Trust: the currency that sustains the global financial system

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

Financial systems are built on trust. It is the quiet assumption that agreements will be honoured, rules applied consistently, and cooperation sustained beyond immediate self-interest. At the 2025 IMF and World Bank Annual Meetings in Washington, D.C., trust emerged as a central theme as leaders confronted a global economy defined by uncertainty, geopolitical tension, and rapid technological change.

The Meetings opened against a backdrop of persistent volatility. IMF Managing Director Kristalina Georgieva warned that “uncertainty is the new normal,” noting that while global growth has proved more resilient than expected, it remains fragile. In such an environment, trust becomes both harder to sustain and more essential, providing the foundation that allows financial systems to function even when predictability erodes.

Trust operates at every level of the financial system. It exists 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 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.

These dynamics were evident in discussions on financial innovation. Stablecoins, a form of cryptocurrency backed by fiat currencies or government securities, were described by Georgieva as the “future of finance.” They promise to reduce the cost and friction of cross-border payments, enabling near-instant, low-cost transactions. Yet their adoption rests almost entirely on trust: 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 showing that trust strongly influences interest in and adoption of cryptocurrencies underscores its centrality to 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 public trust in the financial system. 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. Robust and effective multilateral regulation is essential to ensure that AI strengthens, rather than undermines, public trust in an increasingly digital and interconnected financial system.

Trust also emerged as a critical determinant of capital flows. Discussions placed particular emphasis on attracting foreign direct investment to developing countries, especially across Africa, at a time when the decline in U.S. foreign aid in 2025 has increased reliance on private capital to fill financing gaps. The importance of trust was highlighted in the IMF’s Analytical Corner session, A Panorama of the External Financing Landscape in Sub-Saharan Africa, where economists Can Sever and Thibault Lemaire emphasised that strong governance is essential to securing sustainable financing. A similar message was echoed by the Syrian Minister of Finance, who stressed that restoring investor confidence and institutional trust is central to attracting foreign investment and supporting economic recovery.

Trust is equally vital to the operation of the IMF and World Bank. In many countries, public scepticism toward these institutions remains deeply rooted, shaped by past interventions perceived as externally imposed or socially costly. At the Meetings, representatives from civil society organisations shared firsthand accounts of communities affected by IMF structural adjustment programs and the associated negative externalities. These accounts revealed a gap between institutional intent and public perception. This underscores that trust must be earned not only between states and institutions, but also with the individuals and communities whose lives are directly shaped by these programs.

Throughout the 2025 IMF and World Bank Annual Meetings, it became clear that trust is the fragile yet indispensable currency sustaining the global financial system. Whether in the adoption of new financial technologies, the mobilisation of private capital, or the legitimacy and effectiveness of the IMF and World Bank, trust remains essential. Preserving the confidence of investors, households, and states requires constant stewardship, making the maintenance of trust a deliberate and ongoing task in an increasingly complex global economy.

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.