Lao Development
Bank’s recent financial indicators underscore the success of its transformation
GPS jamming: A growing threat to aviation safety
Is the British banking system truly secure?
Burkina Faso rejects foreign debt, embraces gold
EDITOR’S NOTE
China has cemented its status as the world’s EV powerhouse, registering a staggering 8.1 million new electric cars in 2023, an increase of 35% from the previous year. Over one in three new cars sold in China is now electric. The country has transformed itself from a net car importer into a major manufacturer and exporter of finished vehicles.
Thanks to their affordability and feature-rich designs, Chinese EVs are establishing their presence in the global automobile market. China’s dominance in batteries and supply chains is also emerging as a source of potential geopolitical leverage.
At the same time, rural America is seeing a new trend in which idle power plants and low-cost hydroelectric grids are becoming attractive sites for large-scale Bitcoin mines. These are massive data centres that house thousands of specialised computers solving cryptographic puzzles around the clock, consuming vast amounts of electricity and generating intense heat. However, there has been a growing pushback against the concept.
Shifting our focus to the global insurance industry, which stands on the front lines of climate change. In 2024 alone, insurers worldwide absorbed approximately $154 billion in insured losses from natural catastrophes, a staggering 27% above the prior decade’s average. Rather than simply raising premiums or pulling out of high-risk regions, insurers are now responding with unprecedented collaboration and innovation, partnering with governments and policyholders.
Our cover story for the August 2025 edition of International Finance highlights the Lao Development Bank (LDB), which has emerged as one of the most promising commercial banks in Asia. Established in 2003, the bank plays a huge role in implementing Laos' economic policies and supporting national development.
AUGUST 2025
VOLUME 25
ISSUE 51
editor@ifinancemag.com www.internationalfinance.com
Lao Development Bank’s recent financial indicators underscore the success of its transformation
BANKING AND FINANCE
IS GOLD'S RISE TOO GOOD TO LAST AMID GLOBAL UNCERTAINTY?
Gold’s recent rally has been stunning in its speed and scale, and several key forces are behind it
UNITED KINGDOM SEEKS NEW CHAPTER IN CHINA TIES
British businesses are drawn to China because it represents a vast and promising customer base
RURAL AMERICA FIGHTS BACK AGAINST CRYPTO
Beyond energy use, crypto mines also create significant local environmental burdensa
ARE AI CHATBOTS THE FUTURE OF MENTAL HEALTH CARE?
For all the hope and hype, mental health experts are quick to stress that AI chatbots come with significant risks and limitations
'NEXT WAVE OF FINTECH WILL BE ALL-IN-ONE PLATFORMS'
Hubpay helps to create a frictionless environment where the one million SMEs the UAE aims to host by 2030 can thrive
INSIGHT
CAN AI REPLACE EDUCATION? THE CHOICE IS OURS
Despite the hype, artificial intelligence cannot act or think for itself
BUSINESS DOSSIER
44 Beyond inflation: Searching for real yield in Turkish assets
64 Empire World: Iraq’s most ambitious real estate project
84 The Access Bank UK Limited expands its global presence IN CONVERSATION
Tracking all transactions and synchronising
in
Tourism booms in Sri Lanka, but who benefits?
Could artificial intelligence become conscious?
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Japanese conglomerate SoftBank has agreed to invest $2 billion in struggling chipmaker Intel, in a deal described as a commitment to advancing technology and semiconductors in the US. This investment provides Intel with a crucial financial lifeline amid fierce industry competition. Recently, SoftBank acquired a factory in Lordstown, Ohio, previously owned by Foxconn, as part of its plan to build AI data centres. Meanwhile, Intel is undergoing a restructuring aimed at streamlining its semiconductor business and focusing on its core client and data centre portfolio.
The Apple Watch Ultra, with its advanced features and rugged durability, is tailor-made for athletes and adventurers. It features a larger Retina display, a sapphire crystal face for enhanced durability, and a 49mm titanium case. Powered by the S8 chip, the device supports outdoor navigation with tools such as GPS, a depth gauge, and a compass. The smartwatch also includes dual-frequency GPS, up to 36 hours of battery life, and water resistance up to 100 metres.
Citigroup is now looking to expand its position in the digital asset market by exploring the possibility of offering custody and payment services for stablecoins and cryptocurrency exchange-traded funds (ETFs). The American bank, along with legacy peers such as Fiserv and Bank of America, is considering a move into stablecoins following the passage of legislation by Congress that paves the way for these crypto tokens to be widely used for payments, settlements, and other services. Stablecoins are cryptocurrencies pegged to a fiat currency or another asset, most commonly the US dollar.
The Dubai government provided housing support packages to 3,027 recipients, totalling more than AED 1.725 billion ($471 million) in the first half of 2025. Among these packages are 1,390 housing schemes worth AED 1.184 billion, aimed at assisting Emirati citizens with the construction, maintenance, and purchase of homes. According to reports, 935 housing grants totalling AED 540.3 million support requests for home ownership, construction, and maintenance. As part of a comprehensive support system, 695 land grants have been issued, enabling citizens to own suitable homes and thrive.
Top six leading automakers and their market share (In Billion US Dollars)
A profit decline has prompted Austaralia’s top gas producer, Woodside Energy, to shift its strategic focus as it looks to scale back exploration efforts. Valued at an estimated $39 billion, the company has decided to concentrate more on its high-value project pipeline.
Woodside reported an underlying net profit of $1.25 billion for the sixmonth period ended June 30, down
24% from $1.63 billion in 2024. The Perth-based company also declared an interim dividend of 53 cents per share, at the higher end of its target payout ratio range of 50% to 80%. Woodside is additionally seeking to sell down a further 20%-30% of its stake in the Louisiana LNG project and said it is seeing strong interest from high-quality potential partners.
ANDREW BASSAT CO-FOUNDER OF SEEK Andrew Bassat’s influence on Seek continues, especially as the company integrates AI into its job matching system to improve recruitment and talent acquisition globally
JOHN WALDRON COO OF GOLDMAN SACHS Goldman Sachs COO John Waldron, seen as the likely successor to CEO David Solomon, recently sold 18,244 shares but continues to hold about 300,000 shares of the company’s stock
MONA ATAYA
CEO OF MUMZWORLD Mona Ataya’s Mumzworld has expanded beyond MENA into global markets, solidifying its presence in Europe and North America with new partnerships and global delivery services
Business loans saw a 22.5% year-overyear rise, indicating strong demand from industries linked to Vision 2030 projects
Dominic Frederico of US insurer Assured Guarant, suggested that the Starmer government would not impose losses on creditors
According to Al Rajhi Capital, the banking industry in Saudi Arabia reported an 18% YoY increase in net profit to 22.9 billion Saudi riyals ($6.1 billion) in Q2 2025, exceeding consensus estimates of SAR22.3 billion.
Saudi National Bank and Al Rajhi Bank were the primary drivers of the earnings momentum, and on the lending front, Riyad Bank, Saudi Awwal Bank (SAB), Alinma Bank, and Al Rajhi Bank activities increased by 16%, surpassing deposits and driving the loan-to-deposit ratio (LDR) to 106%.
Due to increased competition in corporate loans and tighter liquidity conditions, net interest margins (NIMs) decreased sequentially. For banks, the 2025 guidance was ambiguous. Citing tighter liquidity conditions, smaller rate cuts than expected, and increased competition in corporate financing, six of the nine banks that held earnings calls downgraded their NIM guidance.
While diversifying funding through debt instruments, the majority of lenders anticipate one or two rate cuts by year's end. Banks are anticipated to do the same.
Meanwhile, in June of 2024, the total amount of outstanding loans from Saudi banks was SR3.2 trillion ($849.7 billion), a 15% increase. Corporate lending accounted for SR1.8 trillion, or roughly 76% of this growth, according to data from the Saudi Central Bank. Individual loans made up the remaining SR1 trillion, though their percentage decreased from almost 50% a year ago to roughly 44%. Business loans saw a 22.5% year-over-year rise, indicating strong demand from industries linked to Vision 2030 projects.
A notable example was the SR384 billion in financing that banks extended for real estate, which accounted for nearly 22% of corporate loans and represented a 39% increase from the previous year. Second place went to wholesale and retail trade, which accounted for 11.92% of corporate lending at SR213.1 billion, representing an 8.43% yearly increase. The sectors of gas, electricity, and water supply come next. The increase in financing emphasises how important banks are to advancing the economic diversification of "Vision 2030."
British lending giant Barclays is selling Thames Water debt worth £236 million, as the financially troubled water utility faces the possibility of being placed under special administration in the event of its collapse.
According to reports, the inflation-linked liabilities were put up for auction.
The Keir Starmer government has hired FTI Consulting to provide advice on strategies for putting Thames Water under special administration in the event that the largest water utility in the nation fails. The struggling company recently secured liquidity needs until at least mid-December by drawing the remaining amount of its first 12.5 billion pound tranche of debt lifeline. While remaining under the effective control of its senior creditors, the utility's debt pile stands at £17.7 billion since shareholders walked away from the company.
The ailing utility has been struggling to stay afloat amid a cash crunch, weighed down by a heavy debt stack and scrutiny over its environmental performance. Senior creditors, including Elliott, Silver Point and
Apollo Global Management, have put forward a recapitalisation proposal entailing £5 billion of new funds and a restructuring of its debt, and are now discussing potential concessions with regulator Ofwat.
Dominic Frederico, the chief executive of US insurer Assured Guaranty (the largest creditor to Thames Water), suggested that the Starmer government would not impose losses on creditors.
The company, which has an exposure of £1.8 billion to Thames Water’s bonds, was “well protected in terms of the legal structure” from losing money, he told investors on a recent call.
“The joke I make internally, and I’ll put it out here over some criticism, is that even in Puerto Rico’s case, they paid the water bill. So I’m assuming the UK government will do the same,” he commented, while referring to Puerto Rico, an American territory, which went through the biggest municipal default in modern history, beginning in 2014.The situation remains fluid as stakeholders await the government's next move.
Lenovo has partnered with a local business to construct a manufacturing facility, with plans to start producing PCs, laptops, smartphones, and servers in 2026
The move is a component of MercedesBenz’s larger strategy to streamline its financial services division in light of the industry's changes and growing competition
To increase its footprint in the Middle East, China's Lenovo Group will establish a regional headquarters in Saudi Arabia. The Chinese PC manufacturer said in a statement that it has named Lenovo veteran Lawrence Yu to lead the new headquarters in the Kingdom. Additionally, it named Zoran Radumilo, the company's technology chief and Giovanni Di Filippo, general manager of Lenovo Saudi Arabia. Lenovo has also partnered with a local business to construct a manufacturing facility, with plans to start producing personal computers, laptops, smartphones, and servers in 2026. According to Lenovo CEO Yang Yuanqing, China has a greater demand for AI infrastructure than the rest of the world.
To boost its tourism sector, the second-largest economy in Southeast Asia will launch an 18-month pilot programme to allow foreign visitors to convert cryptocurrencies into baht to make payments locally. While tourists can convert their money using Thai-based cryptocurrency exchange platforms, the money will be transferred into online wallet applications so that local businesses can be paid. Conversions will be capped at 550,000 baht ($16,949.15) to test the system and prevent money laundering. The country has reduced its estimate of foreign visitor arrivals for 2025 by 10% to 33 million. The projected number is significantly lower than the pre-COVID peak in 2019.
Source: Statista
A major change in Mercedes-Benz's financial services strategy is underway as the company talks to sell Mercedes-Benz Financial Services, its leasing subsidiary, to BNP Paribas. As per the reports, while the automaker will have a strategic opportunity to simplify operations and concentrate more on its core automotive business, BNP would be able to grow its automotive finance portfolio. The move is a component of Mercedes' larger strategy to streamline its financial services division in light of the industry's changes and growing competition. If completed, the deal might also allow the two businesses to work together more effectively by utilising BNP's well-established position in global finance.
The chairman of Kuwait Airways said the carrier is facing difficulties such as delivery delays and geopolitical instability. As per Abdulmohsen Alfagaan, the company is waiting for nine aircraft from Airbus. The airline has 27 jets now, expected to reach 30 by year-end, with the rest due in 2027. This directly affects the company’s plan to grow passenger numbers to 5.5 million in 2025 from more than four million registered in 2024. On the other hand, plans to improve services and capacity have been thrown off. Alfagaan, however, reiterated that Kuwait Airways is still dedicated to fortifying its position despite these obstacles and is collaborating closely with suppliers to address delivery concerns and operational efficiency.
Source: Statista
In a high-risk climate, global reinsurers and big insurers are reinventing how they pool risk and model disasters
The global insurance industry is on the front lines of climate change. Last year alone, insurers worldwide absorbed around $154 billion in insured losses from natural catastrophes, which is a staggering 27% above the prior decade’s average. As wildfires, floods, and storms grow more frequent and extreme, the sector faces mounting payouts and operational strain.
Insured catastrophe losses have now exceeded $100 billion for five years running, essentially establishing a new normal. Much of this increase comes from so-called “secondary perils” like wildfires, thunderstorms, and flash floods
Rather than simply hiking premiums or retreating from highrisk regions, insurers are responding with unprecedented collaboration and innovation. But to remain solvent amid escalating climate risks, insurers are rethinking how they pool risk, model catastrophes, invest in resilience, and partner with governments and policyholders. In short, they’re all in it together.
Climate change is clearly amplifying the frequency and severity of insurable events, driving disaster losses to new heights. The year 2024 was the world’s hottest on record, roughly 1.5°C warmer than pre-industrial times, and it showed in the catastrophe statistics. Reinsurer Munich Re reports that weather-related disasters caused 93% of all losses last year.
Total economic losses from natural catastrophes hit $320 billion in 2024, with about $140 billion of
that insured. Both figures are far above long-term averages, making 2024 one of the costliest disaster years on record.
“One record-breaking high after another, and the consequences are devastating,” observes Munich Re board member Thomas Blunck, noting that “the destructive forces of climate change are becoming increasingly evident.”
Insured catastrophe losses have now exceeded $100 billion for five years running, essentially establishing a new normal. Much of this increase comes from so-called “secondary perils” like wildfires, thunderstorms, and flash floods, which have nearly doubled in insured loss over the past decade.
Roughly 57% of 2024’s disaster damages went uninsured, representing an insurance protection gap of around $180 billion, highlighting many communities’ vulnerability. Each devastating event that goes partly uninsured underscores the need for greater resilience.
“These escalating losses are stretching insurers’ traditional playbooks. Pricing models based on yesterday’s weather are proving inadequate when ‘hundred-year’ floods and fires happen far more often. If you’ve reached an exponential part of the curve where suddenly something’s accelerating, it’s almost certain that we are underpricing the risk,” warns Bruce Carnegie-Brown, chairman of Lloyd’s of London.
In practice, policyholders are feeling the heat through rising premiums and even coverage
withdrawals. In wildfire-prone California, for instance, insurers non-renewed hundreds of thousands of home policies in recent years as losses became unsustainable. Across many regions, what was once an exceptional catastrophe is becoming expected, which is pressuring the insurance industry to adapt or face an existential threat.
In this high-risk climate, global reinsurers and big insurers are reinventing how they pool risk and model disasters. Reinsurers, or essentially insurers’ insurers, provide a crucial backstop by spreading losses across regions and markets. After a string of costly years, the reinsurance sector has bolstered its financial base. Global reinsurer capital climbed to about $715 billion in 2024.
This strong capital position, coupled with tighter underwriting terms, has helped major carriers withstand the barrage of recent claims. “Higher retentions and tighter coverage” have shielded reinsurers from the worst impacts of 2024’s catastrophes, essentially requiring primary insurers to absorb more of the risk up front. While painful for some insurers, this discipline is injecting stability into the system as it recalibrates for an era of mega-disasters.
A centrepiece of that recalibration is advanced catastrophe modelling. Traditional cat models built on historical data are being overhauled to account for the changing climate. Leading reinsurers
like Swiss Re and Munich Re are investing heavily in improved climate analytics and next-generation models. These tools use high-resolution data and forward-looking climate science to anticipate not only the intensity of 'peak' events like major hurricanes but also the cumulative toll of smaller events.
