U.S. Policy Turmoil Shakes Global Markets, Undermines Dollar’s Safe-Haven Role, and Fuels Fears of Systemic Instability

A surge in U.S. policy unpredictability is unsettling global financial markets, eroding confidence in the dollar’s traditional safe-haven status, and intensifying concerns over broader systemic risks. The Bank for International Settlements (BIS) has issued a stark warning about growing financial fragility and the urgent need for credible policy responses.

At the BIS Annual General Meeting on June 29 in Basel, General Manager Agustín Carstens declared that the world economy has entered a “new era of heightened uncertainty,” reversing recent signs of optimism.

While inflation had moderated and growth showed signs of resilience earlier in the year, Carstens emphasized that a sharp shift in U.S. policy direction has destabilized markets. He cautioned that persistent uncertainty, coupled with deepening structural vulnerabilities, could stall recovery efforts unless global policymakers act decisively to reinforce economic foundations.