Economic Power in the Age of Geopolitical Competition: CBDCs, Sanctions
and Global Power

Ali Lalani

doi:10.46609/IJSSER.2026.v11i08.026

Title: Economic Power in the Age of Geopolitical Competition: CBDCs, Sanctions and Global Power
Authors: Ali Lalani
Journal: International Journal of Social Science and Economic Research (IJSSER) ISSN: 2455-8834 Volume: 11 Issue: 8 Publication Date: August 2026 DOI: 10.46609/IJSSER.2026.v11i08.026
\|\| \|\|
Ali Lalani IB student, United World College of the Atlantic, United Kingdom.
MLA 8 Lalani, Ali. "Economic Power in the Age of Geopolitical Competition: CBDCs, Sanctions and Global Power." Int. j. of Social Science and Economic Research, vol. 11, no. 8, Aug. 2026, pp. 4012-4041, doi.org/10.46609/IJSSER.2026.v11i08.026. Accessed Aug. 2026. APA 6 Lalani, A. (2026, August). Economic Power in the Age of Geopolitical Competition: CBDCs, Sanctions and Global Power. Int. j. of Social Science and Economic Research, 11(8), 4012-4041. Retrieved from https://doi.org/10.46609/IJSSER.2026.v11i08.026 Chicago Lalani, Ali. "Economic Power in the Age of Geopolitical Competition: CBDCs, Sanctions and Global Power." Int. j. of Social Science and Economic Research 11, no. 8 (August 2026), 4012-4041. Accessed August, 2026. https://doi.org/10.46609/IJSSER.2026.v11i08.026.
References [1] . Allen , S., Juels, A., Prasad, E., & Grimmelmann, J. (2020). Design choices for central bank digital currency. In Brookings. https://www.brookings.edu/articles/design-choices-for-central-bank-digital-currency/ [2] . Bank, E. C. (2025). Progress on the preparation phase of a digital euro - Closing progress report. European Central Bank. https://doi.org/10.2866/6934742 [3] . Bank for International Settlements. (2021). III. CBDCs: An opportunity for the monetary system. Www.Bis.Org. https://www.bis.org/publ/arpdf/ar2021e3.htm [4] . Bansal, R., & Singh, S. (2021, August 31). China’s Digital Yuan: An Alternative to the Dollar-Dominated Financial System. Carnegie Endowment for International Peace. https://carnegieendowment.org/research/2021/08/chinas-digital-yuan-an-alternative-to-the-dollar-dominated-financial-system?utm_source=chatgpt.com [5] . Best, R. (2024, October 21). How the U.S. Dollar Became the World’s Reserve Currency. Investopedia. https://www.investopedia.com/articles/forex-currencies/092316/how-us-dollar-became-worlds-reserve-currency.asp [6] . Bianchi, J., & Sosa-Padilla, C. (2025). International Sanctions and Dollar Dominance. The Economic Journal, 135(672), 2567–2577. https://academic.oup.com/ej/article-abstract/135/672/2567/8193683?utm_source=chatgpt.com [7] . BIS. (2024). Project mBridge reached minimum viable product stage. Www.Bis.Org. https://www.bis.org/about/bisih/topics/cbdc/mcbdc_bridge.htm [8] . Bloor, K. (2022, May 21). Power and Development in Global Politics. E-International Relations. https://www.e-ir.info/2022/05/21/power-and-development-in-global-politics/ [9] . Christoph, W. (2021). Digital currencies and economic sanctions: The increasing risk of sanction evasion. Journal of Financial Crime, 29(4), 1269–1282. https://doi.org/10.1108/JFC-07-2021-0158 [10] . Connecting Economies through CBDC Project mBridge Project mBridge: Connecting Economies through CBDC 2 Content. (2022a). https://www.bis.org/publ/othp59.pdf [11] . Dollar decentring, de-dollarisation, and the UK’s trade and investment policy \| CITP. (2025). Citp.Ac.Uk. https://citp.ac.uk/publications/dollar-decentring-de-dollarisation-and-the-uks-trade-and-investment-policy [12] . Dooley, M. P., Folkerts-Landau, D., & Garber, P. M. (2022). US Sanctions Reinforce the Dollar’s Dominance. NBER. https://doi.org/10.3386/w29943 [13] . Economic Sanctions Are Mainly Used To. (2026a). Cannacompanionusa. https://www.cannacompanionusa.com/update/ra3/763/geti6epkm-economic-sanctions-are-mainly-used-to [14] . Fabrichnaya, E., & Marrow, A. (2024, July 25). Russia, China turn to digital payments as sanctions hamper bilateral trade settlements. Reuters. https://www.reuters.com/technology/russia-china-turn-digital-payments-sanctions-hamper-bilateral-trade-settlements-2024-07-25/ [15] . Farrell, H., & Newman, A. L. (2019). Weaponized Interdependence: How Global Economic Networks Shape State Coercion. International Security, 44(1), 42–79. https://doi.org/https://doi.org/10.1162/isec_a_00351 [16] . Gafsi, N. (2025). The impact of central bank digital currencies (CBDCs) on global financial systems