Financial & Monetary Warfare

What it is. Using currencies, debt, liquidity, listings, and payment rails to steer behavior. Tools include capital controls, currency pegs/devaluations, shadow banking, sovereign funds, sanctions evasion, and exchange access. The aim is to make compliance the cheapest option—and reprice defiance.

Operating model

  • Actors: central banks, finance ministries, SWFs, state banks, exchanges, rating agencies.
  • Levers: FX policy, bond access, swap lines, listings, correspondent banking, KYC rules.
  • Mechanisms: attract flows → create exposure → vary liquidity → extract concessions.
  • Escalation ladder: guidance → regulatory friction → selective exclusion → systemic cutoff.
  • Success metrics: spread compression for allies, volatility transfer to rivals, policy shifts.

Paper Tigers, Real Money (VIEs)

Domain: Financial & Monetary · Stratagems: 7, 17, 25

Problem / betrayal. Investors think they own a firm; they own a paper claim.

How it happened. HFCAA forces disclosures and PCAOB inspection access; where inspection can’t happen, trading bans trigger. PCAOB finally got “complete access” (2022), but it’s contingent. SEC.

The men behind it. Issuers using offshore chains; banks and law shops that write the maze.

Consequences. Governance risk, sudden delistings, and stranded capital.

Warning. If you can’t inspect, you don’t own.

Counter-Orders

  • Audit: flag issuers subject to HFCAA risk; check PCAOB access status. SEC.
  • Inoculate: mandate audit-workpaper access and on-shore cash controls in term sheets.
  • Isolate: restrict treasury exposure to non-inspectable issuers/trusts. SEC.

Tactic clusters (curated, non-repetitive)

1) Liquidity Leash

Bind counterparties via access to liquidity and listings.

Stratagems: 1 Fool the Emperor to Cross the Sea, 17 Toss Out a Brick to Attract Jade

Application: Offer premium listings and swap lines; later increase compliance burdens to steer behavior.
Countermeasures: Diversify listings, multi-currency funding, pre-arranged alternative liquidity.

2) Proxy Pressure

Apply pressure through banks, funds, and indices rather than directly.

Stratagems: 3 Kill with a Borrowed Sword, 26 Point at the Mulberry…

Application: Lean on index providers and custodians to downgrade exposures; others fall in line.
Countermeasures: Transparent index governance, parallel benchmarks, regulatory independence.

3) Controlled Whiplash

Use FX moves or guidance shocks to punish or reward.

Stratagems: 27 Feign Madness but Keep Your Balance, 35 Combining Tactics

Application: Time devaluations with rivals’ rollovers; amplify stress on their refinancing calendar.
Countermeasures: Stagger maturities, FX hedges, regional reserve pools.

4) Debt Diplomacy

Extend credit that embeds strategic dependence.

Stratagems: 24 Borrow the Road to Conquer Guo, 30 Exchange Guest for Host

Application: Development loans with collateral-in-kind; defaults convert to influence points.
Countermeasures: Debt transparency, shared creditor clubs, collateral ring-fencing.

5) Masked Prudence

Frame coercive limits as “prudential” or “consumer protection.”

Stratagems: 8 Repair the Walkway…, 14 Borrow a Corpse to Raise the Spirit

Application: Tighten outflows under AML rhetoric; rivals accept constraints as responsible policy.
Countermeasures: Independent audits, international standards alignment, appeal pathways.

6) Capitulation Windows

Brief relaxations encourage behavior that later locks dependence.

Stratagems: 16 First Let It Go, 36 If All Else Fails, Retreat

Application: Temporarily ease controls to entice capital; then re-tighten with conditions attached.
Countermeasures: Treat holidays as temporary; use exits; avoid path dependence.

Failure modes & risks

  • Flight: parallel markets and crypto rails dilute leverage.
  • Contagion: feedback loops harm domestic credit and growth.
  • Reputation: premium listings migrate; rule-of-law discount grows.

Related: Information Warfare, Economic Warfare.