of finance.” They have the ability to reduce the

cost and friction of cross-border payments by enabling near-instant, low-cost transactions.

Yet their adoption rests almost entirely on trust: in the quality and liquidity of backing assets,

in the governance and transparency of issuers, and in the regulatory frameworks that

oversee them. Recent research reveals that trust strongly influences both interest in and

adoption of cryptocurrencies, highlighting its critical importance for the viability of stablecoins

at scale (Jalan et al., 2023).

Artificial intelligence also featured prominently throughout the Meetings as both an

opportunity and a test of trust in financial systems. Generative AI can enhance risk detection,

strengthen anti-money laundering and counter-terrorism financing compliance, and enable

regulators to monitor markets with greater speed and precision. At the same time, AI

introduces new systemic risks, including automated fraud, deepfakes, and AI-enabled

market manipulation. The President of Singapore, Tharman Shanmugaratnam, emphasised

that addressing these risks requires a proactive and coordinated multilateral approach to AI

regulation, warning that a fragmented response could allow unchecked development with

profoundly destabilising effects. Therefore, robust multilateral regulation will be essential to

ensure that AI strengthens, rather than undermines, trust in an increasingly digital and

interconnected financial system.

At a macroeconomic level, trust is fundamental to both the flow of foreign investment and

overall economic stability. At the IMF Analytical Corner session, A Panorama of the External

Financing Landscape in Sub-Saharan Africa, economists Can Sever and Thibault Lemaire emphasised that strong governance is essential for securing sustainable financing through

foreign direct investment. At the same time, trust in central banks is vital for the effective

operation of monetary policy. Amid rising pressures on central banks to lower interest rates,

the IMF’s Chief Economist, Pierre-Olivier Gourinchas, warned that if trust erodes, monetary

policy becomes less effective, inflation can rise, and overall macroeconomic stability may

deteriorate.

Trust is also central to the existence and functioning of the IMF and World Bank. In many

countries, public scepticism toward these organisations remains deeply rooted, shaped by

past interventions perceived as externally imposed or socially costly. At the Annual

Meetings, civil society representatives, particularly from countries that have received IMF or

World Bank assistance, shared firsthand accounts of communities affected by the

organisations’ programs and the social impacts of related policies. While these discussions

highlighted gaps between institutional intent and public perception, they also presented an

opportunity to strengthen trust. Both organisations have introduced extensive programs to

allow civil society organisation representatives to voice local concerns, propose policies, and

exchange ideas - an approach that, if sustained, can play a key role in building trust.

The 2025 IMF and World Bank Annual Meetings revealed that trust is the indispensable

currency sustaining the global financial system. From the promise of new financial

technologies to the mobilisation of private capital, and from the reputation of central banks to

the work of multilateral institutions, every aspect of the system depends on it. Trust is

inherently fragile and must be actively cultivated through sustained multilateral cooperation

and a shared commitment from all stakeholders. In a world defined by complexity and

uncertainty, the stability of global finance ultimately rests on our collective ability to preserve

and reinforce trust.

References

Arrow, K. J. (1972). Gifts and exchanges. Philosophy & Public Affairs, 1(4),

343–362. https://www.jstor.org/stable/2265097

Jalan, A., Matkovskyy, R., Urquhart, A., & Yarovaya, L. (2023). The role of interpersonal trust in cryptocurrency adoption. Journal of International Financial Markets, Institutions and Money, 83, Article 101715. https://doi.org/10.1016/j.intfin.2022.101715

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The views and opinions expressed by Global Voices Fellows do not necessarily reflect those of the organisation or its staff.