in the G20 country GVAR approach. FinTech, 4(3), 35. https://doi.org/10.3390/fintech4030035 [17] . Ganti, A. (2019). Pegging Definition. Investopedia. https://www.investopedia.com/terms/p/pegging.asp [18] . Goktug Keskin. (2025, July). Weaponized Finance: Sanctions, SWIFT, and the Future of Global Political Risk \| Atlas Institute for International Affairs. Atlas Institute for International Affairs. https://atlasinstitute.org/weaponized-finance-sanctions-swift-and-the-future-of-global-political-risk/ [19] . Greene, R. (2023). Asia’s interest in wholesale central bank digital currency—and challenges to cross-border use. In Carnegie Endowment for International Peace. https://carnegieendowment.org/research/2023/02/asias-interest-in-wholesale-central-bank-digital-currencyand-challenges-to-cross-border-use [20] . Hayes, A. (2025). What Is Dollar Weaponization and How Has It Sped Up De-Dollarization?Investopedia. https://www.investopedia.com/dollar-weaponization-11753104 [21] . Holcombe, R. G. (2020). Economic Power. Springer eBooks, 45–68. https://doi.org/10.1007/978-3-030-48667-9_3 [22] . Hüther, P. D. M. (2022, May 30). In Search of a New World Order. German Economic Institute (IW). https://www.iwkoeln.de/en/press/in-the-media/michael-huether-in-search-of-a-new-world-order.html [23] . IMF. (2024, November 8). Central Bank Digital Currency (CBDC) - Virtual Handbook. IMF. https://www.imf.org/en/Topics/digital-payments-and-finance/central-bank-digital-currency/virtual-handbook [24] . Keenan, L., Monteath, T., & Wójcik, D. (2022). Financial discipline through inter-sectoral mergers and acquisitions: Exploring the convergence of Global Production Networks and the Global Financial Network. Environment and Planning A: Economy and Space, 54(8), 1532–1550. https://doi.org/10.1177/0308518x221115739 [25] . Lawyers, O. B. F. (2022, January 11). How to Comply with OFAC Sanctions for Business: A Complete Compliance Guide 2026. OFAC Blocked Funds Lawyers. https://ofacblockedfundslawyers.com/how-to-comply-with-ofac-sanctions-for-business/ [26] . Lee, L. (2025, September 25). Can RMB Dethrone the Dollar in the Foreseeable Future? Asia Society. https://asiasociety.org/policy-institute/can-rmb-dethrone-dollar-foreseeable-future [27] . Liu, E., Ryan, M., Zhou, L., & Berrang, P. (2026). Evasion under Blockchain sanctions. Proceedings of the ACM Web Conference 2026, 3507–3518. https://doi.org/10.1145/3774904.3792715 [28] . Lukonga, I. (2023). Monetary policy implications of central bank digital currencies: Perspectives on jurisdictions with conventional and islamic banking systems. IMF Working Papers, 2023(060). https://doi.org/10.5089/9798400236532.001.A001 [29] . mBridge Cross-Border CBDC Platform. (2026b). Envisioning. https://www.envisioning.com/research/vault/gulf-states__mbridge-cross-border-cbdc [30] . McDowell, D. (2023). Financial Sanctions and the Dollar’s Rivals. OUP Academic. https://doi.org/10.1093/oso/9780197679876.003.0008 [31] . Mohammed, M. A. (2024). The role of financial sanctions and financial development factors on Central Bank Digital Currency implementation. FinTech, 3(1), 1–16. https://ideas.repec.org/a/gam/jfinte/v3y2024i1p9-150d1339330.html [32] . Myburgh , S., & Tamaro, A. M. (2013). Economic Power - an overview \| ScienceDirect Topics. Www.Sciencedirect.Com. https://www.sciencedirect.com/topics/social-sciences/economic-power [33] . ngraham. (2024). Retaliation and Resistance: China’s Economic Statecraft in a Taiwan Crisis. In Atlantic Council. https://www.atlanticcouncil.org/in-depth-research-reports/report/retaliation-and-resilience-chinas-economic-statecraft-in-a-taiwan-crisis/? [34] . RAMDANI BOUCHRA, & AOURAGH MIMOUN. (2025). CBDCs and the Future of Global Money: Sovereignty, Surveillance, and the Emerging Digital Monetary Order. International Journal of Economic Studies and Management (IJESM), 5(6), 693–704. https://doi.org/10.5281/zenodo.17432969 [35] . RESLOW, A., SODERBERG, G., & TSUDA, N. (2024). Cross-border payments with retail central bank digital currencies. In IMF. https://www.imf.org/en/Publications/fintech-notes/Issues/2024/05/15/Cross-Border-Payments-with-Retail-Central-Bank-Digital-Currencies-547195 [36] . Ronaghi, M. H. (2022). A contextualized study of blockchain technology adoption as a digital currency platform under sanctions. Management Decision, 61(5), 1352–1373. https://doi.org/10.1108/md-03-2022-0392 [37] . Sanusi, A. R., Mamman, S. O., Jamilu