Deutsche Bank's George Saravelos warns the Greenland dispute exposes a critical U.S. vulnerability: its reliance on foreign capital to finance persistent deficits. European investors hold roughly $8 trillion of U.S. bonds and equities, making them America's largest lender. The confrontation with Washington could challenge this financial interdependence.

Danish pension funds began reducing dollar exposure last year, and Saravelos suggests Greenland could catalyze broader European rebalancing. With the U.S. net international investment position at record negative extremes, weaponizing capital flows rather than trade could prove far more disruptive to global markets than tariffs alone.

The EU's anti-coercion instrument could target capital markets, not just goods. With U.S. midterm elections approaching, European leaders may believe they hold leverage. A unified European response, even from euro-sceptic factions, would send a powerful signal to markets about the future of transatlantic financial relations.