The Case for Pragmatism and an Opportunity for Sino-US Leadership: Protecting Financial Stability Against Cyber Threats

Geopolitical tensions are on the rise worldwide, including between China and the United States. This will make multilateral cooperation and engagement generally, and diplomatic efforts focusing on more comprehensive frameworks specifically, more challenging. At the same time, the technological change will persist, transforming societies that become increasingly digitally connected in terms of both humans and machines. Governments can either manage emerging risks associated with this transformation proactively or respond reactively to them after major incidents. Some of these risks have a systemic dimension requiring particular attention. This includes the financial system, and clear warning signs are already on the horizon. The United States and China have an opportunity to proactively mitigate these risks given their shared interest and their combined influence. Cooperating in this more narrowly defined area holds greater promise in the current political environment than more ambitious initiatives do. The initiative outlined in this paper could be the blueprint for such a joint endeavor when the political window of opportunity presents itself.