Iliyasu, & Abubakar, A. B. (2023). Financial sanctions and the share of US dollar in global reserve currencies: Evidence from the Least Absolute Shrinkage and Selection Operator (LASSO) model. Applied Economics Letters, 1–4. https://doi.org/10.1080/13504851.2023.2261617 [38] . Sen, J. (2019). JULIUS SEN STRATEGIC UPDATE THE WEAPONISATION OF THE DOLLAR POLICY OPTIONS FOR SMALL COUNTRIES. https://www.lse.ac.uk/ideas/Assets/Documents/updates/LSE-IDEAS-Weaponisation-Dollar.pdf [39] . Seth, S. (2024, June 14). Central Bank Digital Currency (CBDC). Investopedia. https://www.investopedia.com/terms/c/central-bank-digital-currency-cbdc.asp [40] . SWIFT. (2022b, March 12). Wikipedia. https://en.wikipedia.org/wiki/SWIFT [41] . Tan, B. (2023). Central Bank Digital Currency and financial inclusion. In IMF. https://www.imf.org/en/Publications/WP/Issues/2023/03/18/Central-Bank-Digital-Currency-and-Financial-Inclusion-531104 [42] . The geopolitical relevance of central bank digital currencies. (2021, June 26). CEPR. https://cepr.org/voxeu/columns/geopolitical-relevance-central-bank-digital-currencies [43] . Thibaut Bidet-Mayer. (2026). The end of the dollar’s hegemony? Cairn’s Dossiers, (2). https://shs.cairn.info/dossier-end-of-dollar-s-hegemony-page-1?lang=en [44] . Watanabe, T. (2025). ABeam Consulting. ABeam Consulting Ltd. https://www.abeam.com/in/en/insights/133/ [45] . What Is SWIFT, and Could Sanctions Impact the U.S. Dollar’s Dominance? (n.d.). Www.Richmondfed.Org. Retrieved 7 July 2026, from https://www.richmondfed.org/publications/research/economic_brief/2022/eb_22-09 [46] . Wright, L., Kratz, A., Vest, C., & Mingey, M. (2021). Progress of Research & Development of E-CNY in China Working Group on E-CNY Research and Development of the People’s Bank of China Progress on Research and Development of E-CNY in China. https://www.pbc.gov.cn/en/3688110/3688172/4157443/4293696/2021072014364791207.pdf [47] . Zhang, S., & Bian , J. (2025, November). Transformations in the international financial order driven by CBDCs: rule challenges under financial sanctions and Chinas response. ResearchGate. ResearchGate. https://www.researchgate.net/publication/399196918_Transformations_in_the_international_financial_order_driven_by_CBDCs_rule_challenges_under_financial_sanctions_and_Chinas_response [48] . Zhong, L. (2025). The Impact of Central Bank Digital Currency Participation in Cross-Border Payments on International Monetary Competition. SHS Web of Conferences, 218, 03002. https://doi.org/10.1051/shsconf/202521803002 [49] . Zola, F., Medina, J. A., & Orduna, R. (2024). Assessing the impact of sanctions in the crypto ecosystem: Effective measures or ineffective deterrents? In arXiv.org. https://arxiv.org/abs/2409.10031
ABSTRACT: As we look to the future of intensifying geopolitical competition, economic power has become an increasingly important tool which states are starting to use in order to pursue strategic objectives. Along with the widespread use of economic sanctions, the emergence of Central Bank Digital Currencies (CBDCs) has the potential to transform the global financial system and alter existing power dynamics. This study adopts a qualitative research approach which draws on a comprehensive review of academic literature, reports from international organizations, government publications and policy analyses. It looks into the relationship between CBDCs, sanctions and the international financial system through the lens of economics and international relations while linking these to recent geopolitical developments. The findings of the study suggest that even though sanctions remain one of the ,past influential tools of economic statecraft, the development of CBDCs may gradually reduce their effectiveness by providing alternative payment mechanisms that bypass traditional financial networks. However, the true extent of this change depends on the global adoption of CBDCs, interoperability between digital currencies and the geopolitical influence of the issuing states. Overall, the study concludes that CBDCs do have the potential to reshape the global financial order but their impact will be gradual and contingent upon international cooperation, regulatory frameworks and evolving geopolitical relationships. These findings contribute to a deeper understanding of the intersection between finance, technology and global power in the twenty-first century.

IJSSER is Member of