Tariff Tensions Push Foreign Exchange Trading to Record Highs in 2025: Key Financial Developments
Published Oct 2, 2025 · Updated Jan 5, 2026
By Rebecca Geldard, Senior Writer, Forum Stories
Introduction
Global financial markets are witnessing unprecedented activity this year, driven by tariff tensions and geopolitical uncertainties. Foreign exchange (FX) trading volumes have surged to historic levels in 2025, while digital currencies and stablecoins are coming under increased regulatory and institutional scrutiny, particularly in Europe. Additionally, a partial US government shutdown has delayed critical economic data releases, contributing to market volatility. The World Economic Forum’s Centre for Financial and Monetary Systems highlights these key developments shaping the global financial landscape.
1. US Dollar Dominates as FX Volumes Soar to New Heights
The Bank for International Settlements (BIS) released its latest triennial survey showing that worldwide currency trading reached an extraordinary daily turnover of $9.6 trillion in April 2025. This marks a 28% increase since the last survey in 2022, fueled by ongoing tariff-related market volatility and global geopolitical risks.
Despite the US dollar’s depreciation earlier this year, it continues to dominate the FX market, featuring in 89% of all trades. Meanwhile, China’s yuan has strengthened its presence, accounting for 8.5% of trading volumes. The euro and the British pound sterling saw a decline in market share to 29% and 10%, respectively, signaling shifting investor preferences.
London remains the premiere hub for foreign exchange activity, followed by New York, Singapore, and Hong Kong. Interestingly, derivatives trading in euros nearly doubled, and Japanese yen trading surged — trends partially driven by Japan’s recent monetary policy adjustments.
Key Findings from the BIS Survey:
- Daily FX turnover hit $9.6 trillion, a 28% rise from 2022.
- The US dollar was involved in 89% of transactions, underscoring its unmatched liquidity.
- China’s yuan increased to 8.5%, reflecting broader internationalization efforts.
- The euro’s market share dropped to 29% and sterling to 10%.
- FX spot and outright forwards volumes surged, although FX swaps remain the largest instrument at 42%, down from 51%.
- Trading activity expanded among financial institutions such as regional banks, institutional investors, and hedge funds.
The survey, which covers data from over 1,100 banks and dealers across 52 countries, offers policymakers and market participants a comprehensive snapshot of evolving FX market dynamics.
2. Stablecoins Gain Attention Amid UK and European Regulatory Moves
Stablecoins—digital assets designed to maintain stable value by being pegged to traditional currencies—are attracting growing institutional interest in Europe and the UK.
A consortium of nine major European banks, including ING and UniCredit, is establishing a new company to launch a euro-denominated stablecoin, aiming to streamline payments and reduce settlement costs. Reuters reports this initiative as part of Europe’s strategic push to bolster its digital finance markets.
Simultaneously, the Bank of England (BoE) is developing regulatory guidance for stablecoins used at scale. BoE Governor Andrew Bailey emphasized in the Financial Times that while it would be fundamentally wrong to oppose stablecoins outright, ensuring public trust and financial stability is essential. He highlighted that large-scale stablecoin adoption could lessen reliance on traditional commercial bank lending, but only under a robust regulatory framework.
The BoE plans to issue a consultation in the coming months to clarify these standards and safeguard users.
On the other side, the European Central Bank (ECB) remains cautious. ECB President Christine Lagarde has pointed to risks stablecoins may pose to monetary policy and financial stability, advocating instead for a central bank digital euro as a more secure alternative. This cautious stance reflects Europe’s balancing act between embracing innovation and managing systemic financial risks.
Currently, the global market for dollar-backed stablecoins is near $300 billion, underscoring the rapid growth of these crypto assets.
3. Additional Finance News Highlights
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US Government Shutdown Delays Key Economic Data: Starting October 1, a partial US federal government shutdown paused crucial data releases from agencies such as the Bureau of Labor Statistics and Bureau of Economic Analysis. This disruption comes at a sensitive time for markets and policymakers, potentially heightening market volatility amid active trade tensions.
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COP30 Climate Finance at Belém, Brazil: The conference will focus on mobilizing climate-related investments, updating national plans for climate action, scaling finance to close funding gaps—targeting up to $1.3 trillion annually by 2035—and establishing a global carbon credit trading system. Social equity and ‘just transition’ finance will also be integral themes.
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Rise of Non-Bank Financial Institutions: The IMF reports that non-bank financial entities holding nearly half of all global financial assets is reshaping credit and investment landscapes, though these entities pose new financial stability challenges due to lighter regulatory oversight.
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Sustainable Property-Linked Finance: Initiatives aim to expand the $18 billion US property-linked finance sector into a global asset class. This aims to drive private investments toward net-zero, climate-resilient building projects.
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Fintech Growth in Latin America and the Caribbean: The fintech market there expanded by 340% from 2017 to 2023, driven by digital payments, mobile banking, and neobanks. Despite significant underbanked populations, the sector is poised for further growth amid regulatory and infrastructural hurdles.
4. Looking Ahead: Insights from the World Economic Forum
The World Economic Forum’s Centre for Financial and Monetary Systems continues to bring together leaders from the public and private sectors to navigate transformations in the global financial system. Their work focuses on enhancing sustainability, resilience, innovation, and digitalization to foster economic stability and inclusive prosperity.
For readers interested in further exploring global financial trends, the Forum provides comprehensive analyses and resources on topics such as sustainable finance, digital asset regulation, and strategic investment in future economic infrastructure.
To learn more about the World Economic Forum’s work in global finance, visit the Centre for Financial and Monetary Systems.
This article is published under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License. Views expressed are those of the author alone and do not necessarily reflect the positions of the World Economic Forum.