Central banks, FATF, and the “special relationship”: who’s reshaping global finance?

Several of today’s think-tank pieces converge on one question: is the global financial system quietly rebalancing away from the dollar while regulators tighten the rules of the road. One article frames the possibility that central banks are moving out of dollar assets, implying a gradual shift in reserve management rather than a single shock event. In parallel, RUSI analysis focuses on how the FATF leadership and its risk-based approach are being operationalized, emphasizing governance, listening, and implementation discipline. Taken together, the cluster suggests that financial “plumbing” is becoming a strategic arena, not just a technical one. Geopolitically, the stakes are about leverage: reserve composition influences sanctions effectiveness, funding costs, and the ability to isolate adversaries. If central banks diversify away from dollar assets, the U.S. and allies could face a slower transmission of sanctions and a more contested global liquidity environment. Meanwhile, FATF effectiveness determines whether cross-border financial flows—especially those linked to illicit finance, sanctions evasion, or high-risk jurisdictions—are disrupted or merely documented. The “special relationship” framing in another RUSI piece points to coordination among major Western partners as strategic transformation accelerates, implying that regulatory architecture and intelligence-sharing may be used to preserve influence. Market and economic implications could show up across FX, rates, and risk premia rather than in a single headline number. A sustained move away from dollar assets would typically pressure USD demand at the margin and could lift volatility in USD funding markets, with knock-on effects for Treasury-related hedging and global carry trades. On the compliance side, FATF-driven scrutiny can raise costs for banks and fintechs tied to correspondent banking, trade finance, and compliance-heavy payment rails, potentially tightening liquidity for higher-risk flows. The combined effect is likely to be sectoral: financials with strong compliance infrastructure may gain relative advantage, while institutions reliant on less transparent cross-border channels could face higher capital charges and slower onboarding. What to watch next is whether these ideas translate into measurable policy and market signals. For the dollar-asset question, monitor central bank reserve disclosures, changes in reported FX composition, and shifts in major reserve managers’ stated benchmarks, alongside USD funding spreads and DXY trend breaks. For FATF, track leadership priorities, the pace of mutual evaluations, and how the risk-based approach is applied in practice—especially in jurisdictions under heightened scrutiny. Finally, watch for concrete coordination outputs implied by the “special relationship” narrative, such as joint regulatory guidance, enforcement actions, or new standards that affect compliance timelines. Escalation would look like faster diversification plus harsher enforcement; de-escalation would be slower reserve shifts paired with more predictable compliance expectations.

Geopolitical Implications

• 01

  Dollar reserve diversification could weaken the speed and certainty of sanctions transmission.

• 02

  FATF effectiveness will shape whether illicit finance and sanctions evasion are disrupted or merely tracked.

• 03

  Western regulatory coordination may act as a strategic tool to preserve financial influence.

• 04

  Risk-based supervision can concentrate pressure on specific jurisdictions and institutions, reshaping compliance geography.

Key Signals

• —Reserve composition changes that indicate sustained USD de-risking
• —USD funding spreads and DXY volatility as early confirmation
• —FATF mutual evaluation pace and follow-up enforcement outcomes
• —New or tightened guidance affecting correspondent banking and trade finance compliance