Tariff tensions drive foreign exchange (FX) trading to record highs in 2025, alongside key finance developments
Published: October 2, 2025 | Updated: January 5, 2026
As the global financial landscape navigates ongoing geopolitical uncertainties, foreign exchange markets are reaching new historic peaks. A recent report from the Bank of International Settlements (BIS) reveals FX trading volumes surged to all-time highs in April 2025, fueled primarily by tariff-related volatility. Meanwhile, stablecoins gain momentum amidst evolving regulatory frameworks in Europe and the UK, and the U.S. government shutdown introduces fresh market complexities. Here is what you need to know about this week’s leading finance stories.
Dollar maintains dominance as FX volumes soar
According to the latest triennial survey by the BIS, daily global currency trading hit a historic milestone in April 2025, with turnover reaching an unprecedented $9.6 trillion. This figure marks a 28% increase since 2022 and reflects heightened market activity driven largely by trade tensions and geopolitical risks.
Despite a notable depreciation earlier in the year, the U.S. dollar remains the dominant currency in global foreign exchange markets, involved in 89% of trades. China’s yuan continues to gain ground, rising to 8.5% of daily turnover, signaling its growing importance in international finance. Conversely, the euro’s share slipped to 29%, and sterling dropped to 10%, underscoring shifting investor preferences amid fluctuating economic conditions and monetary policies.
London solidified its position as the world’s leading FX trading hub, with New York, Singapore, and Hong Kong also maintaining significant shares. The report highlighted a near doubling of euro-denominated derivatives trading and a surge in yen activity, attributed in part to recent policy moves by the Bank of Japan.
With FX spot and outright forwards volumes rising substantially, the dominance of FX swaps—the largest trading instrument—has slightly waned, holding 42% of turnovers compared to 51% previously. Increased trading involvement by financial institutions, including regional banks, institutional investors, and hedge funds, has contributed to the elevated market activity.
Adding to the uncertainties, the partial U.S. government shutdown beginning October 1 has delayed key economic data releases from agencies such as the Bureau of Labor Statistics and the Census Bureau, potentially exacerbating volatility in an already dynamic currency market.
The BIS compiled data from over 1,100 banks and dealers across 52 countries, providing a comprehensive view to inform policymakers and market participants alike.
Stablecoins under the spotlight amid European and UK regulatory moves
Stablecoins, a category of cryptocurrencies designed to minimize price volatility, are attracting growing institutional interest against the backdrop of evolving regulatory approaches.
A consortium of nine major European banks, including ING and UniCredit, are jointly creating a new company set to launch a euro-denominated stablecoin. This initiative aims to enhance the speed and reduce the cost of payments and settlements in Europe, positioning the continent strategically in the digital finance sector.
Concurrently, the Bank of England is preparing regulatory guidance for stablecoins intended for widespread use, focusing on depositor protection and potential access to central bank accounts. BoE Governor Andrew Bailey emphasized in the Financial Times that opposition to stablecoins “as a matter of principle” would be misguided, recognizing their potential to drive payment system innovation. He further underscored the importance of clear regulatory frameworks to maintain public trust and ensure financial stability.
The Bank of England plans to consult stakeholders in the coming months to clarify these standards.
In contrast, the European Central Bank (ECB), led by President Christine Lagarde, has sounded cautionary notes. She expressed concerns over the risk stablecoins might pose to monetary policy and financial stability and suggested that a central bank digital euro could offer a safer, government-backed alternative. This dynamic illustrates the broader challenge in Europe of balancing innovation with systemic risk management in the rapidly evolving digital payments ecosystem.
Currently, the dollar-backed stablecoin market nears a valuation of $300 billion.
Additional finance news highlights
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Impact of U.S. government shutdown: The partial shutdown starting October 1 has halted key economic data outputs from several federal agencies. This pause complicates market analysis and policymaking during fragile economic conditions, potentially increasing market volatility.
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COP30 climate finance focus: The upcoming United Nations climate conference in Belém, Brazil, will center on scaling climate finance under the Paris Agreement. Goals include mobilizing up to $1.3 trillion annually by 2035 for developing countries, enhancing sustainable finance taxonomies, and finalizing rules for global carbon credit markets. Integrating social equity into climate investment decisions, known as “just transition finance,” will also be a priority.
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Rise of non-bank financial institutions: An International Monetary Fund report highlights that nonbank financial entities now hold nearly half of global financial assets. While their expansion broadens credit and investment accessibility, their lighter regulation and interconnections with banks introduce fresh financial stability concerns.
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Scaling property-linked sustainable finance: Efforts by the Climate Bonds Initiative and Green Finance Institute aim to transform the $18 billion U.S. sustainable property finance market into a global asset class. The initiative seeks to attract private capital for net-zero, climate-resilient real estate projects.
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Latin America and Caribbean fintech boom: The region has witnessed a 340% increase in fintech market growth from 2017 to 2023. Innovations in digital payments, mobile banking, and neobanks have fostered financial inclusion for a largely underbanked population, though infrastructure and regulatory challenges remain.
About the Centre for Financial and Monetary Systems
The World Economic Forum’s Centre for Financial and Monetary Systems brings together leaders and experts to navigate transformations across global financial systems. By fostering cooperation and insights, the Centre aims to promote financial innovation, resilience, and sustainability aligned with broader economic stability and shared prosperity.
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This article reflects the views of the author, Rebecca Geldard, Senior Writer for Forum Stories, and does not necessarily represent the World Economic Forum’s official stance.
Explore more:
- BIS Triennial FX Survey
- Bank of England stablecoin consultation plans
- COP30 and climate finance initiatives
- IMF global financial stability reports
For comprehensive coverage of global financial system changes, visit the World Economic Forum Financial and Monetary Systems Centre.