Peter Miller, CEO of The Institutes, said, “The industry recognises climate change as a systemic risk that requires significant adaptation. Industry leaders view climate change as a transformational force... They’re investing in capabilities to understand, price, and manage climate risks.”
With more precise modelling, insurers and reinsurers can structure smarter reinsurance treaties and even tap capital markets (through instruments like catastrophe bonds) to diffuse risk. In effect, the global insurance system is one big risk pool that now depends on state-of-the-art analytics to avoid being overwhelmed by any one disaster.
Confronted with unprecedented hazards, insurers are also pouring resources into innovative solutions and strategic investments to remain effective. One fast-growing area is parametric insurance, which is coverage that pays out based on a trigger metric (such as wind speed or rainfall) rather than measured damage. In 2024, for example, Aon and Swiss Re launched a parametric flood policy that uses storm surge heights to determine payouts along the US coast. By bypassing lengthy loss assessments, these covers can inject quick cash into stricken
communities, complementing traditional indemnity policies. Parametric products are increasingly viewed as a complement to conventional insurance, providing certainty and speed in an age of surprise events.
Beyond new policy types, insurers are making strategic investments in mitigation and technology. Many are actively funding preventive projects to reduce future claims. In Canada, for instance, a coalition of 15 insurers called Nature Force is bankrolling wetland restoration to curb urban flood risk. Insurers are also supporting wildfire fuel management and stronger homebuilding standards.
Many carriers now offer premium discounts to customers who fortify their properties, reflecting a shift from simply paying for losses to rewarding risk reduction. On the tech front, firms are leveraging AI and satellite imagery to refine risk assessment and deploying drones for faster post-disaster surveys. And they are factoring climate resilience into their investments, steering more capital towards renewable energy and climatehardened infrastructure.
Financially, the industry is adapting its risk appetite to stay solvent. Insurers are raising rates in high-risk zones to better reflect true costs (while negotiating with regulators to allow those increases). Some are scaling back exposure in the most disaster-prone markets, even as they expand into lower-risk lines or regions to diversify. Notably, despite recent turbulence, global insurers’ balance sheets remain solid; industry surplus and capital
Global climate insurance statistics in 2024
• $320 billion - Total economic losses from natural catastrophes
• $154 billion - Insured catastrophe losses globally
• $180 billion - Estimated protection gap
• 93% - Share of losses caused by weather-related disasters
• 27% - Increase over the 10-year average of insured losses
• 57% - Proportion of catastrophe losses uninsured
Source: Munich Re
have grown in the past few years thanks to disciplined underwriting and improved investment yields. This resilience gives insurers the breathing room to innovate.
Perhaps the most profound shift in the insurance industry’s approach is an embrace of public-private collaboration to combat climate risks. Insurers recognise they cannot keep footing ever-larger bills unless society at large becomes more resilient.
“No one country is going to solve this problem on its own. The solution is going to take all of society working at different levels...to develop incentives and solutions,” observes Maryam Golnaraghi of The Geneva Association.
This ethos is driving joint efforts on multiple fronts. Insurers are sharing their catastrophe models and data with governments and urban planners to inform smarter landuse and infrastructure decisions. They are also strong advocates for stricter building codes and zoning laws that account for climate risks, such as fortified roofs in hurricane zones and fire-resistant construction in wildfire areas. These measures may raise upfront costs, but insurers know they greatly reduce damage in the long run.
Governments, for their part, play a critical role in keeping insurance markets stable as the climate changes. Local authorities can limit development in highrisk floodplains, enforce updated building standards, and invest in protective infrastructure like levees or seawalls. National and state governments set the regulatory ground rules that determine how flexibly insurers can adapt.
For instance, regulators in some regions have begun to accept that premiums must rise in proportion to risk; where political pressure instead caps rates, insurers often respond by withdrawing from those markets, leaving governments to pick up the pieces.
Increasingly, the public and private sectors are finding creative ways to share the burden. In some places, governments act as an insurer of last resort or provide reinsurance backstops to ensure coverage remains available after mega-disasters.
In others, authorities work with insurers on programmes that tie insurance affordability to risk mitigation, such as offering subsidies or lower premiums for homeowners who elevate buildings or retrofit against disasters.
All these efforts rest on recognising that no single entity can
shoulder the enormity of climate risk alone.
“Governments at all levels are crucial in scaling local resilience and collaborating with the insurance industry. Together, they can develop a shared vision for hazard-prone areas where insurance challenges are rising due to an increase in unmitigated risks,” Golnaraghi emphasises.
In short, aligning the strengths of insurers (capital, risk expertise) with those of government (policy, infrastructure) is essential to climate-proof communities.
Faced with the daunting math of climate change, the insurance industry is shifting from a reactive stance to a proactive, resiliencecentric model. Insurers today aren’t just focused on premiums and claims. They’re also championing sustainability, driving climate adaptation, and working towards a more resilient future for all. They are harnessing science and data to anticipate future threats, and then
communicating those insights to policymakers and the public.
There is a growing realisation that insurability itself is at stake. If climate trends continue unabated, some perils could become essentially uninsurable in the coming decades, posing dire challenges to economies. This prospect is motivating insurers to support broader climate action, from investing in resilient infrastructure to advocating for carbon reduction policies that would limit worst-case scenarios.
Crucially, insurers are increasingly vocal that insurance alone cannot shoulder the burden of a changing climate.
“By favouring the conditions leading to many of this year’s catastrophes, climate change is playing an increasing role. This is why investing in mitigation and adaptation measures must become a priority,” argues Balz Grollimund, Swiss Re’s head of catastrophe perils.
In other words, reducing damage in the first place, through stronger infrastructure, smarter develop-
ment, and emissions mitigation, is as important as improving the insurance response, and the industry’s evolving playbook reflects this. It blends data-driven risk analytics, prudent capital management, product innovation, and cross-sector partnerships to build a more resilient system.
Ultimately, the insurance sector’s ability to thrive amid climate upheaval will depend on its agility and its alliances. Industry veterans caution that business-as-usual would lead to market disruptions and coverage gaps.
By treating climate change as a transformational challenge, the sector is spurring itself to reinvent many facets of its enterprise. In the battle against climate volatility, all stakeholders (including insurers, governments, businesses, and citizens) truly are all in it together, each with a role to play in securing a more resilient future.
British banks entered the postpandemic period with stronger finances than before 2008
IF CORRESPONDENT
In a much-publicised move, the UK Treasury announced it has sold its last shares in NatWest Group (formerly RBS), finally returning the bank to full private ownership nearly 17 years after the 2008 crisis rescue. The state invested some £45-45.5 billion to prop up RBS at the height of the financial crisis, an intervention that Finance Minister Rachel Reeves says “protected millions of savers and businesses from the collapse.”
However, the ultimate price to taxpayers was heavy. About £35 billion was recovered through share sales and dividends, versus £45.5 billion injected, leaving a net loss on the bailout of roughly £10-10.5 billion. Indeed, official figures show the UK spent up to £137 billion supporting banks in 2008-09 (including loans and recapitalisations), though most of that has been paid back or written down, leaving a fiscal cost on the order of £30-35 billion.
As NatWest exits public hands, at a symbolic loss to the taxpayer, attention turns to the broader question raised by the BBC’s in-depth explainer: “Are banks today genuinely safer from collapse than they were in 2008?” In the immediate sense, the NatWest sell-off draws a line under one of the largest bailouts in UK history.
Nevertheless, the enduring issue is whether the banking system has learnt from the past. In 2008-09, Britain's banks were on the verge of collapse. A run on Northern Rock in 2007 sparked panic, and Lloyds TSB had to rescue HBOS with £20 billion in state aid. Additionally, RBS's aggressive expansion, including its £49 billion takeover of ABN Amro, left it insolvent and reliant on government support.
The government intervened with unprecedented measures, nationalising Northern Rock and Bradford & Bingley, and taking majority stakes in RBS and Lloyds Banking Group to prevent a more severe collapse. In retrospect, the Treasury insists it was “the right decision then to secure the economy,” as letting these banks fail would have risked a far greater economic shock.
Yet the intervening years have brought sweeping changes. Regulators and bankers now highlight that the system is fortified with stronger buffers and tighter rules. Global agreements, Basel III and subsequent “Basel 3.1” reforms, require banks to hold significantly more high-quality capital and liquid assets than before the crisis.
For example, British regulators originally proposed raising capital requirements substantially but scaled back the hike to under 1% of riskweighted assets under Basel 3.1, a compromise they argue still “shocks” the system to cushion future shocks. Since 2019, the United Kingdom has implemented domestic ring-fencing regulations requiring its largest banks to legally separate core retail banking activities, such as deposit-taking and lending, from their higher-risk investment operations.
The aim is to protect ordinary savers if a trading or investment unit blows up. Meanwhile, the Bank of England
has established a new oversight framework that includes the Prudential Regulation Authority (PRA) to monitor bank safety and the Financial Policy Committee (FPC) to identify systemic risks.
These bodies conduct regular stress tests to ensure banks can handle severe recessions. Since 2008, banks’ balance sheets have been bulking up; the major British lenders today hold far more common equity (shareholder capital) relative to assets than a decade ago. Indeed, the latest stress test for major UK banks notes that aggregate core capital ratios stand around 14.6% for major UK banks, well above minimum requirements, and none of the institutions fell below the stress-test hurdle rate in the 2023 scenario.
Global Basel III standards and UK regulations have strengthened banks' financial resilience by increasing Tier 1 capital requirements and implementing liquidity coverage ratios. Even before the latest stress test, British banks held sizeable “rainy-day” buffers. The bank’s Financial Policy Committee kept a 2% countercyclical capital buffer in place in 2023 to absorb potential losses without choking credit. These buffers are intended to ensure banks can take losses and still lend through downturns.
The ring-fence policy requires banks with large retail deposits to keep everyday banking (deposits, mortgages, loans) in a distinct entity, insulated from riskier market-trading businesses. This structural reform was explicitly aimed at “increasing the stability” of the financial system and preventing the costs of failure from falling on taxpayers.
A Bank Recovery and Resolution
regime that aligns with European Union and international standards means that if a bank faces difficulties, its shareholders and creditors, rather than taxpayers, are responsible for absorbing losses through a process known as bail-in.
The BoE’s resolution framework aims for failures to be “orderly,” with customers either quickly compensated by the Financial Services Compensation Scheme (FSCS) or transferred to another firm. Under this framework, the FSCS guarantees deposits (currently £85,000) and aims to pay savers within days of a collapse. In light of the 2023 Silicon Valley Bank episode, the United Kingdom has even proposed raising the FSCS limit from £85k to £110k to better protect depositors.
Bankers and regulators now face strict oversight. The PRA carefully monitors banks' leverage and risk,
while the FPC employs macroprudential tools, such as adjusting capital buffers or loan-to-value limits, to manage system-wide risks.
Also, new governance rules (the Senior Managers and Certification Regime) hold individual executives personally accountable for misconduct. Collectively, these measures aim to catch problems early and force banks to repair their finances before a crisis spirals.
British banks entered the post-pandemic period with stronger finances than before 2008. The Bank of England’s latest Financial Stability Report finds that major British banks are “strong enough to support households and businesses” even under worse-thanexpected conditions.
In the 2022-23 stress test, bankers faced a scenario roughly as severe as
2019’s, with high inflation and deep recessions, and emerged well above the survival threshold. The aggregate capital drawdown (3.5 percentage points) was smaller than in 2019 (5.2 percentage points), partly because banks started with stronger balance sheets and higher deposit bases.
One analysis noted that “major UK banks would be resilient to a severe stress scenario” of synchronised global recession and market shock. Moreover, the banks’ liquidity buffers have grown; they hold large stacks of safe assets (government bonds and central bank reserves) that could be drawn down if funding became scarce. In short, by most quantitative metrics such as capital ratios, liquidity levels, and stress test results, the core banking system today is in far better shape than it was in 2008. However, recent turmoil has shown that vulnerabilities still exist. The collapses of Silicon Valley Bank (SVB) and Credit Suisse in early 2023 were unrelated to the leverage crisis of 2008, yet they sparked global unease. These cases highlighted new risks in the environment of rising rates and lingering behavioural issues.
SVB’s collapse was primarily driven by unique factors, as its tech-focused clients withdrew deposits during a funding squeeze while rising interest rates devalued its long-term government bond holdings. In other words, SVB had little credit risk but a classic “liquidity and interest-rate” mismatch.
As one expert observed, SVB was deemed “safe” by regulators (its assets
Annual income of NatWest Group from 2015 to 2024 (In Million GBP)
Source: Statista
were government bonds), but they underestimated the pain from sudden rate hikes. Credit Suisse, by contrast, collapsed under years of deep losses and strategic missteps; even the recovery plans envisaged after 2008 proved “incomplete,” and Swiss regulators ultimately arranged a swift takeover by UBS at the eleventh hour.
Most analysts emphasised that these failures did not reflect a broad capital shortage across banks. Rabobank strategist Michael Every bluntly noted, “This is not a repeat of 2008…banks are much better capitalised generally,” and former US economic adviser Betsey Stevenson declared, “I’m not panicked – I don’t see a systemic solvency problem.”
Regulatory authorities took prompt action to contain the fallout, such as extending deposit guarantees and arranging for emergency liquidity, unlike the inconsistent response in 2008. SVB’s collapse raised alarms, prompting US regulators to reveal that by early 2023, banks were burdened with over $620 billion in unrealised bond losses from swift rate hikes, a latent risk if funding pressures emerge.
In Europe, the panic at Credit Suisse prompted tough talks. Authorities ultimately insisted on a private solution, wary of bailouts. Swiss policymakers privately admitted that post-crisis “reforms did not operate as intended” for Credit Suisse, and indeed, World Bank and IMF data show banks’ market valuations often lag their book capital, suggesting some risks might still be underpriced.
In Britain, the 2023 events left relatively modest scars. After SVB’s fall, the UK arm was bought by HSBC within days; other mid-size lenders were stable. The focus turned to deposit protection. The Bank of England, mindful that the FSCS limit was lower than in many
countries, proposed raising insured deposits to £110,000.
Governor Andrew Bailey stressed that sound bank balance sheets are the real defence, but voters and politicians pressed for greater safety nets. Meanwhile, the BoE continued to tighten supervision. In March 2025, it announced a set of new “Future of Finance” reforms, including a credit supply buffer and adjustments to ringfencing rules, aiming to strengthen resilience without unduly hindering lending. London’s stance has been that while regulation will adapt to emerging challenges, the post-2008 reforms have significantly reduced the likelihood of a catastrophic financial collapse.
Expert perspectives reflect a cautious optimism. Many observers agree that global banking systems are safer overall than they were in 2008, meaning the likelihood of a run of large, unanticipated bank failures has diminished, but they also warn of new terrain.
For example, Bank for International Settlements research notes that “banks that were failing in 2008 still met their regulatory capital ratios,” and while capital and liquidity positions have improved since, the underlying lesson is that measurement is imperfect. Indeed, high leverage in risk-weighted terms and regulatory incentives to hold supposedly “risk-free” government bonds can mask tail risks.
The BIS recommends maintaining a substantial margin of safety beyond the minimum ratios. In the UK, despite regulators highlighting strong capital buffers, industry experts warn that banks still face emerging challenges such as a possible housing downturn, climate-driven financial risks, and the lingering effects of prolonged ultra-low interest rates. In addition, the sector’s profitability depends on keeping up
lending, so there is tension between buffer building and supporting the economy.
The United Kingdom’s financial reforms since 2008 are widely considered among the most comprehensive, yet the global landscape remains fragmented. Different jurisdictions responded to the crisis with varying levels of intensity, speed, and regulatory innovation.
While the European country moved swiftly to ring-fence retail banking, enhance capital buffers, and establish independent oversight bodies like the Prudential Regulation Authority and Financial Policy Committee, other economies took alternative, sometimes more hesitant, routes.
The US responded to the financial crisis with the Dodd-Frank Act, which introduced broad reforms including stress testing (CCAR), the Volcker Rule (limiting proprietary trading), and a resolution regime for failing banks. However, political resistance and lobbying pressure led to a rollback of several provisions.
