Record-High Global Conflicts Pose Emerging Risks to Banking System Stability
Forbes reports that 2025 saw 65 active state-based wars—the highest count since World War II—with direct interstate conflicts doubling to eight. The article argues these conflicts create five distinct financial transmission channels: sovereign debt deterioration, commodity volatility, sanctions complexity, cyber warfare, and capital market fragmentation. Banking regulators and financial institutions face pressure to assess how simultaneous geopolitical shocks could destabilize the global financial system.
According to Forbes analysis of Uppsala Conflict Data Program (UCDP) data, 2025 recorded 65 active state-based armed conflicts, the highest since systematic tracking began in 1946, with direct interstate wars doubling from four to eight in a single year. The article identifies five mechanisms through which these conflicts threaten financial stability: non-performing loan cascades in conflict zones (exemplified by Sudan, Ukraine, and Haiti), commodity supply-side inflation from weaponized trade chokepoints (Red Sea disruptions adding $1 million per vessel in rerouting costs), proliferation of sanctions regimes (Russia-Ukraine war alone generating over 12,000 designations), increased AML/CTF compliance costs for Global Systemically Important Banks, and state-sponsored cyber warfare against financial infrastructure. The piece argues these risks are underappreciated by regulators and calls for urgent attention from the Basel Committee, Financial Stability Board, and national legislatures.
What's missing
The article does not provide specific examples of how cyber attacks have already impacted financial institutions, nor does it quantify the aggregate compliance costs across G-SIBs or model potential systemic failure scenarios. The piece also does not discuss potential policy responses or mitigation strategies beyond calling for regulatory attention.
What different sources said
- ForbesCenter
Why Record-High Conflicts Threaten The Global Banking System
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