In European capitals, familiar disaster scenarios dominate the debate. What should Europe do now on Ukraine and how should it respond to Russia’s hybrid campaigns? How do we weather the Trump tornado? And how to handle China’s tightening grip on critical raw materials?
These are all valid concerns. Yet they crowd out a more fundamental question: what if Donald Trump does to the global financial system what he has already done to the international security order: discard the rules, undermine institutions and weaponise dependencies? This is not theoretical, nor is it a niche issue for financial specialists. It is geopolitics and it affects us all.
Consider recent events. Last week, the US Department of Justice started an investigation into Jerome Powell, the chair of the Federal Reserve. In so doing, the Trump administration is openly undermining the Fed’s independence, the central pillar of global confidence in the dollar. At the same time, the US budget is spiralling out of control, with deficits exceeding US$2 trillion a year, or 6.2% of GDP.
In many ways, US financial power proved more effective than any aircraft carrier.
The clearest signal, however, is coming not from Washington but from financial markets. In early January, China issued a dollar-denominated government bond at the same interest rate as US Treasuries. That was despite China’s lower credit rating (A+ versus AA for the US), which would normally require a higher yield to attract buyers. Yet capital poured in: demand was roughly thirty times the amount on offer. This is historically unprecedented. And it is not a financial technicality; it is about power and trust.
For fifty years, the United States has wielded global influence through the dollar. Being cut off from the SWIFT payment system meant economic strangulation. Withdrawing emergency loans or freezing currency reserves triggered immediate crises. Financial sanctions compelled political compliance. In many ways, US financial power proved more effective than any aircraft carrier.
The effectiveness of that weapon is eroding – faster than many European policymakers seem to realise. The shift began before Trump, but, as so often, his behaviour has accelerated it.
Look at what others are doing. The bulk of trade among the BRICS countries (Brazil, Russia, India, China and South Africa) is no longer settled in dollars but in local currencies. Saudi Arabia now sells a quarter of its oil to China in yuan rather than dollars.
More importantly, these countries are building a parallel infrastructure. They are creating alternative payment systems outside SWIFT. Development banks are emerging as substitutes for the IMF and the World Bank. Commodity exchanges are developing where oil, gold and grain are traded in local currencies. This is partly a political pushback against ‘the West’, but it is also rational risk management in a world where financial dependence has become a strategic vulnerability.
What if access to dollars becomes politicised?
For Europe, this is particularly troubling. We are more deeply embedded in the American financial system than the BRICS countries, and the whole system rests on trust. European banks, pension funds and central banks collectively hold more than US$3 trillion in US Treasuries. They rely on legal certainty and political restraint in Washington.
But what if trust and the old rules no longer apply? What if Trump imposes an additional levy on foreign holders of US bonds, under the guise of national necessity? What if access to dollars becomes politicised? And how much European gold is stored on US soil? If Europe sought to repatriate that gold during a geopolitical crisis – say, over Greenland – can we be absolutely certain it would be returned?
What to do? The first step Europe must take is to stress-test its financial vulnerabilities, just as it already does for energy supply and defence. This is perhaps inconvenient: we are already stretched and reluctant to acknowledge another weakness. Yet financial security is a core condition for us to be able to decide our own future.
Everything now hinges on reducing one-sided dependencies. The euro must become more attractive as a reserve and transaction currency. For years, the EU has sought to build a European Capital Markets Union so that European and international investors have credible alternatives to US markets. Progress has been limited because EU member states resist risk-sharing and cling to national control. The same reluctance underpins opposition to Eurobonds.
The Hague should push in Brussels for a European strategy on financial resilience.
That is precisely why the joint €90 billion loan for Ukraine was the right move – both to keep the country in the fight against Russia’s war of aggression but also as proof of concept. It is good to borrow together in euros to invest in common goals as it strengthens Europe’s financial autonomy.
The Netherlands bears particular responsibility. As a major financial hub with large pension funds, it has above-average exposure to US markets. The Hague should push in Brussels for a European strategy on financial resilience: diversifying reserves, increasing transparency on gold storage and preparing scenarios for economic coercion by allies as well as adversaries. Threats come from all directions, and even friendly powers can abuse their leverage.
This opinion piece by Steven Everts was originally published in Dutch in NRC on 16 January 2026 under the title, 'Europa heeft een onderschatte zwakke plek'. It is reproduced here in English with the permission of NRC.