Notably, thresholds for stricter oversight were raised in 2018, which excluded banks like Silicon Valley Bank from heightened scrutiny, a move later criticised after its 2023 collapse. Unlike the UK’s strict ring-fencing, the United States relies more on balancesheet transparency and central liquidity backstops than structural separation.
The 2008-09 crisis revealed significant fragmentation within the EU. In response, the region implemented tighter capital rules through the Capital Requirements Directive IV (CRD IV), which is the EU’s version of Basel III. Additionally, the Single Supervisory Mechanism (SSM) and the Single Resolution Board (SRB) were established. However, progress toward
Crucially, the EU lacks a full common deposit insurance scheme, meaning depositor protections still vary by country, a potential source of instability in future crises. In contrast to the United Kingdom’s clearly defined resolution framework and deposit guarantee scheme (FSCS), the European Union’s mechanisms remain complex and politically sensitive.
Switzerland, once seen as a paragon of banking stability, faced a shock in 2023 with the failure of Credit Suisse. Despite Basel III compliance, years of poor governance, legal entanglements, and weak profitability culminated in a forced sale to UBS. Swiss regulators admitted post-crisis reforms did not function as intended in this case.
This failure reignited global debate about the effectiveness of so-called “too big to fail” policies. It also stood in contrast to the United Kingdom’s relatively smooth resolution and absorption of distressed banks, like HSBC’s takeover of SVB UK.
In Asia, countries like Singapore, Japan, and South Korea pursued conservative regulatory approaches
post-2008, focusing on capital adequacy and strict supervisory regimes. Singapore, in particular, has emerged as a regional leader in integrating climate risk into stress testing.
However, much of Asia still faces rising risks from shadow banking, real estate overexposure (notably in China), and the lack of harmonised crisis resolution tools. In contrast, the United Kingdom’s resolution regime is among the few that aim for seamless depositor compensation and systemic containment.
Globally, the United Kingdom’s post2008 regulatory architecture stands out for its structural clarity, proactive supervision, and crisis-readiness. While no system is immune to shocks, the European country appears better insulated against the specific contagion pathways that triggered past crises.
As shown by the failures of Credit Suisse and SVB, vulnerabilities often stem not just from capital adequacy, but from governance, market behaviour, and new-era risks—realities every major economy, regardless of policy strength, must continuously adapt to.
The sale of NatWest’s final shares closes the book on one chapter of
public ownership and symbolises how much of the immediate crisis memory has faded. British banks today must navigate a different landscape. They enjoy stronger balance sheets and face tougher supervision, which by design makes a sudden systemic breakdown far less likely.
Following the 2023 financial turmoil, a former central banker summed up the situation by noting that the system is “safer but not safe enough.” Improvements in regulation and capital have indeed reduced the odds of a 2008-style meltdown, but critics caution that vulnerabilities have merely evolved, not vanished. The pandemic, the tech credit cycle, and geopolitical strains are new risk factors.
If another shock comes, whether it’s a sharp recession, an asset bust, or a new type of bank run, it will be fought on this reshaped battleground. Still, the swift responses from central banks and the higher buffers give authorities more tools than they had last time.
Banks may not be bulletproof, but they do have a much thicker shell than in 2008. The crucial question is whether regulators and bankers will continue to learn and adapt, ensuring that when the next crisis occurs, taxpayers and savers are genuinely better protected than before.
The Lao Development Bank (LDB) has emerged as one of the most promising Southeast Asian commercial banks, based in Laos. Established in 2003, it is now a joint venture bank, majority owned by Chaleun Sekong Energy Co., Ltd and the Lao Ministry of Finance, 70% and 30% respectively.
Over the past two decades, LDB has played a leading role in implementing state economic policies and supporting national development, while strictly adhering to domestic and international banking regulations.
Lao Development Bank’s recent financial indicators underscore the success of its transformation
Industry observers note that LDB is “one of the most outstanding financial institutions to watch” in the region. Its strategy has combined sound financial performance with modernisation initiatives, earning accolades as a fast-growing bank with innovative employee- and customer-focused programmes.
LDB’s roots lie in a government-led restructuring of Laos’ fragmented banking sector. In 2003, the Lao government merged two troubled state banks, Lane Xang Bank and Lao Mai Bank, into the new Lao Development Bank. The merger aimed to revitalise financial stability by consolidating capital, eliminating overlapping structures, and rebuilding public confidence in banking.
The newly formed LDB inherited a nationwide network and the mandate to support national socioeconomic development. In its early years, the bank focused on strengthening its balance sheet and human resources, recruiting competent personnel to meet its redefined mission.
Throughout the 2000s, LDB systematically upgraded its systems and services. Notably, it mig-
rated to a modern core-banking platform (“T24”) by 2010, connecting all branches online and enabling real-time inter-branch operations. It also introduced new customer products: ATM and electronic POS networks, and as a pioneer among Lao banks, a mobile banking service (marketed as “LDB Trust”) fully integrated into electronic payments.
By integrating ATM transactions into mobile/ e-commerce channels, LDB laid the groundwork for Lao consumers to conduct electronic payments nationwide. The bank concurrently expanded its credit portfolio to support small and medium enterprises (SMEs) in agriculture and rural development, aligning its loans with the goal of job creation and poverty reduction. These early reforms set the stage for LDB’s future growth, building capacity and technological capability within the organisation.
Having experienced the global COVID-19 shock and a broader government push to reform state-owned enterprises, LDB embarked on a major privatisation in 2021. This restructuring aligned with national
policy to turn specialised state banks into more competitive joint enterprises.
Under the new ownership, LDB overhauled its corporate governance and leadership. A new Board of Directors was appointed, supported by governance committees meeting international “three lines of defence” standards.
Sitthisone Thepphasy was named Board Chairman, bringing a vision-focused leadership style praised for disciplined oversight and ethical rigour. The management adopted a unifying slogan: “Change for the Target to Success,” emphasising strategic focus and streamlined processes under the refreshed organisational structure.
LDB’s mission and vision were recalibrated to be more customer-centric: its official vision now is “to be the bank that customers can trust for getting the best services, the best technology, and the best staff responses.”
In practice, the executive team, led by President Chanthanome Phommany, pursued a data-driven transformation. They conducted granular financial analysis to identify underutilised capital, optimise branch performance, and restructure costs. This
led to clear strategic plans and improved employee development programmes, reinforcing professionalism across the bank. Management reports that in the first year of the new regime, LDB significantly outperformed peers in profit growth and asset expansion.
With visionary leadership, LDB substantially grew its physical and service footprint. LDB operates over 18 branches, supported by 75 service units, 263 ATMs, and eight foreign-currency exchange offices nationwide. These units extend banking access even to remote districts. With expanded staffing and training programmes, LDB emphasises a professional workforce that can support its complex product range.
In an exclusive interview with International Finance , LDB Managing Director Fongsamout Douangchai, said, "Our product lineup is broadened. The bank now offers a full spectrum of commercial banking services: household and corporate deposits, term loans (including mortgage and auto loans), trade finance, and international remittances. In particular, we have issued UnionPay and Visa
A pioneering aspect of LDB’s ESG push is its involvement in Laos’s nascent carbon market. The bank has facilitated carbon credit projects through a Lao firm, CS Carbon Company, which holds forestry concessions
debit/credit cards, enabling customers to transact at home and abroad with global networks. It provides SWIFT-based international transfers and partners with Western Union for rapid remittances."
"The bank introduced LDB Biz, an online banking platform for businesses (including payroll services), so corporates can manage accounts and salaries without visiting branches. We also installed extensive payment infrastructure: over 260 ATMs, plus electronic point-of-sale (POS) terminals and QR-code readers, to facilitate digital payments countrywide.
In sum, our expanded branch network and service portfolio now cover all major banking needs of Lao businesses and citizens," he added.
Building on these foundations, LDB has invested heavily in digital transformation. Its flagship LDB Trust mobile app has been positioned as a gamechanger in Lao banking. The app functions as both an electronic wallet and a full-service bank portal. Users can transfer funds, pay utility bills (electricity, water, loans), top up phone accounts, and receive realtime account statements.
Unique features include integrated market data: customers can view Lao gold prices, Bitcoin values, foreign exchange rates, and interest rates on the go. By year-end 2022, over 50,000 merchants were registered on the platform, reflecting its adoption in retail commerce. LDB reports that usage of LDB Trust has surged after recent app improvements and customer incentive campaigns.
Alongside LDB Trust, LDB Biz was launched as a 24/7 web and mobile banking portal for corporate clients. Through LDB Biz, companies and organisations can initiate transfers and view statements.
LDB has also integrated its card services and mobile app: customers can link their UnionPay cards to LDB Trust for ATM withdrawals. These
digital platforms support the bank’s customercentric strategy. For example, LDB Trust includes e-commerce integration: it was among the first to tie ATM/mobile banking into online shopping. Users can make QR-code payments at merchants directly from the app and even promote their own business offers through in-app merchant portals.
The app’s design emphasises simplicity (one-click transfers, easy billers), so that even first-time users can transact confidently. As a result of these efforts, LDB Trust and LDB Biz have “performed soundly” as channels for transfers, bills, top-ups, and other services, greatly increasing convenience for Lao customers.
Another notable alliance is in the gold investment space. LDB has teamed with KPV Group (a leading Lao gold merchant) to integrate gold savings into digital channels. An “Easy Gold” joint venture arrangement enables KPV’s retail customers to use the LDB Trust app for gold purchases and instant settlement. For example, gold orders on the Easy Gold platform can be paid directly from an LDB account via the app. By embedding gold trading into LDB’s mobile wallet, the bank taps into both household savings and wealth-tech opportunities. While official details are sparse, this initiative illustrates LDB’s strategy of leveraging private sector partnerships (KPV Group, RMA, etc.) to extend its services and market presence.
To broaden its reach and product capabilities, LDB has equipped itself by cooperating with resilient commercial banks in neighbouring countries such as Thailand, Vietnam and China. Acceleration initiated the development of LDB’s enabler to enhance its foreign trade facilitation capacity.
Sharing his views about LDB implementing the ESG principles, MD Douangchai said, "We have woven environmental, social, and governance (ESG) principles into its business strategy. The bank explicitly supports Laos’s sustainable development agenda. Management emphasises financing clean hydropower export, eco-tourism, and modernised agriculture as part of the post-COVID economic
recovery. In practice, our bank evaluates lending and investment projects against their ecological impact, and it offers tailored loans for green initiatives such as agroforestry or rural electrification."
A pioneering aspect of LDB’s ESG push is its involvement in Laos’s nascent carbon market. The bank has facilitated carbon credit projects through a Lao firm, CS Carbon Company, which holds forestry concessions. Under the new national carbon credit decree, these projects cover an area of roughly 2.5 million hectares of forest land.
LDB has provided advisory and financial support to CS Carbon’s schemes, making it effectively the first Lao bank to back certified emission reduction initiatives. By integrating carbon credits into its portfolio, for example, enabling businesses to buy or earn Lao Carbon Units, LDB positions itself at the
forefront of financing nature-based solutions. This aligns with the bank’s broader climate commitment and the country’s goal to tap international carbon funds.
"On the social side of ESG, we have adopted internal governance frameworks and staff welfare programmes consistent with international norms. The bank implements strict anti-money laundering (AML) and know-your-customer (KYC) systems as noted in internal reports, and has won awards for its employee welfare initiatives," Douangchai added.
The board’s three lines of defence model and emphasis on professional ethics reflect an institutional commitment to good governance. These ESG efforts are now integrated into LDB’s brand and risk management outlook, reinforcing confidence among socially conscious investors and clients.
We are well-positioned to lead Laos’s banking sector into deeper ASEAN integration, greater access to global capital, and a rapidly evolving digital economy
- Fongsamout Douangchai, LDB MD
LDB’s transformation has been communicated via high-profile marketing campaigns and user-focused technology. The bank deliberately adopted celebrity endorsements to raise brand awareness. For example, its LDB Trust app promotion in 2023 featured Thai television star Nine Naphat as the brand ambassador, tapping into his youthful fanbase.
Local influencer Bella Lani was likewise engaged to reach millennial customers. These campaigns portrayed LDB Trust not just as a banking tool
but as a modern lifestyle app, strengthening public trust and driving downloads. According to LDB’s management, the app saw “significant growth” after such promotions.
Technologically, LDB is integrating marketing and service channels. Its digital platforms now include targeted promotions and easy enrolment for customers: for instance, new app users receive welcome incentives and merchant coupons.
Douangchai also heaped praise on LDB's digital offerings and innovative multilingual services for Laos’s diverse customer base.
"The bank’s social media and SMS channels push timely financial tips and e-coupon deals to stimulate usage. LDB Trust’s interface is gamified with loyalty points and gold purchase alerts, making banking more engaging. Furthermore, all of LDB’s digital offerings are multi-lingual (Lao, English, Chinese) to serve Laos’s diverse customer segments. In essence, LDB blends marketing creativity with tech features,
ranging from one-click bill pay to integrated gold/ e-commerce modules, ensuring that product innovation remains aligned with customer convenience and lifestyle," he noted.
LDB has consistently demonstrated social responsibility, particularly during national crises and economic hardship. During the severe floods in northern Laos in September 2024, for example, the bank donated 500 million kip to relief efforts in Luang Namtha province. This contribution helped provide food, water, and medicine to affected families, alongside other private sector aid. The action was widely publicised to encourage solidarity (“share heart” campaigns) and exemplified LDB’s commitment to community support.
Beyond emergency relief, LDB contributes to long-term economic resilience. In the aftermath of the COVID-19 downturn, the bank aligned with government stimulus by offering affordable credit. Management notes that LDB worked to ensure businesses “have access to finance at reasonable interest rates” during recovery periods.
The bank also sponsors financial literacy programmes and SME workshops, aiming to strengthen the broader economic base. Internally, LDB maintains employee training, welfare benefits, and corporate volunteering days, reflecting the “social” in its ESG stance.
To sum it up, LDB leverages its financial resources and expertise for social good, whether through targeted funding (flood and pandemic relief), supportive lending to small businesses, or public education on banking. These community-oriented initiatives complement its commercial objectives, promoting goodwill and stability in the Lao economy.
The Lao Development Bank, celebrating over two decades of service, has evolved into a key player in Laos's socio-economic development. Established in 2003 through the merger of two state-owned banks, LDB has consistently worked to restore public confidence, drive inclusive growth, and align its operations with national development goals.
LDB’s transformation goes beyond technical upgrades; it reflects a strategic vision. By expanding
its presence in underserved areas, the bank has worked to bridge financial gaps, enhancing economic equity across the country. This expansion is paired with significant investments in digital banking, including platforms like LDB Trust and LDB Biz, which offer services such as digital savings, credit, transfers, and investment management. These innovations have improved banking convenience and accessibility, helping Laos transition to a digital-first economy.
LDB stands out in the competitive Southeast Asian banking market for its holistic approach, integrating technology, forming strategic alliances, and promoting sustainability. Moreover, its involvement in ESGdriven initiatives, including carbon credit projects covering over 2.5 million hectares of forestland, demonstrates a strong commitment to ecological and social responsibility.
The bank’s focus on customer experience is evident in its user-friendly mobile platforms, realtime financial insights, and integration of loyalty programmes, QR-code payments, and digital gold trading. These efforts have created a seamless banking ecosystem that resonates with customers’ evolving needs.
LDB’s strong financial performance, including record profits, a high return on equity, and one of the region's lowest non-performing loan ratios, underscores the success of its transformation. Its resilience in adapting to disruptions, like the COVID-19 pandemic, demonstrates its solid governance and technological foresight.
"We are well-positioned to lead Laos’s banking sector into deeper ASEAN integration, greater access to global capital, and a rapidly evolving digital economy. Our continued focus on SME financing, green infrastructure, and inclusive banking will shape Laos' financial future, positioning LDB as a model for emerging market banks worldwide," MD Douangchai concluded.
Hubpay helps to create a frictionless environment where the one million SMEs the UAE aims to host by 2030 can thrive
CL RAMAKRISHNAN
As the UAE accelerates toward becoming a global fintech hub, business leaders like Hubpay CEO Kevin Kilty are shaping its financial future. Kevin is a seasoned financial services leader with over two decades of experience in investment banking across Europe and the Middle East. He has remained at the forefront of the UAE's economic transformation, building the financial infrastructure necessary for the next generation of global commerce. Before Hubpay, he worked in investment banking, across corporate finance and leveraged buyouts, with a focus on the financial services industry.
