Core Viewpoint - Finance is a key battleground in geopolitical economic competition, with financial sanctions being increasingly utilized by major powers to achieve both economic and non-economic objectives. The rise of financial sanctions is driven by external factors such as network effects and technological advancements, as well as institutional design that allows certain countries to leverage their financial systems for asymmetric geopolitical advantages [2][3][4]. Group 1: Financial Sanctions Overview - Financial sanctions are defined as measures taken by one or more governments or international organizations to restrict the financial activities of specific countries, entities, or individuals to achieve certain economic or political goals [6][7]. - The number of financial sanctions has significantly increased in recent years, with the Global Sanctions Data Base (GSDB) reporting a rise from an average of 200 sanctions per year to over 500, indicating a shift in geopolitical competition from traditional military means to trade and financial tools [7][8]. Group 2: Mechanisms and Effects of Financial Sanctions - Financial sanctions can lead to a substantial increase in the target country's financial transaction costs, which can rise from approximately 0.5% to about 3%, significantly impacting financial stability and increasing the likelihood of sovereign defaults [24][29]. - The economic impact of financial sanctions largely depends on the size and openness of the target country. Larger and more open economies tend to have a greater capacity to withstand sanctions, while smaller economies may face more severe consequences [27][31]. Group 3: Differences in Financial Sanction Capabilities - The United States possesses the most robust financial sanction capabilities, supported by a comprehensive institutional framework that allows for swift implementation and enforcement of sanctions [16][19]. - The European Union has strong sanction capabilities but faces challenges in internal coordination, which can lead to more restrained execution of sanctions compared to the U.S. [20][21]. - China's financial sanction framework is still developing but has made significant strides in recent years, establishing legal foundations to respond to foreign sanctions [21][25]. Group 4: International Responses to Financial Sanctions - Countries facing financial sanctions can enhance the resilience of their financial systems and support high-risk enterprises as a short-term strategy. Long-term strategies include diversifying reserve assets and strengthening legal frameworks against sanctions [43][44]. - Utilizing physical assets to facilitate international financial cooperation and deepening financial ties with neighboring countries can also serve as effective countermeasures against financial sanctions [47][48].