Global policymakers at the IMF and World Bank Spring Meetings in Washington expressed cautious relief as U.S. President Donald Trump pulled back from his earlier threats against two pillars of the global financial system: the Federal Reserve and the International Monetary Fund.
Concerns had been rising about Trump’s aggressive stance toward international institutions and the stability of the U.S. dollar as the world’s top reserve currency. But during the meetings, Trump’s administration signaled a shift by scaling back attacks on Fed Chair Jerome Powell and proposing reforms to the IMF and World Bank rather than an outright withdrawal.
“This week was one of cautious relief,” said Robert Holzmann, Austria’s central bank governor. “There was a turn (in the U.S. administration’s stance) but I fret this may not be the last.“
Treasury Secretary Scott Bessent’s comments about reshaping — not abandoning — the IMF and World Bank reassured officials worldwide that the U.S. remains committed to multilateral financial institutions it helped create after World War II.
No Clear Alternative to U.S. Leadership
While the euro is growing in popularity as a reserve currency, officials admitted it still lags far behind the dollar’s dominance. Structural challenges within the eurozone, such as national debt disparities and political instability, limit its ability to replace the dollar.
Other options like Japan’s economy or China’s heavily controlled currency were deemed even less viable. As one policymaker put it, the world has “no alternative” to the U.S.-led financial system for the foreseeable future.
“The U.S. is absolutely crucial for multilateral institutions,” Polish Finance Minister Andrzej Domanski told Reuters. “We’re happy they remain.“
Looking Ahead: Relief, but Not Complacency
Although markets briefly faced turmoil in response to Trump’s past threats against Fed independence, the strong reaction appeared to serve as a warning to the administration about the global consequences of undermining financial stability.
Economists like Citi’s Nathan Sheets believe that market backlash played a key role in moderating Trump’s approach.
Still, despite this week’s reassuring signals, officials remain wary that deeper challenges — including America’s dominance over tech and finance — will continue to create tension in the global order.