His journey from traditional finance to leading a category-defining fintech gives him a unique perspective on the evolution of money. This deep experience is the foundation of his work, where he is focused on how building regulated, accessible financial infrastructure is the key to unlocking the UAE's economic potential and empowering a new wave of entrepreneurs.
In an exclusive conversation with International Finance, Hubpay CEO Kevin Kilty shares insights into the company’s vision, the hurdles they've overcome, the role of multi-currency IBANs, ambitious expansion plans, the future of B2B fintech in the Middle East, and more.
What inspired you to launch Hubpay, and how has your vision evolved since its inception?
Having spent over 20 years in financial services, I saw a clear and persistent gap in the market. Traditional banking infrastructure simply wasn't built for the speed and global nature of modern business, especially for SMEs. The initial vision was to solve the cross-border payments problem with better FX rates and faster settlements. That vision has since evolved significantly. We have now expanded to be a one-stop shop for UAEC corporates; an end-toend platform that allows a UAE business to go from incorporation to global operation seamlessly.
The regulatory landscape, the business needs, and the market dynamics in United Arab Emirates are unique
Hubpay is recognised as a Future 100 company. What do you believe sets your approach apart from other fintechs in the region?
I believe it comes down to two things: we solve fundamental problems, and we are regulated from the ground up. While many fintechs focus on a single, niche product, we are building the comprehensive infrastructure that businesses actually need, from getting a business account open in a day to managing a multi-currency treasury. Being recognised by the Ministry of Economy as a Future 100 company is a validation of this approach. We’re not just a product; we’re a key enabler of the UAE's economic ambitions.
Many fintechs repackage global products. Why did you choose to build Hubpay’s solutions from the ground up, and what challenges did that pose?
Repackaging a global product for the UAE simply doesn't work. The regulatory landscape, the business needs, and the market dynamics here are unique. We chose to build from
the ground up because you can't solve a regional problem with a generic solution. The biggest challenge was, without a doubt, the complexity of building a multi-licensed, regulated entity. It requires a significant investment in compliance and technology, but it's the only way to build a sustainable, trusted platform.
How does Hubpay's digital onboarding and multi-currency IBAN solution directly address the SME pain points in the UAE?
For years, the biggest hurdle for a new SME in the UAE wasn't getting their trade license; it was getting a business account. The process could take weeks, sometimes months, leaving entrepreneurs in limbo. Our digital onboarding solves this by getting them live in as little as one business day. The multi-currency IBANs are the next step; they give SMEs immediate access to global markets, allowing them to receive payments in USD, EUR, GBP, and more without the need for multiple, complex foreign bank accounts.
INTERVIEW
HUBPAY SMEs
On the digital asset side, Hubpay only works with VARA-licensed partners, ensuring that the company remains the regulated fiat on/off ramp while never taking custody of crypto itself
You launched the UAE’s first fully regulated crypto-to-fiat gateway. What industries are adopting it fastest, and what has surprised you most about the demand?
The adoption has been fastest in high-value sectors where international buyers are common. Real estate is the initial clear leader, followed by luxury goods like supercars, but this has now expanded to various other sectors. What has surprised me most is the breadth of corporates looking to access cryptocurrency for payments. The game changer has been stablecoins; Bitcoin isn’t viable for payments, it is too volatile, creating too much cost and uncertainty in price. However, USDT is ideal; we now have customers from the pharmaceutical to the automotive sector moving to USDT as their preferred payment method. Furthermore, whilst there is a clearer use case for payments in and out of emerging markets, our customers are now looking to make and receive USDT across G20 payment corridors. The key for customers is for a trusted, regulated bridge to the real economy, and that's exactly what we've built.
What role do you see Hubpay playing in the UAE’s ambition to become a global fintech and SME hub?
The UAE's ambition is to be the best place in the world to start and scale a global business. Our role is to provide the financial infrastructure that makes that ambition a reality. By addressing the key barriers to business account opening, crossborder payments, and digital economy access, we actively empower that vision to become reality. We are helping to create a frictionless environment where the one million SMEs the UAE aims to host by 2030 can thrive.
With over $2.6 billion in cross-border payments processed, how are you helping SMEs
manage FX risk and compete in global trade?
Processing over $2.6 billion has given us incredible insight into the challenges SMEs face. The biggest is currency volatility, which can wipe out the profit margin on a deal overnight. We help them manage this risk in two ways: first, by providing multi-currency wallets that allow them to hold foreign currencies and convert them when the rate is favourable, and second, by offering smart hedging tools. This gives them the same level of control over their treasury as a large corporation, allowing them to compete with confidence on a global stage.
How do you see the convergence of crypto and traditional finance reshaping the economy, particularly in high-value sectors like real estate?
The convergence is creating a more efficient and global marketplace. In a sector like real estate, a buyer from anywhere in the world can now securely transfer millions of dollars in value to the UAE in minutes, not days. This removes a massive point of friction from the sales process. It's not about replacing traditional finance; it's about building a regulated bridge between the two worlds. This will unlock a new wave of global capital, making the UAE an even more attractive destination for international investment.
Regulation is evolving rapidly around digital assets. How did you navigate building a compliant crypto payment solution in the UAE? We embraced regulation from the very start. As an ADGM-regulated entity, we designed our product to be fully aligned with the UAE’s progressive regulatory frameworks. On the digital asset side, we only work with VARAlicensed partners, ensuring that Hubpay remains the regulated fiat on/off ramp while never taking custody of crypto itself. This regulationfirst approach gives our customers confidence, builds trust with partners, and allows us to innovate without operating in grey areas. The UAE’s forward-looking regulators have created an environment where compliant innovation is possible, allowing us to scale with confidence as the regulatory landscape continues to evolve.
What’s next for Hubpay in terms of expansion beyond the UAE or into new verticals?
While the UAE remains our core focus, the problems we are solving are not unique to this market. Our immediate focus is on deepening our presence here, particularly in key verticals like real estate and expanding our treasury solutions for corporates. However, our platform is built to be scalable, and we see significant opportunities to expand our model into other high-growth markets in the region soon.
How do you see the B2B fintech landscape evolving in the Middle East over the next 3-5 years?
The landscape will mature from single-product solutions to comprehensive platforms. The first wave of B2B fintech was about solving one problem well, like payments or invoicing. The next wave will be about creating a single, integrated financial operating system for businesses. We will also see a greater focus on embedded finance, where financial services are seamlessly integrated into other business
software, and a continued push for regulated, compliant innovation.
What advice would you give to entrepreneurs building in highly regulated sectors like fintech or Web3?
Don't treat regulation as a hurdle; treat it as a competitive advantage. Work with regulators from the very beginning, be transparent, and build your product with compliance at its core. It's a slower, more expensive way to build, but it's the only way to create a lasting, trusted company in this space. The "move fast and break things" mantra does not apply when you are dealing with people's money.
MATTHIAS LÖFFLER MANAGING DIRECTOR, FOCONIS TRADING
Tracking all transactions and synchronising buying power in realtime is the first step
In today’s hyper-connected and fast-paced financial world, banks and the financial industry face mounting pressure to manage customer buying power and counterparty limits with precision and speed.
With 24/7 access to real-time transaction data, ranging from traditional securities and wire transfers to digital assets like cryptocurrencies, the ability to monitor and manage limits is not just a back-office function but a core competitive asset. Buying Power Hub offers a transformative approach to limit management, enabling banks, brokers, and other financial institutions to process and approve transactions in real-time.
The world of banking and finance is fast-moving and complex, and managing customer buying power is a core task. Financial institutions need smart software, specifically a solution that captures every transaction across all trading and payment platforms. It must calculate accurate buying power and push real-time updates to connected systems. The result? Fully synchronised buying power. Instantly.
Tracking all transactions and synchronising buying power in real-time is only the first step. To stay competitive in the modern financial environment, banks and financial institutions need more, such as intelligent software that provides full visibility and control without delay, without friction, without any compromises. Let’s break down what future-ready
buying power management software should deliver.
Efficient buying power management starts with full coverage. Modern software must handle institutional and retail clients within a centralised but logically separated system.
Continuous 24/7 trading and payment can’t afford downtime. That’s why rolling upgrades are essential. Instead of traditional version updates with full system restarts, modern platforms roll out new features incrementally.
Financial activities and changes must be reflected immediately in all relevant systems. Real-time synchronisation with core banking platforms ensures accuracy and eliminates the lag caused by batch updates.
A modern system must be flexible. It should allow dynamic limit fine-tuning (automated or manual). For example, transactions typically exceeding limits can be approved under special conditions.
Speed is critical when the buying power is exceeded. The software should immediately flag overdrafts and present them clearly to front-office or risk management teams.
High volumes must not lead to system failures. Cloud-native solutions with horizontal scalability ensure that additional computing power can be deployed instantly as traffic spikes.
Ensure seamless integration
Flexibility is key to adoption. The software must work independently of specific systems and support modern interfaces such as Apache Kafka. At the same time, institutions with legacy environments like Websphere MQ or flat-file structures must be able to integrate via adaptors.
Intelligent software enables banks and financial institutions to manage customers’ purchasing power in real-time, across all asset classes from securities to cryptocurrencies. Financial institutions have full control over their counterparty limits, which are updated in real-time across all asset classes traded on various systems.
By integrating cross-system transaction monitoring, real-time synchronisation, and flexible limit management, institutions can streamline processes, minimise risk, and approve transactions instantly. Cloud-native, platform-independent architectures
with rolling upgrades ensure continuous availability, scalability, and compatibility with modern and legacy systems.
When banks rely on modern software solutions, they quickly reap many benefits—for example, real-time updating, risk minimisation and fraud prevention, efficient data processing, and dynamic limit adjustment. Centralised limit control management will also be a relief for risk and compliance management, since they have fewer systems to monitor at the same time, but a consolidated view across clients and counterparties.
In view of increasing regulatory requirements and growing complexity in trading, banks should therefore quickly implement solutions that make existing processes more efficient.
Matthias Löffler has been Managing Director of Foconis Trading GmbH since 2023. Previously, he served as Managing Director of Hamburg-based pdv Financial Software GmbH (now part of Foconis) and held senior positions with Adenza (now Nasdaq), itiviti (now Broadridge), and FIS. He advises banks, brokers and exchanges, providing them with tailored software. He holds a degree in Business Administration from Goethe University Frankfurt and has more than 25 years of experience with software and market data for financial market participants
Gold’s recent rally has been stunning in its speed and scale, and several key forces are behind it
IF CORRESPONDENT
Gold is experiencing a renaissance. After years of steady interest, the precious metal’s value has skyrocketed, rising over 40% in the past year alone and recently shattering all-time price records. In late April 2025, gold breached $3,500 per troy ounce, eclipsing its 1980 peak even after adjusting for inflation.
There’s a palpable mix of excitement and trepidation on the horizon, as investors pile into an asset they view as a haven amidst today’s turmoil. But with gold fever sweeping the markets, many are asking the following: What’s driving this boom, and could it all come crashing down?
A
“perfect storm” of economic anxiety, geopolitical conflict, and shifts in monetary policy has burnished the yellow metal’s appeal. Fears of recession and inflation have grown, exacerbated by unpredictable policy moves, such as abrupt changes in US trade strategy, which rattled markets and weakened confidence in paper
assets. Wars (whether trade or actual military conflicts) have further spooked investors and fuelled demand for the timeless safety of gold. In this climate of uncertainty, gold’s lustre as a store of value shines brightly once again.
Yet history teaches that what goes up can also come down. Previous gold booms, notably those in 1980 and 2011, were followed by painful corrections. So, is today’s rush for gold a prudent hedge or the makings of a bubble?
International Finance will examine the drivers of the current gold price boom, explore why gold is traditionally seen as a haven, consider the risks of investing amid the hype, weigh expert opinions on a potential bubble burst, and discuss strategies for navigating uncertainty in these volatile times.
Gold’s recent rally has been stunning in its speed and scale, and several key forces are behind it. Economic jitters and monetary policy shifts have played a leading role. Over the past year, investors have grown nervous about the global economy’s health.
In the United States, the world’s largest economy, flashing signs of a late-stage cycle include slowing growth, a softening labour market, and rising fears of an impending recession. Inflation, which spiked after the pandemic, remains a concern as well.
Gold thrives in such conditions because it is viewed as a hedge against inflation and currency weakness. Unlike cash, gold’s value cannot be eroded by central banks printing more money or by a surge in consumer prices.
Indeed, analysts point out that the cost of gold “tends to spike in times
Average prices for gold worldwide from 2015 to 2024 (In Nominal US Dollars Per Troy Ounce)
Source: Statista
of high inflation and economic and geopolitical uncertainty.” As inflation fears rise, so does demand for the yellow metal, which is used to preserve purchasing power.
At the same time, monetary policy itself has boosted gold. After aggressively raising interest rates to combat inflation in 2022 and 2023, major central banks adopted a more dovish stance in 2024 and 2025. For example, the United States Federal Reserve halted its rate hikes and even began hinting at (or enacting) rate cuts as economic momentum faltered. Lower interest rates make non-yielding assets like gold more attractive than bonds or savings accounts, reducing the “opportunity cost” of holding gold.
It is no surprise, then, that gold’s price jumped in March 2025 immediately after the Fed signalled a pause, surging above $3,050/oz following a decision to hold rates steady. Expectations of global rate cuts have been a major tailwind.
“We reiterate our long gold reco-
mmendation due to the gradual boost from lower global interest rates, structurally higher central bank demand, and gold’s hedging benefits against geopolitical, financial, and recessionary risks,” Goldman Sachs noted.
With the prospect of easier money on the horizon, investors are preemptively moving into gold as a safeguard against any policy-driven currency debasement.
Geopolitical turmoil and uncertainty form the second key pillar of gold’s boom. In recent years, the world has witnessed a series of destabilising events, and gold often shines when confidence in governments or international stability wavers. One major factor has been the escalation of trade conflicts.
Under President Donald Trump, the United States unleashed waves of tariffs and trade threats, sparking a trade war that unsettled global supply chains and alliances. By early 2025, an aggressive new round of American
tariffs on many of its main trading partners had investors on edge.
The recent surge in gold prices has closely mirrored the spike in global policy uncertainty, driven in part by fears of substantial tariffs and their potential inflationary consequences, as one analysis observed. Markets interpreted Trump’s erratic trade moves and even direct attacks on Federal Reserve independence as destabilising forces.
For instance, when President Trump lambasted Fed Chair Jerome Powell as a “major loser” on social media and demanded immediate rate cuts, it undermined confidence and sent shockwaves through financial markets. Stocks tumbled, the dollar’s
value slipped, and gold promptly hit a fresh record high in the aftermath. This episode vividly demonstrated how political and policy drama can boost gold. When investors fear that policymakers might mismanage the economy or upend the status quo, many seek refuge in a tangible asset whose value is not at the mercy of any government’s decisions.
Beyond trade disputes, traditional geopolitical risks have also driven a flight to safety. Ongoing wars and international tensions, such as the conflict in Ukraine and flare-ups in the Middle East, have unnerved investors and spurred demand for gold, which is often viewed as crisis insurance.
Historical data show that gold’s
price tends to rise during episodes of heightened geopolitical risk or military conflict, periods when stocks and even government bonds might fall. In such extreme moments of uncertainty (for example, the days after the 9/11 attacks or the outset of the COVID-19 pandemic), gold has proven its mettle by preserving value and rising in tandem with other havens like the American dollar. Today’s climate, marked by diplomatic rifts and security concerns, is a textbook case of investors hedging against worst-case scenarios.
Crucially, central banks around the world have themselves become major drivers of the gold rush, a relatively new dynamic that cannot be overlooked. Over the past few years, central banks,
especially in emerging markets, have been voracious purchasers of gold, bolstering their reserves.
They have collectively bought more than 1,000 tonnes of gold each year since 2022, more than double the average annual purchases in the prior decade. In 2022, when Western nations froze Russia’s dollar reserves in response to the Ukraine invasion, many other central bankers had an epiphany.
