Power in the International Monetary and Financial System: The Geopolitical Limits of the Exorbitant Privilege

Abstract This article examines the asymmetries and power dynamics within the international monetary and financial system (IMFS), emphasizing its structural and geopolitical interconnections. The Russian invasion of Ukraine in 2022, followed by United States (USA) sanctions such as the freezing of Russian dollar reserves and the exclusion of banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, demonstrated the capacity of the USA to mobilize monetary and financial instruments for geopolitical purposes. This takes place amid a relative decline in US influence and the rise of alternative powers, notably China, in terms of economic weight, trade, and security. To date, although China meets virtually all theoretical prerequisites for the expansion of its monetary and financial power, this potential has not (yet) materialized into a concrete challenge to the USA-led IMFS. This context brings traditional notions of power in the IMFS into question, revealing the limitations of analyzing the monetary and financial dimensions in isolation. Drawing on the literature on power, economic power, and asymmetries, particularly concerning the dominant role of the dollar, it is argued that the US overuse of its ‘exorbitant privilege’ in pursuit of geopolitical objectives, particularly via financial sanctions, may ultimately erode its own position.