From internecine conflict on European soil to pernicious public health crises, a range of uncertainties affect how money flows across the globe, determining national and international politics in the process:

1. The Russian invasion of Ukraine

The Russian invasion of Ukraine has, most notably from a financial standpoint, led to a comprehensive ejection of major Russian financial institutions and individuals from Western payments systems. Beyond an exclusion from international payments network SWIFT, Ukraine’s allies have also frozen assets belonging to Russia’s central bank. 

This has driven the Russian monetary system to prop up its own payments network, the System for Transfer of Financial Messages (or SPFS). Russia’s Finance Minister, Anton Siluanov, said in April that sanctions imposed against Russia for its invasion of Ukraine will accelerate the collapse of a dollar-based monetary system. "This pushes us to the need to speed up work in the following areas: the use of national currencies for export-import operations, the integration of payment systems and cards, our own financial messaging system and the creation of an independent BRICS rating agency," he said. 

But, while purchases of Chinese yuan in Russia have increased 800% this year, international payments remain largely in the control of Western powers—with SWIFT and the dollar still in charge. Foreign-exchange uncertainty has had ripple effects, however, leading international payments challengers like Wise to up their fees, passing the cost of volatility onto the consumer. 

That crypto hasn’t become a default mode of monetary storage and exchange is also of note. The virtual currency’s traceability and price volatility make it far less useful or convenient for skirting sanctions than other forms of money laundering. Crypto’s failure to take off as a surreptitious vehicle suggests the real showdowns in the politics of payments remain in fiat-currency territory.

2. The Covid-19 pandemic

The Covid-19 pandemic fundamentally shifted the way businesses and consumers pay for goods and services—and rapidly accelerated the digitization of our economy. Danielle Kane, Director of Small Business Banking at Grasshopper Bank, told The Financial Revolutionist in May that small banks have had to quickly digitize in order to overcome the hurdle of in-person bank branch closures. Businesses still needed bookkeeping, bill payment, and other assistance, even if their interactions with banks were no longer face to face. “It's more of a cashless world now, and banks need to better suit them that way,” she said. 

Perhaps the most decisive payments-related development arising from the pandemic, however, was the disbursement of stimulus payments. Between March 2020 and March 2021, qualifying US taxpayers received $3,200 to buoy them through economic and employment uncertainty. Critics have suggested the system has driven inflation—more so than the Covid-related supply-chain woes that have pushed up costs. 

3. Inflation and interest rates

And, ultimately, the Fed has framed inflation as the main economic issue it must tackle, even if it means artificially inducing a recession by hiking up interest rates. Last month, the Fed said aggressive rates would "prevent the far greater economic pain associated with entrenched high inflation, including the even tighter policy and more severe restraint on economic activity that would then be needed to restore price stability.”

But economic anxieties—inflation mixed with visions of an impending recession—are doing incumbent Democrats no favors. A recent New York Times poll lists economic anxieties as the leading issue for voters: at 44%, up from 36% in July. “Voters most concerned with the economy favored Republicans overwhelmingly, by more than a two-to-one margin,” the Times added. Facing both rising interest rates, which are slowing the path to homeownership for voters on both sides of the aisle, as well as inflation, the Biden administration most recently announced the release of 15 million barrels of oil in an effort to bring the price of at least one basket of goods down. How payments have changed in the past two years may have significant political effects in the US, determining who occupies Washington, D.C.’s halls of power after the midterms.