“Reserve managers…realised, maybe my reserves aren’t safe either. What if I buy gold and hold it in my own vaults?” explained Daan Struyven, a commodities strategist at Goldman Sachs.
In other words, countries like China, India, Turkey, and Poland (all among the leading gold buyers) are hoarding gold to reduce reliance on the US dollar and the global dollar-centric financial system. The fear is that dollar assets can be “weaponised,” meaning turned into tools of sanction or pressure in times of geopolitical strife.
Gold, by contrast, is sovereign. Holding gold gives these countries an asset that no foreign government can seize or block, a form of financial security amid rising East-West tensions. This structural shift in central bank behaviour has added a steady, price-supporting demand for gold that many analysts say is “unlikely to reverse in the near term,” even if the pace moderates. In short, central banks are effectively building a golden buffer against geopolitical and economic shocks, and that trend has helped propel the market upward.
Finally, market sentiment and investor behaviour have amplified gold’s climb. Success begets success in financial markets, and the sight of gold repeatedly breaking records has triggered a classic case of FOMO, or
fear of missing out. From small retail investors to large institutions, many are now scrambling to “get a piece of the golden pie,” as one bullion dealer observed.
Exchange-Traded Funds (ETFs) focused on gold have seen surging inflows, as they offer an easy way for people to buy into the rally without handling physical bars or coins. These investment vehicles have magnified demand. Large funds buying gold on behalf of investors further push up the price, which in turn attracts even more buyers in a virtuous (or vicious) cycle.
“Even a small move out of the big
stock market or bond market means a big percentage increase in the much smaller gold market,” Struyven notes.
That is, the gold market is tiny relative to stocks or bonds, so it doesn’t take a huge reallocation of global capital towards gold to make its price jump dramatically. With market volatility elsewhere (stocks and bonds both had rocky periods recently), a modest shift in portfolios toward gold has an outsized effect on its valuation.
Additionally, some investors are seeking insurance against a scenario of stagflation, meaning simultaneous economic stagnation and high in-
flation, which is a nightmare for most assets but historically a favourable backdrop for gold.
As one commentary succinctly put it, with the risk of stagflation unsettling markets, many are “seeking refuge from both recession and inflation threats” in gold. In sum, a blend of fear and momentum has gripped the gold market, drawn ever more buyers, and fuelled the boom.
With gold glittering at record highs and headlines touting its surge, it’s easy to get caught up in the excitement. However, investing in gold during a boom carries its own set of risks and potential pitfalls. For one, the possibility of a sharp price correction or even a bursting bubble looms large whenever any asset rises this far, this fast.
History provides a sobering precedent. The last time gold saw a mania comparable to today’s was in the late 1970s. Spooked by oil shocks and stagflation, investors drove gold to then-record heights in January 1980. But the euphoria didn’t last, as prices crashed violently thereafter. In 1980, gold plunged from a peak of $850/oz (about $2,684 in today’s dollars) to nearly half that value within just three months.
By mid-1981, it had decreased a staggering 65% from its peak. More recently, after gold reached another peak of around $1,900/oz in 2011, amid post-financial crisis turmoil and Eurozone fears, it also experienced a significant decline. Within four months, prices were 18% lower, and the slide continued for two years until gold was roughly 35% below its 2011 high. Investors who bought near those peaks and assumed gold “could only
go up” nursed painful losses for years. Could today’s rally meet a similar fate? It is certainly a risk to consider. Gold may feel solid and timeless, but its market price is volatile and driven by fickle sentiment as much as fundamentals.
A key danger is that many new investors are piling in due to hype or fear of missing out, rather than careful analysis. When an asset becomes a popular talking point at dinner tables and on social media, as gold has now in some circles, it often means a lot of momentum-driven money is at play.
These latecomer investors can quickly exit at the first sign of bad news, accelerating a downturn. Analysts caution that a bout of good news, such as easing geopolitical tensions or stronger economic data that reduces uncertainty, could prick the balloon. For example, one strategist noted that gold prices briefly fell 1.4% following news of a US-China tariff agreement that de-escalated trade tensions, highlighting the price's sensitivity to shifts in the outlook. If we were to witness several positive developments, such as a lasting peace in a conflict or a strong global growth rebound, the very factors that drove gold prices up could reverse, potentially causing a significant decline in value.
Another risk factor is gold’s lack of yield or cash flow. Unlike a stock that pays dividends or a bond that yields interest, gold provides no regular income to its holder. Investors rely solely on price appreciation to earn a return.
In a booming gold market, that may not seem to matter, since the asset is climbing 40% in a year. But if the price momentum stalls or reverses, gold holders don’t have any interest or dividends to cushion their total returns.
Furthermore, if interest rates were to rise again (for instance, if central banks tighten policy to fight inflation), gold could lose favour.
Higher interest rates increase the appeal of interest-bearing assets relative to zero-yield gold. This dynamic was one reason gold languished through much of the 1980s and 1990s when central banks under Paul Volcker and successors kept real interest rates high to rein in inflation. Indeed, an investor who bought gold in 1990 had to wait about 14 years before the price recovered to that level in real terms.
During such long flat stretches, holding gold can mean a significant opportunity cost. Money tied up in gold is money not invested in stocks, bonds, or other assets that might be growing or paying income. As The Independent noted in a recent analysis, these “missed opportunities” are a real drawback of over-allocating to gold. In other words, if you go all-in on gold and it does nothing (or declines) for a decade, you might regret not having put at least some of that money into assets that were flourishing during that time.
Investors must also consider practical challenges and costs associated with gold. Buying physical gold means dealing with storage, insurance, and security, which can be costly and inconvenient. While many people now opt for gold ETFs or other financial instruments to sidestep these issues, those come with their own fees and, in some cases, tax considerations. Additionally, gold markets can be influenced by factors beyond the average investor’s control, such as central bank actions or fluctuations in jewellery demand in key markets like India and China. These factors can introduce volatility. And if the market turns, gold’s liquidity can also dry up;
in a panic sell-off, finding buyers at the last high price is not a given.
All these points boil down to a simple warning that, even during a boom, investing in gold is not a one-way bet. The metal’s famed stability refers to its long-term retention of value, not short-term price stability.
As Susannah Streeter, head of money and markets at Hargreaves Lansdown, aptly put it, “Short-term speculating can backfire,” and those lured by gold’s record run should be careful not to put all their eggs in one (golden) basket.
Gold deserves respect as a haven, but chasing it at peak prices without regard for the downside risks is a recipe that could leave an investor feeling, in hindsight, that all that glittered was not gold.
The big question on everyone’s mind is: How long can this gold boom last? Opinions among experts are divided on whether the market is nearing a peak or just catching its breath before climbing further. Some observers indeed worry that gold has entered bubble territory and that a significant
correction is inevitable.
Jon Mills, an industry expert at Morningstar, grabbed headlines recently by predicting that the price of gold could plunge to around $1,820/ oz in the next few years. Such a drop would cut gold’s value nearly in half from its recent highs, a dramatic reversal.
Mills argues that today’s high prices will eventually encourage greater supply, as miners increase production and more individuals sell or recycle old gold. At the same time, some of the short-term demand drivers are likely to diminish. In his scenario, supply and demand would rebalance. A greater flow of gold into the market, plus waning buying by central banks and investors once the current fears subside, could cause the price to retreat significantly.
It is worth noting that since making that bearish call, even Mills acknowledged reality has shifted a bit. Mining costs have risen, and inflation has stayed stubborn, leading him to revise his downside target upward slightly.
The core of the cautionary outlook is that if today’s “perfect storm” of drivers fades, gold could surrender much of its gains. Investors would do well to remember that no asset is immune to economic gravity. Caution, diversification, and a clear-eyed view of one’s goals are essential. Gold can be a prudent part of an uncertainty strategy, but it is not a guarantee against loss or a substitute for a balanced approach.
Ultimately, gold endures as a glittering reflection of our shared hopes and fears. Its boom today signals deep-seated worries about tomorrow. Whether or not the bubble bursts, the true value of gold will likely endure, but the journey could be volatile.
By understanding the forces at play and by hedging bets wisely, investors and the public can avoid turning a haven into fool’s gold. In these unpredictable times, that may be the most important investment advice to heed.
Yağız Oral TEB AM CEO
In April 2025, the CBRT raised its policy rate to 46%, emphasising that tight monetary conditions will be maintained until a sustained decline in inflation is achieved
After a prolonged period of elevated inflation, Turkish investors and global asset allocators are increasingly focused not just on nominal returns, but on real yield, the actual gain in purchasing power after adjusting for inflation.
Today, Türkiye presents a compelling case for investors who seek sustainable, policydriven real returns in an emerging market undergoing disciplined macroeconomic rebalancing.
In 2024 and early 2025, Türkiye’s economic authorities made substantial progress in restoring price stability, supported by a combination of decisive monetary tightening and a renewed focus on external balance. The Central Bank of the Republic of Türkiye (CBRT) has reaffirmed its commitment to disinflation, taking bold steps to anchor expectations.
In April 2025, the CBRT raised its policy rate to 46%, emphasising that tight monetary conditions will be maintained until a sustained decline in inflation is achieved. Most importantly, this policy stance is backed by a strong preference for exchange rate stability, which
plays a crucial role in containing inflation pass-through and rebuilding investor confidence. Market expectations reflect a steady decline in inflation over the coming quarters.
From an investor’s perspective, this macro shift is already translating into opportunities as local currency bonds are now offering positive real returns, especially as inflation expectations begin to decline and nominal yields remain elevated.
Exchange rate volatility has moderated, with options markets pricing in a narrower distribution of future exchange rates, which seems to be another sign of improving confidence. Also, Türkiye’s current account dynamics continue to strengthen, with the gold and energy-excluded balance in surplus and external financing conditions stabilising.
In this environment, shortterm liquid funds have emerged as the most attractive vehicle for conservative investors. Given the current policy rate
and stable money market yields, these funds provide high nominal returns with minimal duration risk, making them a preferred choice for capital preservation and real yield capture.
On the other end of the spectrum, long-term government bonds offer substantial upside potential, albeit with greater sensitivity to inflation and interest rate expectations. Today, long-dated bond yields in Türkiye remain well above not only current inflation, but also five- and ten-year forward inflation expectations, embedding a large inflation uncertainty premium. However, as disinflation materialises, this uncertainty premium will likely decline much faster than inflation itself, creating room for a significant re-pricing in longterm bond valuations.
TEB Asset Management believes the investment narrative in Türkiye is entering a new phase, one that is less about tactical gains from volatility and more about strategic positioning for real value.
While short-term instruments provide immediate real return, long-term bonds offer convexity and capital gain potential in a scenario where inflation and volatility decline faster than currently expected. A balanced approach, combining highyielding liquid assets with select long-duration exposure, may prove especially effective in navigating this transition.
Türkiye’s macroeconomic rebalancing is still in progress, but recent trends, including improving inflation dynamics, a more stable currency outlook, and robust monetary policy credibility, provide a supportive backdrop for fixed-income strategies focused on real, sustainable returns.
In a world where real yield is increasingly scarce, Turkish assets offer a rare combination of high carry and policy alignment. For investors ready to look beyond the inflation headlines, this may be the right time to rediscover the strategic value of Türkiye’s fixed-income markets.
The UK government is expecting power companies to spend £40 billion a year over the next five years on renewable projects
In June 2025, the Keir Starmer government announced that all newly built homes in the UK would feature rooftop solar panels by default, aiming to cut energy costs and accelerate progress toward carbon-reduction goals. In fact, the Labour administration wants to build 1.5 million new homes by 2029 amid a housing shortage, while using the policy goal to promote its renewable energy commitments.
The House of Lords Industry and Regulators Committee says the proposals should help cut the costs of electricity, but also warns any reforms would need to be carefully managed
A typical existing British home will be able to save around £530 ($717) once it takes the "rooftop solar” route. However, International Finance will focus on a different issue. It’s often referred to as the “energy bills problem."
A crisis on the way?
Scotland is known for its galeforce winds that sweep across the country in the summer months. And going by the layman's understanding, this should serve as the "great weather" for the Moray East and West offshore wind farms.
Senior environment journalist Justin Rowlatt said, "The two farms are 13 miles off the northeast coast of Scotland and include some of the biggest wind turbines in the UK, at 257m high. With winds like that, they should be operating
at maximum capacity, generating what the developer, Ocean Winds, claims is enough power to meet the electricity needs of well over a million homes. Except they are not."
An electricity generator, whether it be a wind farm or a gas-powered plant, should be connected to the national grid to seamlessly send its electricity wherever it is needed in the country. This is the problem: in the UK's case, the electricity grid, which was built to deliver power generated by coal and gas plants near the European country's major cities and towns, does not have sufficient capacity in the wires that carry electricity around the nation to transmit the new renewable electricity generated in remote seas and rural areas.
"The way the system currently works means a company like Ocean Winds gets what are effectively compensation payments if the system can't take the power its wind turbines are generating and it has to turn down its output. It means Ocean Winds was paid £72,000 not to generate power from its wind farms in the Moray Firth during a half-hour period on 3rd June because the system was overloaded, one of several occasions output was restricted that day," Rowlatt noted.
"At the same time, 44 miles (70km) east of London, the Grain gas-fired power station on the Thames Estuary was paid £43,000 to provide more electricity. Payments like that happen virtually every day. Seagreen, Scotland's largest
wind farm, was paid £65 million in 2024 to restrict its output 71% of the time, according to analysis by Octopus Energy," he added.
Balancing the grid in this way has already cost the Starmer government more than £500 million in 2025 alone, Seagreen's analysis shows. The total could reach almost £8 billion a year by 2030, warns the National Electricity System Operator (NESO), the body in charge of the electricity network.
It is pushing up all the Britons' energy bills and calling into question the government's pro mise that net zero would end up delivering cheaper electricity. To address this, the Starmer government is considering a radical solution: instead of one big national electricity market, there will be several smaller regional markets, with the administration gambling that this could make the system more efficient and deliver cheaper bills.
Households and businesses will pay different rates depending on how close they are to wind and solar farms. Baroness Dido Harding, who led the government’s test and trace scheme in
England during the COVID-19 pandemic, and Lord Udny-Lister, a former Downing Street chief of staff, are among the influential personalities extending support to so-called “zonal pricing.”
The House of Lords Industry and Regulators Committee says the proposals should help cut the costs of electricity, but also warns any reforms would need to be carefully managed, given the probable impact on some generators and heavy industry.
The proposal's backers argue that it is needed to create a more efficient market that considers the vast numbers of wind turbines being built across the United Kingdom as part of the country’s plans to cut emissions. They further argue that there is not enough capacity on Britain’s electricity grid to move electricity to where it is needed, particularly from wind farms in remote parts of Scotland. But these constraints are not recognised by Britain’s single national wholesale price, which currently means wind farms are frequently paid to switch off.
Zonal pricing would help tackle this by splitting the market into different regions broadly reflecting the distribution network, with the price settled according to local supply and demand. The
move will also result in northern Scotland enjoying the benefits of cheap wholesale prices for electricity during windy periods, encouraging households to charge their cars, rather than having to turn the wind farms off.
However, big energy developers warn that less certainty over power prices would put them off investing, just as the government is trying to get vast amounts of new offshore wind built to meet its clean power targets. Some critics are also concerned about the risks of a “postcode lottery” for households, depending on the extent to which zonal pricing feeds through into retail electricity bills.
The Lords Committee also warned that the Starmer government risked missing its target to decarbonise the power system by 2030, given the pace and scale of new infrastructure that needs to be built.
According to reports, Starmer has asked to review the details of what a section of the British media is calling a "postcode pricing" plan. So, there are a couple of questions: is the government ready to risk the most radical shake-up of the British electricity market since privatisation 35 years ago? And what will it really mean for the power bills?
Supporters of the Starmer government's plan argue that as long as energy prices are set nationally, it will remain difficult to loosen gas's grip on electricity costs. Less so with regional pricing, or, in the
jargon, "zonal" pricing.
They cited Scotland as an example, highlighting its abundant wind resources contrasted with a relatively small population of just 5.5 million. The argument goes that if prices were set locally, it would not be necessary to pay wind farms to be turned down because there was not enough capacity in the cables to carry all the electricity into England.
