This Week’s Must-Read Finance Stories: FX Trading Hits Record Highs Amid Tariff Tensions, Stablecoins Gain Momentum, and More
Published: October 2, 2025 | Updated: January 5, 2026
By Rebecca Geldard, Senior Writer, Forum Stories
Image credit: REUTERS/Yuya Shino
Currency Markets Surge as Tariff Volatility Drives Record FX Trading
Global foreign exchange (FX) markets have reached unprecedented levels in 2025, fueled by ongoing tariff tensions and geopolitical uncertainties. According to the latest Bank for International Settlements (BIS) triennial survey, world currency trading daily turnover surged to a historic $9.6 trillion in April 2025, marking a 28% increase since 2022. Despite some depreciation earlier in the year, the US dollar continues to dominate FX trading, featuring in 89% of all transactions worldwide. Meanwhile, China’s yuan has seen a significant rise in participation, now accounting for 8.5% of daily trades. Conversely, the euro’s market share has slipped to 29%, and sterling has declined to 10%, highlighting shifting investor preferences and evolving dynamics within the global financial system.
London remains the premier hub for FX activities, hosting the largest share of turnover, followed by New York, Singapore, and Hong Kong. Notably, derivatives trading in euros has almost doubled, and the Japanese yen has experienced a strong upswing driven partly by recent monetary policy changes in Japan.
The survey also reveals that FX spot and outright forwards experienced substantial volume gains. Although FX swaps continue to be the largest instrument category, their share declined to 42% from 51%, underscoring evolving trading patterns. Participation by financial institutions—including regional banks, institutional investors, and hedge funds—has significantly increased during this period.
Adding to market volatility, a partial US government shutdown beginning October 1, 2025, has delayed critical economic data releases from agencies such as the Bureau of Labor Statistics and Bureau of Economic Analysis. This has injected further uncertainty into market operations amid already turbulent trade and geopolitical environments.
The BIS triennial survey collected data from over 1,100 banks and dealers across 52 countries, providing a comprehensive overview of the current state and trends shaping the global FX landscape to assist policymakers and market participants.
Stablecoins at the Forefront as Europe Advances Digital Finance Plans
Stablecoins are increasingly capturing the interest of policymakers, regulators, and major financial institutions across Europe and the UK. A consortium of nine prominent European banks—including ING and UniCredit—is establishing a new entity dedicated to launching a euro-denominated stablecoin. This initiative aims to enable faster and more cost-effective payments and settlements, reinforcing Europe’s strategic foothold in digital financial markets.
Concurrently, the Bank of England is developing regulatory guidance tailored to stablecoins used at scale. The focus is on ensuring depositor protection and clarifying access to central bank accounts. Bank of England Governor Andrew Bailey articulated in the Financial Times that while it would be “wrong to be against stablecoins as a matter of principle,” maintaining public trust and financial stability is paramount. He highlighted stablecoins’ potential to foster payment system innovation but cautioned that those operating at scale could reduce reliance on commercial bank lending, necessitating a clear regulatory framework.
The BoE intends to publish a consultation document soon to outline the proposed regulatory standards.
Contrasting this proactive approach, the European Central Bank (ECB) remains more cautious. ECB President Christine Lagarde has voiced concerns about the risks stablecoins may pose to monetary policy and financial stability. She has advocated for considering a central bank digital euro as a safer alternative to privately issued stablecoins.
These contrasting perspectives underline the ongoing balancing act in Europe between fostering innovation and managing systemic risk amid the evolving digital payments ecosystem. To note, the global dollar-backed stablecoin market is approaching a valuation of $300 billion.
Additional Finance Developments to Watch
US Government Shutdown Disrupts Economic Data Flow
The partial shutdown of the US federal government starting October 1 has paused important economic data releases from key agencies. This disruption comes at a critical moment, heightening market volatility and complicating policymaker decision-making against a backdrop of fragile economic conditions.
COP30 Climate Finance Priorities
The upcoming COP30 conference in Belém, Brazil, scheduled for November, is set to be a crucial juncture for climate finance negotiations under the Paris Agreement and UNFCCC frameworks. Eric Usher, Head of UNEP Finance Initiative, outlines several key areas expected to shape sustainable investment flows: translating updated Nationally Determined Contributions into investable plans, scaling up climate finance to mobilize up to $1.3 trillion annually by 2035, enhancing sustainable finance taxonomies for greater investor confidence, finalizing global carbon trading rules, and ensuring equitable transition finance that integrates social equity.
Rise of Non-Bank Financial Institutions
The International Monetary Fund reports that non-bank financial institutions—firms providing credit and investments outside traditional banking—now possess nearly half of global financial assets. While this diversification expands access to finance, it also raises new financial stability risks due to lighter regulation and interconnectedness with the banking sector.
Global Expansion of Property-Linked Sustainable Finance
Initiatives by the Climate Bonds Initiative and Green Finance Institute aim to elevate the roughly $18 billion US property-linked sustainable finance market to a global scale. The effort seeks to unlock billions in private capital for net-zero, climate-resilient building investments by offering technical expertise and financial tools.
Latin American and Caribbean Fintech Surge
The fintech sector in Latin America and the Caribbean has experienced explosive growth—340% between 2017 and 2023—driven by rising digital payments, mobile banking, and neobank adoption. Despite around 70% of the regional population remaining unbanked or underbanked, startups are fueling financial inclusion and innovation. Regulatory challenges and infrastructure limitations persist, but the outlook for continued expansion is strong, according to Forbes.
The World Economic Forum’s Centre for Financial and Monetary Systems
The Forum’s Centre for Financial and Monetary Systems continues to play a vital role by convening global leaders and experts to navigate transformative changes in financial markets. Their work spans sustainability, resilience, innovation, and digitalization—helping align financial systems with goals of long-term economic stability and inclusive prosperity.
For more information on their initiatives and insights into the evolving financial landscape, visit the Centre for Financial and Monetary Systems.
Further Reading on Forum Stories
- Sustainable Finance Gains Momentum: Sustainable debt topped $1 trillion in 2024, and private finance for nature investments has increased elevenfold since 2020. Early movers stand to benefit both financially and in market leadership.
- Who Will Finance the Future Economy? Strategic investments in digital infrastructure, powered by rising electricity demands from AI and data centers, will shape global economic competitiveness.
- US Stablecoin Law Sparks EU Crypto Debate: The US GENIUS Act has clarified crypto regulations stateside, prompting EU policymakers to reconsider existing frameworks and the importance of transatlantic regulatory alignment.
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The views expressed are those of the author alone and do not necessarily reflect the World Economic Forum’s official position.