The escalating conflict in Iran is prompting fresh scrutiny of the global financial order, with the US dollar at its apex. Brad Setser, Whitney Shepardson senior fellow at the Council on Foreign Relations, discusses how the war is already creating new global imbalances. The episode parallels past energy shocks, raising questions about the stability of the existing financial architecture.

Setser notes that the conflict could reshape financial flows in significant ways. Gulf states may become less desirable business destinations, while Iran could establish a tollbooth at the Strait of Hormuz. The war might also accelerate the world's shift away from oil, though the exact outcomes remain uncertain. These developments have implications for reserve management and broader financial flows.

The unique situation facing East Asia adds another layer of complexity. The region is experiencing a surge in energy import bills while simultaneously profiting from selling AI chips. This dual dynamic creates additional strain on the global financial system. The conversation with Setser explores how these interconnected factors could reshape the international monetary landscape and challenge the dollar's supremacy.