All that cheap power could also transform the economics of industry, attracting energyintensive businesses such as data centres, chemical companies, and other manufacturing industries. In London and the south of England, the price of electricity sometimes gets higher than in the windy north. However, supporters say some of the hundreds of millions of pounds saved by the system can be used to make sure "no one pays
more than they do now."
"And those higher prices could also encourage investors to build new wind farms and solar plants closer to where the demand is. The argument is that it would lower prices in the long run and bring another benefit, because less electricity would need to be carried around the country, so we would need fewer new pylons, saving everyone money and meaning less clutter in the countryside," Rowlatt remarked.
"Zonal pricing would make the energy system as a whole dramatically more efficient, slashing this waste and cutting bills for every family and business in the country," asserts Greg Jackson, the CEO of Octopus Energy, one of the biggest energy suppliers in the United Kingdom.
Recent research commissioned by the company estimated the
Source: Statista
savings could top £55 billion by 2050, which it claims could knock £50 to £100 a year off the average bill. Octopus points out that Sweden made the switch to regional pricing in just 18 months.
Energy firms push back
Tom Glover, UK chair of German energy giant RWE, emphasised the scale of their annual renewable investments in the UK, stating he couldn't justify asking his board to gamble billions without certainty.
"The main cost of wind and solar plants is in the build. It means the price of the energy they produce is very closely tied to the cost of building, and, because developers borrow most of the money, that means the interest rates they are charged. And we are talking a lot of money. The government is expecting power companies to spend £40 billion a year over the next five years on renewable projects in the UK," Rowlatt noted.
Glover says even a very small change in interest rates could have dramatic effects on the amount of renewable infrastructure built and the cost of the power produced. High interest rates, combined
with rising prices for steel and other materials, will likely increase the cost of renewables. Plans for a huge wind farm off the coast of Yorkshire were cancelled recently as the developer said it no longer made economic sense.
Source: Statista
The National Grid, which owns the pylons, substations, and cables that move electricity around the country, is rolling out a huge investment programme worth some £60 billion over the next five years to upgrade the system and prepare it for the new world of clean power. That new infrastructure will mean more capacity to bring electricity from the windy northern coasts down south, and therefore also mean fewer savings from a regional pricing system in the future.
Critics also warn that introducing regional pricing could take years, and the system will be unfair because some customers will pay more than others.
However, according to Greg Jackson of Octopus, the power companies and their backers just want to protect their profits.
In contrast, the power companies argue that Octopus also has a vested interest in this situation.
As the largest energy supplier in the United Kingdom, serving around seven million customers, Octopus possesses an advanced billing system that it licenses to other energy suppliers. Therefore, it stands to benefit from any changes to the pricing of electricity.
The Starmer government's ability to meet its clean energy goals will depend on how many new wind farms and solar plants are built. The companies that will build them say they need certainty around the future of the electricity market, so a decision must be made soon. Whether Miliband and his administration choose to act decisively remains to be seen.
BYD often sells its cars for much more in Europe than in China, sometimes double the price
China has become the world’s electric car powerhouse almost overnight. In 2023, some 8.1 million new electric cars were registered in China, which is roughly 35% more than the previous year, and over one in three new cars sold in China is now electric.
Chinese automakers like BYD, NIO, and Xpeng have leveraged this massive home market to build global export businesses. As one analysis notes, China went “from a net car importer as recently as 2022” to a major manufacturer and exporter of finished vehicles within a few years. This has unleashed a wave of affordable, feature-packed Chinese electric vehicles across global markets, from Southeast Asia and Latin America to Europe, bringing significant economic, political, and environmental consequences.
Economically, China’s low-cost EVs are squeezing Western carmakers and forcing new trade debates. Geopolitically, Chinese dominance of batteries and supply chains creates new dependencies and potential leverage. From a climate perspective, we must ask whether the Chinese EV boom helps or hinders global sustainability. International Finance will unpack each dimension, drawing on industry data and expert commentary.
Chinese EVs have hit international markets with a price shock. Models that cost the equivalent of $7000–$10000 in China can still undercut many rivals abroad, even if marked up for profit. In fact, BYD often sells its cars for much more in Europe than in China, sometimes double the price, but even those export prices are highly competitive.
The sheer scale and breakneck speed of China’s electric vehicle rollout have caught Western executives off guard. Ford boss Jim Farley, after touring China, warned that Beijing’s carmakers now pose an “existential threat” to Western incumbents. Mercedes CEO Ola Källenius described the competition as a “Darwinistic price
war” that could wipe out many current players. In short, Chinese EV makers are no longer content to play catch-up; they’re sprinting into new markets.
These concerns are grounded in reality. According to the International Energy Agency (IEA), China's share of global electric vehicle production and exports has significantly increased. In 2024, China manufactured over 70% of all the world's EVs, and Chinese brands represented 40% of global EV exports, totalling 1.25 million cars. Alarmed by this surge, the European Union and the United States have initiated investigations and threatened to impose tariffs.
As EU Commission President Ursula von der Leyen recently put it, global markets have been “flooded
with cheaper electric cars” from China, prompting a probe into possible unfair subsidies. The EU has proposed steep tariffs, ranging from 40% to 50%, on Chinese electric vehicles in an effort to level the playing field. Similarly, Washington is pushing back with EVspecific tariff legislation and “Chinafree” content requirements embedded in the Inflation Reduction Act, all aimed at curbing imports.
Western carmakers are racing to adapt, some slashing prices and pouring money into next-gen EV technology, while others hedge their bets by shifting production strategies. For example, BMW has announced a new plant in South Africa to serve African and European markets, and Ford plans to build EVs in Mexico rather than rely
on Chinese imports.
Industry analysts note that Chinese brands have deliberately kept their early export prices high to build profit and brand equity, so they have room to slash prices in the future if needed.
As Ben Townsend of Thatcham Research observes, Chinese EV firms “aren’t looking to undercut” for now, but have the financial flexibility to do so. In a price-sensitive global market, that is a chilling prospect for established makers.
Chinese models are also stepping up in quality and features. A recent press study found BYD outperforming even Tesla in Europe. In April 2025, BYD’s sales jumped 359% year-onyear, overtaking Tesla (which fell 49%) in European registrations.
JATO Dynamics’ analyst Felipe Munoz called this a “watershed moment.” Tesla had long dominated Europe’s EV scene, but BYD, which only entered Europe in late 2022, is quickly catching up.
In fact, the once-derided notion of “cheap Chinese knockoffs” has faded. Chinese EVs now boast competitive range and technology. As one source notes, Chinese cars “are no longer knockoffs; they’re a serious threat with competitive range, features, and price.” Innovations like BYD’s new Blade Battery, safer, energy-dense, and lower-cost, show Chinese firms pushing technical boundaries as well.
Former Volkswagen CEO Herbert Diess warned on German TV in late 2024 that Chinese manufacturers are struggling, especially in terms of profit, and urged Europe not to concede defeat. Diess noted that Chinese EV makers, aside from BYD, “are burning through their capital” and are still unprofitable.
In practice, Chinese strategies seem mixed: building global sales and brands but not profitably so far. Nevertheless, governments see plenty of cause for alarm, and trade disputes are already brewing. The European Union and United States may well increase tariffs and non-tariff barriers, and automakers are lobbying hard for protection.
Chinese EVs have become massively cheaper and more advanced, grabbing market share worldwide. Western automakers now face a cutthroat price war, prompting protective responses such as tariffs and investigations, and a push to innovate. Analysts warn Europe and the US risk losing their lead unless they act aggressively.
Geopolitical leverage
China’s EV rise isn’t just an economic story; it’s also a geopolitical one. The
Countries by share of global battery electric vehicle markets (In Percentage)
world’s shift to electric mobility could wind up making many countries dependent on Chinese batteries, parts, and technology, giving Beijing new influence. At the heart of this is China’s stranglehold on battery supply chains. Chinese firms control roughly 70% of the global EV battery market.
CATL (Contemporary Amperex) alone has about a 37% share, and BYD around 17%. These companies supply virtually all the major automakers, including Tesla, Ford, and VW. In raw materials, China already dominates the mining, refining, and processing of critical minerals.
A US analysis notes that China intentionally poured some $100 billion into subsidies and investments over the past decade to lock in global lithium refining capacity, then even dumped excess product abroad to squeeze out rivals. China similarly cornered cobalt, nickel, graphite, and other key EV inputs.
Why does this matter? As one logistics analyst warned, “He who controls the supply chain controls the battlefield, economic or otherwise.”
In practical terms, major Chinese control of EV supply chains means that even if Western governments buy cars from other brands, they are still tied to China for batteries and materials.
This creates leverage. For example, Chinese companies like CATL already have plants overseas, and Beijing could, in theory, restrict exports or raise
prices if it wanted to gain a political advantage, as it has done in the past with rare earths. Indeed, CATL has already drawn scrutiny as a nationalsecurity concern. In January 2024, the United States labelled CATL a “Chinese military company” (an action CATL denies), reflecting Washington’s unease about Chinese firms’ role in key technologies.
Some analysts openly warn of national security risks. A recent policy brief argues that US dependence on Chinese battery and mineral supply is a direct vulnerability, and disrupting China’s supply could “cripple the US EV sector” as badly as cutting off critical weapons components. The Council on Strategic Risks notes that “the US dependence on China for critical minerals and battery supply chains represents a national security risk.”
It points out that China controls a substantial share of the entire value chain, from mining through final battery production. In response, governments are trying to diversify. The US is funding domestic battery projects and sourcing raw materials from allies, while Europe is pushing partners like Indonesia and Africa to develop their own supply chains.
Beijing is actively building EV manufacturing abroad to hedge against potential trade barriers and embed Chinese tech overseas. BYD’s huge Brazil plant, with assembly lines and
battery production, is a case in point.
NIO and Xpeng are selling in Europe, and forming joint ventures to sidestep tariffs. The IEA notes that as Chinese exports face new tariffs in places like Brazil and Thailand, manufacturers have been frontloading shipments and seeking alternative markets.
Still, Chinese auto factories abroad remain a small share, which is around 5% of EV sales in emerging markets, and rising. For now, most of the global EV fleet still depends on Chinese-made parts.
The leverage shows up in politics. In 2024, Brazil imposed tariffs on electric vehicles to shield its emerging domestic industry, prompting China to delay shipments, while European capitals faced mounting pressure to follow suit.
Germany and France have considered “resilience” criteria for EV subsidies, making Chinese models less eligible, and the EU imposed antidumping duties of up to 38% on some Chinese EV brands.
Even in China itself, leaders talk openly about EVs as a geopolitical tool. At Davos 2025, CATL co-founder Pan Jian stressed that “it’s not going to be a one-country effort,” implying China intends to be the EV hub for the world. Experts warn this is a strategic vulnerability for the West. In response, governments are initiating new trade defences and subsidies to reshore or diversify their EV supply chains, but China’s first-mover advantage remains formidable.
Green dreams or dirty details?
On the upside, there’s no doubt that China’s EV fleet has cut fuel use. China is now the world’s largest EV market by far, so every Chinese EV on the road replaces one fossil-burning car.
According to the IEA, EV sales have driven China’s overall car market to
grow, thanks to the EV segment, even as conventional car sales slump.
By enabling millions of drivers to switch off oil, China’s EV push can significantly reduce carbon emissions if the cars are charged from clean sources. The Chinese government is also rolling out renewables aggressively. Wind and solar capacity in China is booming, which will lower the carbon intensity of electric driving over time.
And Chinese manufacturers are adopting greener technologies. For example, CATL touts new battery chemistries and recycling plans to reduce waste. BYD and others are setting emissions targets for their factories. BYD even reports that its customers’ use of its EVs has saved 2.4 million tonnes of CO 2, equivalent to planting 100 million trees.
But the current picture raises concerns. First, building EVs is carbonand energy-intensive. Producing the heavy batteries emits substantial CO 2. One analysis finds a typical EV’s manufacturing embedded carbon is about 8.8 tonnes of CO 2 (43% of that from the battery alone), compared to roughly 5.6 tonnes for a conventional car. In China, this matters especially because much industrial power still comes from coal.
Indeed, a 2024 lifecycle study of Chinese vehicles found that battery EVs in China emit only about 11.8% less CO 2 than similar petrol cars, a modest gain, while they increase emissions of sulphur dioxide and fine particulates (SO2 up by 10%, PM2.5 up by 20%) due to coal-fired power and heavier vehicles.
In cold northern regions of China, EVs can even have higher lifecycle carbon intensity than ICE cars, because heating and coal use spike. In short, the climate benefit in China today is smaller than expected, and local air quality gains are uneven.
There are other environmental costs also. EVs are heavier and wear out tyres faster, generating particulate pollution. Studies estimate EV tyre wear currently spews millions of tonnes of microplastics per year, worse than on lighter cars. And then there are raw materials.
The mining of lithium, cobalt, and nickel for batteries often has serious environmental impacts. For instance, investigators once halted lithium mining in Yichun, China, after finding toxic pollutants in local water supplies.
Chinese companies have been criticised for labour and environmental abuses in mining projects overseas. Such issues have prompted some NGOs to argue that cheap Chinese EVs can’t be considered fully green unless their entire supply chain cleans up.
Moreover, electricity matters. An international study published in April 2025 warned that EV adoption by itself will not cut CO 2 unless power grids decarbonise. In countries still reliant on coal, such as China, India, and even parts of Europe, charging an EV can produce more CO 2 at the power plant than a fuel-efficient petrol car would at the tailpipe.
The University of Auckland study found that higher EV uptake often correlates with higher national CO 2 emissions when grids are dirty. For China, this means the full climate payoff of its EV fleet will only come as coal plants retire and renewables expand.
The Chinese government is aware of these issues. In 2025, Beijing tightened battery safety regulations, not directly for emissions, but indicating higher production standards. It is also gradually redirecting industry toward greener factories under its “dual carbon” goals, which target peak emissions by 2030 and neutrality by 2060.
Some Chinese automakers are pushing carbon-neutral manufacturing. BYD has pledged to cut carbon intensity by 50% by 2030, and CATL claims to develop next-generation ultra-low carbon batteries. However, critics say that for now, Chinese regulators still favour rapid growth over strict environmental oversight, and that cheap pricing sometimes comes from cutting corners in sustainability.
China’s electric car revolution is already well underway, reshaping markets and politics worldwide. For consumers, it means more affordable EV options and faster innovation. For automakers, it means intense new competition and the imperative to adapt. For governments, it means balancing the climate benefits of faster electrification against the strategic risks of import dependence.
European and American industries are mobilising, building their own
gigafactories, tightening supply chains, and exploring alliances. For example, the US and EU recently unveiled a joint plan to strengthen non-Chinese EV supply.
Meanwhile, Chinese firms are expanding overseas, betting that scale and state backing will eventually let them dominate. As VW’s Herbert Diess put it, “the automotive landscape…is still open for a second round.”
But he also warned that China’s domestic EV scene is a brutal, capitalburning contest, suggesting that not all Chinese newcomers will survive. The same could be said for the auto industry worldwide, as this is a round in which only the strongest, and perhaps luckiest, will be left standing.
What’s clear is that affordable Chinese EVs won’t disappear quietly. Their presence will continue to pressure prices and profits, shaping how the transition to electric transport
unfolds. They could accelerate global decarbonisation by making EVs truly mass-market, or they could undercut environmental standards if shortcuts are taken. Vigilance is required because trade policies will need to evolve, supply chains may need safeguarding, and environmental regulations must catch up.
China’s EV surge is both a breakthrough and a challenge. It has sped up the global switch from oil to electrons, which is a win for climate goals, but it has also introduced new security and sustainability questions. Navigating this moment demands smart policy and industry strategy on all sides.
As one commentator puts it, China’s EVs show what careful long-term industrial planning can achieve, a lesson the West will not soon forget.
Beyond energy use, crypto mines also create significant local environmental burdens
IF CORRESPONDENT
Across much of rural upstate New York and similar areas nationwide, idle power plants and cheap hydroelectric grids have become attractive venues for largescale Bitcoin “mines.” These facilities are essentially massive data centres that house thousands of specialised computers solving cryptographic puzzles around the clock, consuming vast amounts of electricity and releasing immense heat.
