After years of limited progress, the then-34 members of the FATF decided that they needed a better way to fight illicit financing. The organization was monitoring policy, but too many countries were falling behind. It decided it would issue a public list. If a country, such as Turkey or Indonesia, was not doing enough to stop illicit financing, the FATF would publicize it.

Officially, the FATF rarely threatened punishment against listed countries; such efforts were reserved for major problems such as North Korea and Iran. Unofficially, however, the list was a signal for global banks. Listed countries began to face higher banking costs or delays in trade financing. The FATF might have called for few explicit consequences, but banks were stepping in to enforce FATF standards. Panama's listing, for example, led some international banks to suspend their relations with Panamanian banks. In Thailand, the country's listing meant diplomats struggled to cash checks.

So while defense officials were planning and carrying out invasions in Iraq and Afghanistan, Treasury officials were busy transforming the financial system into a place where banks everywhere would screen for illicit flows.

In 2009, more than 80 percent of countries had either no laws criminalizing terrorist financing, or laws with significant holes. Today, nearly every country has a complete legal framework in place. The FATF accomplished what law and unilateral coercion could not: a drastic shift in the way countries approach terrorist financing.

Market enforcement is predicated on an acute understanding of power in the modern era. Seventy years ago, the U.S. government used financial assistance to Europe to balance against the Soviet Union. The plan linked economic growth and trade with long-term security gains. Fast-forward to today, and those linkages have evolved into a global system in which governments fear the everyday caprices of international finance and trade more than the remote possibility of another world war.

Those who have the power to influence markets, thus, have the ability to change the world. The U.S. has dominated this space for many years, but policy makers don't seem to be aware of the power they possess. Conversations about national security remain focused on weapons systems and alliances; ones focused on climate change suggest a passive acceptance of the status quo. But markets possess their own kind of influence and authority that can be wielded to great effect.