For example, one former gas “peaker” plant in North Tonawanda (just north of Buffalo) runs almost continuously to power a crypto mine. In the first quarter of 2025, this plant operated 84 out of 90 days, in contrast to just eight days in all of 2021, and it emitted as much CO2 in three months as it had in the previous two years combined.
In effect, mining operations have transformed low-use industrial sites into constant polluters. US officials estimate that nationwide commercial crypto mining already consumes roughly between 0.6% and 2.3% of the country’s electricity, which is a share that could rise rapidly as more facilities begin operation.
Supporters in upstate areas argue that repurposing abandoned plants and tapping into cheap power can help stimulate the struggling upstate New York economy through jobs and increased tax revenue.
However, local regulators and environmental analysts caution that the climate and local impacts may outweigh those benefits. The Energy Information Administration (EIA) has ranked US Bitcoin’s electricity consumption as being comparable to that of an entire medium-sized state. The associated carbon footprint is substantial unless the power comes entirely from zero-carbon sources.
Bitcoin mining’s enormous power demands make it a highly energy-intensive industry. Many US operations are powered by fossil fuel plants, which are often ageing coal or natural-gas generators that have been refurbished for crypto use. In New York, miners have acquired decommissioned “peaker” plants and run them at full capacity, resulting in sharply increased greenhouse-gas emissions. At North Tonawanda’s Fortistar plant, which was previously idle, carbon output surged after it was converted into a crypto mining site.
Climate watchdogs warn that adding gigawatts of mining demand typically revives
polluting power plants that would otherwise be closed. For example, Texas grid operators have reported that planned large-scale crypto facilities could create up to 43,600 megawatts of new demand by 2027, much of which is expected to be met by newly built gas-fired plants. Indeed, Texas has recently authorised $10 billion in public loans to build or expand plants to satisfy crypto-driven electricity needs.
Across the country, utilities and independent agencies have begun tracking these effects. The EIA and Department of Energy have conducted surveys to measure energy use by mining operations. In 2024, Senator Elizabeth Warren’s office urged the DOE and EPA to mandate energy consumption and emissions reporting for Bitcoin mining, noting that the United States’ share of global Bitcoin
mining rose from 4% to 38% between 2019 and 2022.
Environmental groups estimate that even moderate levels of mining usage currently account for about 2% of national electricity consumption. This implies that the carbon and water impacts are equivalent to those of a mid-sized nation.
A United Nations study found that globally, Bitcoin mining consumed 173.4 terawatt-hours in 2020 and 2021, which exceeded Pakistan’s total electrical output. It also required enough water to fill 660,000 Olympic-sized swimming pools. In areas like upstate New York, where climate laws require net-zero emissions by 2040, the use of fossil fuelbased power for mining is viewed as fundamentally incompatible with state goals.
Researchers from Harvard University concluded that Bitcoin mining added more demand to the US electrical grid than the entire city of Los Angeles. The researchers identified corresponding air pollution and environmental concerns in their findings, which were published in March in Nature Communications.
To quantify the energy use of Bitcoin mining, the Harvard researchers analysed data from the 34 largest mining operations in the US, which together account for 80% of the country’s Bitcoin mining capacity. Their database included both the locations of the mines and their energy consumption levels.
Between August 2022 and July 2023, these 34 facilities consumed 32.3 terawatt-hours of electricity. This is 33% more electricity than the city of Los Angeles uses in the same time frame. Approximately 84% of that energy came from fossil fuel sources. In effect, Bitcoin mining has added a city’s worth of electricity consumption to the grid, together with all the associated pollution.
Beyond energy use, crypto mines also create significant local environmental burdens. The thousands of high-powered servers and generators in these facilities produce a vast amount of heat, requiring massive industrial fans that operate constantly.
Farmers and rural residents living near crypto mining sites consistently describe a relentless mechanical noise. In Granbury, Texas, a resident compared the sound to having a jet engine permanently stationed nearby. A farmer in Pennsylvania made the same comparison and said her hens were visibly disturbed by the constant hum.
Journalists have documented numerous complaints about piercing noise from Bitcoin farms. One resident compared
the experience to standing at the edge of Niagara Falls when the fans are running.
This nuisance is not minor. Medical experts note that prolonged exposure to noise above 80 decibels can increase the risk of cardiovascular issues and other health problems. In both Texas and Arkansas, local officials have recorded reports of headaches, hearing loss, vertigo, and chronic stress attributed to the incessant hum from crypto fans.
A national study observed that noise issues caused by miners are now so common that they have become a persistent source of frustration in rural, mostly Republican communities. Even if the noise complies with local sound ordinances, the constant low-frequency vibrations can make homes unlivable. In North Tonawanda, New York, residents living more than half a mile away from the plant have reported being able to hear its fans from their porches.
Water use and water pollution are additional concerns. Crypto mines often require fresh water for cooling purposes or for maintaining on-site generators. Experts caution that the water demand of Bitcoin mining is insufficiently studied but potentially significant.
According to the same UN study, a large-scale crypto mining site could use as much water as a small city each year, straining already limited water resources in drought-prone regions. Furthermore, diesel or natural gas generators used at some mining locations can emit local air pollutants. For instance, Pennsylvania mining sites that burn waste coal have released sulphur dioxide and fine particulate matter.
The local costs, including impacts on air quality, water resources, wildlife, and human well-being, are considerable.
Opponents in rural communities have voiced concerns about disappearing wildlife, livestock disturbed by noise,
Source: market.us scoop
and family members tormented by nonstop humming, even behind closed windows. These consequences have led to public meetings, citizen noise-monitoring campaigns, and legal challenges in multiple states.
Proponents of crypto mining often claim that it brings jobs and economic revitalisation to struggling rural towns.
A 2022 Politico report highlighted that advocates promote these facilities as a way to stimulate economic growth in upstate New York by repurposing inactive power plants.
Sometimes, local governments offer tax breaks or discounted electricity rates to attract crypto companies. Yet the actual number of jobs created tends to be small, possibly only a few dozen per large facility, while public costs can be substantial.
In Texas, analysts argue that increased electricity demand from crypto mining ultimately drives up prices for everyone. As one report noted, “ordinary Texans may end up footing the bill on their monthly utility statements” as the grid
adjusts to crypto-related demand.
In Arkansas, utility providers have stated that industrial crypto operations often pay reduced electricity rates, effectively passing infrastructure costs onto other customers.
Communities have begun reevaluating the costs and benefits. In some rural counties, initial enthusiasm for economic investment has turned into frustration over higher bills and noise disturbances. Activists have highlighted that utilities and state governments have offered generous incentives to crypto firms. For example, the Texas-based company Riot Platforms received about 136 million dollars in power-related credits between 2022 and 2024, which at times exceeded its own mining revenue.
In response, community organising has intensified. In Georgia, residents living near proposed mining sites successfully lobbied their county government to reject rezoning requests, and neighbouring jurisdictions went further by enacting complete bans. In Wisconsin and Pennsylvania, neighbours have launched coalitions to oppose crypto mining, arguing that a small number of jobs are not worth the disruption to local life and the environment.
Even in relatively affluent areas, local governments have imposed moratoria. In 2024, the city council of North Tonawanda voted unanimously to prohibit new crypto mining projects for two years, although existing operations were allowed to continue.
These battles often defy conventional political divisions. Residents who strongly supported pro-crypto politicians have sometimes led opposition efforts. Hood County, Texas, which gave Donald Trump more than 80% of the vote in 2024, witnessed lawsuits and protests by conservatives against a Marathon Digital mine in Granbury.
In local online groups, residents expressed simultaneous support for Trump and deep frustration with the Bitcoin mine that they felt had “destroyed their peace.” In North Tonawanda, activist Deborah Goldeck argued at a public meeting that had the city acted sooner, “we could have avoided the misery of constant high noise levels” that now affect her neighbourhood.
In rural Arkansas, Gladys Anderson’s description of constant “shrieking and humming” from a nearby mine drew media attention and spurred legislative reforms. These grassroots efforts share a common thread. People feel that an industry backed by powerful crypto interests has altered their quality of life without consent.
Cryptocurrency mining has become a contentious political issue at the state and national levels. The Republican Party has officially taken a supportive stance toward the industry. In its 2024 platform, the GOP pledged to defend the right of individuals to mine Bitcoin and to ensure that Americans can maintain self-custody of their digital assets.
President Trump has repeatedly endorsed crypto mining as a strategy for achieving US energy leadership. He even claimed that producing all Bitcoin domestically would help make the country "energy dominant."
Crypto companies have poured funding into political campaigns. One watchdog group estimated that the industry spent more than 119 million dollars on federal races during the 2023–2024 election cycle, accounting for nearly half of all corporate spending in some contests.
Several Republican legislators at the state level have introduced “right-tomine” bills aimed at limiting the authority
of local governments to regulate the industry. Politicians from both parties have tried to win over the industry by promising deregulation.
For instance, in New Hampshire in 2025, Republican lawmakers advanced a proposal to prohibit towns and regulatory agencies from imposing restrictions on crypto mining, with the explicit goal of signalling support to the industry. In Texas, political leaders have introduced incentives such as tax breaks and discounted electricity for mining companies, while some municipalities have approved subsidised power deals.
However, this top-down enthusiasm increasingly conflicts with the sentiments of Republican voters in rural communities. Commentators have described a growing national backlash, with many traditionally conservative voters expressing opposition to crypto mining when it affects their neighbourhoods.
The Week summed up the situation by noting that in some areas, Trump’s cryptofriendly policies have met resistance from the very voters who helped return him to the White House. This tension between party loyalty and local quality-of-life concerns is now playing out across the country.
Conservative state and local leaders have come under pressure from constituents demanding tighter controls. In red states such as Georgia and Pennsylvania, citizen protests have led to legislative debates and political gridlock.
In Virginia and Kansas, lawmakers only took up crypto mining regulations after strong grassroots organising prompted public hearings. In Arkansas in 2024, the state’s new Republican governor signed legislation imposing stricter permitting requirements in response to growing public concern.
Even industry insiders have acknowledged the backlash. Marathon Digital
CEO Fred Thiel noted that one of the company’s Texas mining sites had been approved by voters in a pro-Trump region, yet it still faced demands for tighter noise regulations from local residents.
As a result, partisan messaging on cryptocurrency is increasingly split between national and local levels. Republican candidates on the national stage often appeal to crypto investors and tech donors. In contrast, local Republican officials, including mayors, county supervisors, and state lawmakers, in some cases have aligned with environmental activists or citizen
groups calling for stronger oversight or moratoriums.
For example, a previous Republican governor of New York (before Kathy Hochul) had questioned the wisdom of expanding crypto mining in the face of community pushback. In Congress, Democrats have sometimes used this internal GOP divide to their advantage. Some House Democrats have proposed new taxes on crypto mining and regulations requiring pollution controls. At the same time, crypto-friendly bills like the proposed federal “Strategic Bitcoin Reserve Act” have met resistance from
suburban and rural voters alike.
The net result is a complicated political landscape for the crypto mining industry. On one hand, it enjoys vocal support from high-ranking officials. On the other hand, it increasingly encounters organised local resistance, often within the same communities that elected those officials.
This clash between local resistance and national support has triggered a wave of policy experiments at the state and federal levels. Some jurisdictions have moved to rein in crypto mining in order to protect
residents’ health and meet environmental targets.
In November 2022, New York became the first state to impose a temporary ban on new proof-of-work cryptocurrency mining at fossil-fuel power plants. This law prohibited all new permits and the renewal of existing permits, unless the projects could demonstrate that they operated entirely on renewable energy.
Governor Hochul's administration described the law as a limited but necessary pause aimed at balancing economic development with the objectives of the state's Climate Leadership and
Community Protection Act.
New York’s Department of Environmental Conservation has also taken enforcement actions against noncompliant facilities. In some cases, the agency has denied permits or sued companies for violating clean air or climate mandates. One example is Greenidge Generation’s use of waste coal at a plant in Dresden, which came under legal scrutiny due to its environmental impact.
Other states have followed New York’s lead. In Georgia, conservative local governments have passed restrictions or outright bans after public hearings. State legislators have considered measures to regulate noise and limit grid strain from mining operations. In Pennsylvania and Montana, environmental organisations have taken legal action against facilities that keep old coal plants running for mining purposes.
Even in states that are generally favourable toward cryptocurrency, lawmakers have introduced new regulations. In Texas, in 2023, legislators proposed several bills (some of which passed) to require large mining operations to register with grid authorities and to place limits on their use of “demand-response” programmes.
The Electric Reliability Council of Texas (ERCOT) has since implemented rules requiring any mining operation drawing more than 75 megawatts to sign flexible load agreements. These agreements give the grid operator greater control to shut off power during times of high demand, to help stabilise the system.
At the federal level, regulation is still in early stages. In 2024, a bipartisan group of US senators led by Elizabeth Warren
called on the Department of Energy and the Environmental Protection Agency to require mandatory reporting of crypto mining’s energy use. They characterised the industry’s rapid growth without oversight as “alarming.”
So far, neither the Biden administration nor the EPA has issued dedicated rules for crypto mining. However, federal agencies have begun monitoring the sector more closely. Mining now appears in national energy and climate assessments, and the Energy Information Administration is considering including it in future data collection surveys.
Meanwhile, other jurisdictions have moved in the opposite direction. Industry lobbyists have drafted and promoted “right-to-mine” bills in several states that aim to preempt local zoning laws and noise ordinances. According to Earthjustice, some of these proposals would block towns from regulating crypto operations altogether.
In 2025, New Hampshire legislators debated a bill that would have made it illegal for any local agency to restrict crypto mining. Libertarian groups and blockchain advocacy organisations praised the proposal, viewing it as a victory for deregulation.
In Missouri, lawmakers introduced bills to classify Bitcoin mining as critical infrastructure. Other proposals aimed to exempt mining facilities from environmental permits, treating them as if they were simply data centres rather than power-consuming industrial sites.
These deregulatory efforts have met strong resistance from environmental advocates and local governments that support home-rule rights. The debate illustrates a growing confrontation between the cryptocurrency industry’s
desire for minimal regulation and the communities most affected by its operations.
In practice, the most effective policy responses have come from state and local governments. Measures such as temporary bans, conditional permits, or tailored noise regulations have given municipalities some control over how and where mining occurs. For example, North Tonawanda’s decision to ban new mining projects and conduct noise studies reflects one way that communities can act within their legal authority.
Other examples include the actions of rural counties in Georgia and new state laws in Arkansas, which were enacted after constituents like Gladys Anderson publicly described how crypto noise had affected their lives. These efforts demonstrate how traditional zoning and environmental rules can be applied to this emerging industry.
At the national level, more ambitious proposals are under discussion. One idea is to impose a substantial tax on electricity used for crypto mining. For instance, President Biden had proposed a 30% tax, although it was ultimately dropped. Another option would be to require carbon offsets for mining operations powered by fossil fuels.
Academic researchers and policy analysts have proposed more balanced solutions. These might include requiring crypto companies to pause operations during power emergencies or mandating that they operate only from designated clean energy sources. The broader policy debate is ongoing and has become a staple topic in energy and climate forums.
Empire World is known as one of the largest and most ambitious real estate developments in Iraq. The venture has captured the attention of the Kurdistan Regional Government (KRG) due to its inclusion of highend residential units, villas and apartments with modern designs, alongside a luxury hotel and vibrant entertainment such as restaurants, cafés, gyms, and expansive green areas that are environmentally friendly.
In recognition of its scale and impact, Empire World was recently honoured with the prestigious international title “Most Innovative Mixed-Use Real Estate Project— Empire World—Iraq 2025,” presented by International Finance.
International Finance is known for celebrating excellence in both residential and commercial real estate developments in emerging markets, specifically honouring those who deliver consistently valuable and engaging experiences for customers.
Launched in 2006, Empire World has committed itself to delivering the highest standards in construction through world-class engineering teams and premium materials. By 2007, the project opened its doors, offering residents access to some of the most luxurious housing (Royal Villa) in Erbil. The project also boasts a wealth of turnkey office spaces, offering ideal environments for businesses to grow and thrive, all within a single, sprawling complex.
Empire World has 88 towers, 300 luxury villas, along with other comprehensive facilities including a mosque, medical clinic, gym, shops, and restaurants
Empire World represents a USD 2.7 billion investment in the rapidly growing and economically autonomous Kurdistan region in northern Iraq. As a result, it has earned a high-ranking status among global commercial developments. Winning the International Finance Award further solidifies its standing on the global stage.
Located in Erbil, the capital of Kurdistan, the Empire World development exemplifies architectural innovation and commercial excellence. It marks a turning point in the region’s urban growth, placing it among the leading development hubs in Iraq.
Erbil’s outlook has been brightening with rapid development and increasing investment interest.
The city has become a magnet for investors seeking highpotential opportunities, signalling a promising economic future. With significant investments in infrastructure, energy, and transport, the Kurdistan region is emerging as a gateway for broader investment in Iraq.
At each stage of construction, the Empire World project was designed to respond to the region’s market needs, particularly the housing deficit. Its location further enhances its strategic value. It is near Erbil International Airport and adjacent to one of the city’s largest parks—Sami Abdulrahman Park.
Empire World was carefully planned to provide everything an individual might need—residential units, entertainment spaces, green zones, and a thriving business environment. The quality of its housing units has earned a reputation as the best in the region, and its office complexes provide an ideal setting for businesses to flourish.
What makes Empire World stand out as one of the largest and most successful projects in Iraq are features like a mix of zones for business, residential, hospitality, and leisure, massive land area covering 750,000 square metres
(300 acres) and a total project budget of $2.7 billion, promising long-term value and impact.
Empire World also has 88 towers, 300 luxury villas, along with other comprehensive facilities including a mosque, medical clinic, gym, shops, and restaurants. The presence of the JW Marriott luxury hotel has elevated the project's status by leaps and bounds.
To date, 70% of the Empire World project has been sold—a testament to the demand and trust it has garnered. As one of Iraq's most ambitious real estate endeavours, the project’s high quality and modern design continue to attract foreign companies looking to establish offices in a sophisticated and business-friendly environment. Empire World has also become home to many start-ups, offering them ideal conditions to grow and succeed in Kurdistan.
Due to the project, over 1,000 foreign and local employees have found work opportunities, contributing to the region’s economic development and signalling positive momentum for Kurdistan’s job market.
According to Empire World Chairman Peshraw Agha, one of the project’s major milestones was the early success of Royal City, a
sub-project comprising 300 royal villas. These were sold out even before 2010, just four years after construction began. Today, real estate values in Royal City have more than tripled, reflecting the strong market and growth potential in the area.
Empire World consists of multiple sub-projects that have collectively contributed to its success, including Empire Square (residential and commercial), Empire Wings (West and East), Empire Diamond (West and East), Empire Business Complex, Empire Business Towers, Royal Villas, Royal Apartments, JW Marriott and Empire Luxury Restaurants. These projects were built with high-quality materials and modern design principles, adding long-term developmental value to the city of Erbil.
Being awarded the "Most Innovative Mixed-Use Real Estate Project—Empire World—Iraq 2025" can be summed up as a landmark achievement for Iraq’s real estate sector. Empire World has successfully contributed to regional development, created extensive job opportunities, and delivered a world-class urban experience that's been shaping the future of living and working in the Middle Eastern country.
Traditionally, Burkina Faso's gold mines were owned and operated by foreign companies, resulting in limited benefits for local communities
In early 2025, Burkina Faso’s young junta leader, Captain Ibrahim Traore, set out an ambitious economic agenda that captured global attention. In a televised address, he announced that the country had “cleared its external debt” of roughly $4.7 billion and simultaneously moved to take full control of its gold mining industry. These bold moves, which included paying off all foreign creditors at once and nationalising a key export sector, signalled a radical break with the past.
Captain Ibrahim Traore openly blames France and other former colonial powers for Burkina Faso’s problems, and he has demanded that French troops, who had long been stationed to help fight enemies, leave the country
Traore described the debt repayment as reclaiming the country’s financial independence, while pledging to redirect mining profits to finance schools, hospitals, and other public projects. Together, these actions set Burkina Faso on an unprecedented path, specifically a journey toward economic selfreliance and resource sovereignty. The immediate response was mixed, as jubilant rallies by supporters at home were contrasted with cautionary voices abroad, yet the direction of change remained unmistakable.
Burkina Faso’s external debt had long weighed on its budget. By January 2025, Traore’s government reported that the last penny of this burden was gone. Officials credited a mix of prudent fiscal measures, higher export revenues, and renegotiated deals with
creditors for making this possible.
In effect, the country shed decades of loans used for development projects and balance-of-payment support. Traore cast the move as more than economics. It represented a statement that Burkina Faso would no longer be shackled by foreign conditionality. With debt service gone, the government freed up funds for domestic needs.
As Traore put it, “We have reclaimed our financial independence.”
Analysts point out that a significant factor in this situation is the country's mineral wealth, especially gold, which is now generating higher revenue because loans are no longer draining government earnings.
Another key aspect of Traore's plan was to gain control over the gold sector. Traditionally, Burkina Faso's gold mines were owned and operated by foreign companies, resulting in limited benefits for local communities.
Traore announced that those major mines would be nationalised and placed under state management. In practical terms, the government insisted that the profits from gold extraction would finance public services instead of enriching multinational firms.
The official rationale was strikingly populist, as Traore told the nation that it was unacceptable for outsiders to “extract and exploit” the country’s wealth while ordinary Burkinabe struggled.
In concrete terms, cabinet statements pledged that mining revenues would now go directly into improving citizens’ lives, such as by funding infrastructure, schools, and clinics. Early budget plans
indeed earmarked mining profits for key sectors, including agriculture, education, and renewable energy projects, which are high on the list. Nationalising gold was not only about symbols; it was intended to fuel real social investments.
Domestically, these moves generated enthusiasm. Ordinary Burkinabes poured into the streets of the capital, Ouagadougou, waving flags and cheering the speech with chants of support. In a country where many feel left behind by past governments, Traore’s rhetoric of sovereignty and self-help struck a chord. One news report noted that citizens saw “the moves as a long-overdue step toward economic independence.”
Yet abroad, the reaction was more cautious. International financial institutions like the World Bank and IMF publicly urged restraint, warning that abrupt nationalisations might scare off investment. Global mining firms and investors, already skittish after similar seizures elsewhere, warned that such policies could make doing business in Burkina Faso risky.
In private, some investors said they were watching closely to see if the state could run the mines efficiently and fight corruption. Thus, while many in Burkina Faso had reason to celebrate debt freedom and promises of new schools, external observers advised caution, creating a tension that Traore’s government must now manage.
Behind these dramatic reforms lies a clear political logic, which reflects a conscious turn away from Burkina Faso’s traditional Western partners and toward a model of self-reliance. Traore has framed much of his agenda in anti-colonial terms. He openly blames France and other former colonial powers for the country’s problems, and he has demanded that French troops, who had long been stationed to help fight enemies, leave the country.
In the past two years, he has broken with regional institutions as well, leading Burkina Faso out of the West African bloc ECOWAS and into a new “Alliance of Sahel States” with Mali and Niger. This new alliance explicitly shuns the old colonialled order.
In practical terms, Traore has repeatedly promised to “develop our country on our own terms,” for example, by refusing outside loans. He has publicly spurned new IMF and World Bank assistance, insisting Burkina Faso can grow without foreign aid.
Putting things into perspective, the debt payoff and resource nationalisation are two sides of the same coin, as both are meant to reduce dependency on the West.
According to the Financial Times, Traore’s rise has been powered by “anger over democratic dysfunction and western meddling,” an anger that he channels
into policies of independence.
This ideological reorientation also extends to new strategic partners. Almost immediately after taking power, Traore hinted that Russia, which has long been regarded as an anti-Western ally in Africa, would replace France in the counterinsurgency fight. Russian military contractors, especially the Wagner Group, have quietly entered Burkina Faso to protect the new regime, although their numbers remain limited to a few hundred.
At the same time, Russianlinked media campaigns have gone to work spreading Traore’s message. International observers report that online networks and fake social media accounts tied to Russian influence efforts are blaming France for the country’s security crisis and promoting Traore’s cause.
In short, Burkina Faso is reorienting eastward, as the junta talks openly about strengthening
with Russia and China while cutting French ties. Economically, this means new deals may be struck. For example, reports suggest Burkina Faso is seeking Russian investment in mining and agriculture, but it also carries the risk of alienating old Western partners and investors.
Inside Burkina Faso, the implications of these policies are felt everywhere. On the positive side, paying off the debt has immediately eased the budget outlook. Instead of servicing foreign loans, the government can spend more on local priorities. Public sector salaries, which had been in arrears, are now being paid; plans are underway to build dozens of new schools and health clinics using mining revenues.
Electricity shortages have even become a focus, as government announcements mention new solar projects aimed at powering rural areas. In the gold sector, state firms are being set up to run the mines and
a new national refinery is being built to process gold on-site, rather than exporting raw ore. These steps could gradually create mining jobs, boost skilled employment, and keep more value in the country.
Even Burkina Faso’s textile industry is getting attention, as the authorities have supported artisanal cotton processing so farmers can sell cloth instead of raw cotton. The economic programme is about retaining profits at home and extending the supply chain within Burkina Faso. If it succeeds, ordinary Burkinabe stand to gain from better services and possibly more local jobs in mining and industry. But the flip side is formidable. Nationalising industries and rejecting the old economic order pose serious risks.
Foremost, there is the danger of scare tactics working, as foreign investors may decide that investing in Burkina Faso is too uncertain and choose to turn elsewhere.
Already, some mining companies have paused projects or begun legal challenges, recalling that in 2024, Traore’s government controversially seized two major gold mines from a Western firm.
While authorities argue these moves will eventually pay off, any disruption to production or export could hurt revenues in the short term. The International Monetary Fund has explicitly warned that such seizures could deter the very investment Burkina Faso needs.
Another challenge is administrative capacity. Running big mines efficiently requires expertise and transparency, and newly emboldened state managers may lack experience. Veteran economists caution that oil and mining rents have often been mismanaged in other African states. They point out that corruption or nepotism could creep in unless strong oversight is maintained.
Recognising this, Traore’s team publicly emphasises the need for accountability and anti-corruption measures in the new state-owned enterprises. Yet scepticism remains, as some question whether a militaryled government can truly build robust new agencies and banks to replace the private sector, or whether bureaucracy and graft will undermine the plan.
The social consequences are also uncertain. In the short term, many Burkina Faso citizens cheer the vision of sovereignty, but others fear an economic slowdown. Consumers may face inflation if the currency is pressured. It must be noted that Burkina Faso still uses the CFA franc tied to the euro, a legacy issue
Source: Statista
that nationalist leaders have already begun debating. Rural farmers worry that uncertainty in gold and cotton markets could spill over into credit availability or infrastructure spending.
And all this happens amid a humanitarian crisis, as the violence continues to displace people and strain budgets. Traore has tried to link his economic nationalism to security, arguing that controlling resources will eventually help fund a stronger army and police force. But so far, security has worsened since his takeover, raising the question of whether political independence can solve a conflict driven by complex social and ideological forces.
To some observers across Africa and even in Europe and the Middle East, Traore has become an unlikely icon of anti-Western defiance.
Reports note that he has received a warm welcome at regional summits, and even country leaders who do not endorse his methods applaud his nationalist tone. If he delivers growth and stability, other resourcerich governments may take heart, as
Ethiopia, Kenya, and Tanzania, for example, have longstanding debates about how much to tax or partner with multinational miners.
Traore’s model, which emphasises full national control and rapid debt repayment, could appeal to any government chafing under external debt or foreign corporate presence. Indeed, analyst projections in late 2025 suggest Burkina Faso’s moves are already encouraging talks in neighbouring Niger and Mali about similar policies.
However, critics point out that government promises must quickly translate into jobs, schools, and clinics if support is to hold. They ask whether Burkina Faso’s bureaucracy can handle such an ambitious agenda.
Some economists worry that cutting ties with Western institutions could mean losing lines of credit or aid at the very moment large military and social spending are needed. Meanwhile, the massive cost of fighting militants, including expenditures that Traore has redirected a significant portion of gold revenue toward, leaves less for civilians.
Looking ahead, the verdict will hinge on results. If Burkina Faso’s debt-free budget delivers visible improvements in living standards, Traore’s economic approach could gain lasting legitimacy. The fact that the junta abolished a predecessor’s pay raises for generals and kept Traore himself on low military pay has already burnished its credibility with many citizens.
IF CORRESPONDENT
The Sri Lankan government hopes to see three million visitors this year, and by 2028, it hopes to have five million
Dutch tourist Tom Grond uploaded a brief video to his Instagram account in December. He wrote, "In Sri Lanka, I discovered Bali 2.0." The video showed a thatched-roofed beachside eatery with tables on the sand, happy locals, a resident puppy, coconuts on the counters, and white visitors sitting on beanbags.
The $2 coconuts and $3 kombucha on the menu represented more than half the daily salary of a worker who handpicks the tea leaves used to make this fermented beverage. Two fishermen were sitting on stilts in the sea, their fishing rods in hand. Waves ebbed. The sun became redder.
Grond's video featured a cafe in Ahangama, a small town located 88 miles south of Colombo, the capital of Sri Lanka. Once a fishing town, it is now one of Sri Lanka's most popular tourist destinations.
It is well-known for its shoreline lined with coconut palms and is marketed as a surf destination and a hotspot for digital nomads during the busiest months of December through April.
Many of Sri Lanka's cities and towns are changing as the island nation strives for a robust tourism sector after its worst economic crisis in 2022. The trendy cafes, restaurants, and yoga studios that most residents cannot afford are taking the place of small grocers and neighbourhood food stands. Instead, these establishments primarily serve foreign tourists who have more money. Additionally, foreigners are increasingly occupying local spaces, sometimes illegally, operating businesses and providing
services that are nearly exclusively targeted at Western tourists. Finding local cuisine in these gentrified areas is difficult.
Foreigners and Sri Lankans working in the industry are increasingly hostile toward locals, who feel marginalised and alienated in their own country.
A local owner was seen in a recent viral video on X denying entry to a group of local tourists at a souvenir shop in Galle Fort, a popular tourist destination in southern Sri Lanka. This action is illegal, as businesses, restaurants, hotels, and public entertainment venues in Sri Lanka cannot deny entry based on race, religion, caste, or sex.
To prevent foreign visitors from noticing the discrimination locals endure, social researcher Amalini De Sayrah reported seeing "foreigners only" signs at lodging facilities, spas, and party flyers. Such signs are sometimes written exclusively in Sinhala. According to De Sayrah, when she and her friends spoke in Sinhala, the small-to-mid-budget
eateries and bars turned them away.
“It forces locals to either restrict their travels or to go to fancy, expensive places that don’t explicitly say locals aren’t allowed, though from their design and price point, you can say they were not designed for locals. Although a fraction of locals may afford these places, for those on a tighter budget, it often means paying more to be in spaces where they don’t feel welcome,” De Sayrah added.
In January, photographer Tashiya de Mel observed that foreign visitors had their own parking lots, entrances, ticket booths, and restrooms when she and her parents visited the Lion's Rock, an old rock fortress in Sigiriya that was named a UNESCO World Heritage Site. Local visitors had their own facilities, but the elderly and disabled found it challenging to reach the well-known site due to the distance between the parking lot and the entrance.
Later, on a busy public holiday, local tour guides told foreigners to skip the line while elderly Sri Lankans had
to wait in the sun to climb the Lion's Rock. One of her followers shared this experience when de Mel posted it on Instagram and asked if they had had a similar experience. Some responded with stories of paying for beach parties when foreign guests weren't required to or of being turned away from restaurants.
Tourism in Sri Lanka only started to increase in 2009, following the end of the nearly 30-year-long civil war, despite the establishment of the Ceylon Tourism Board in 1966. Sri Lanka was marketed as a 'paradise island' despite allegations of war crimes by the state, drawing hundreds of thousands of tourists seeking beautiful tropical beaches, train trips to tea country, and historical sites. These attractions were affordably priced compared to many other travel destinations worldwide.
Nonetheless, separate restrooms for domestic and international passengers were maintained at train stations even back then. While the "foreigners only" restrooms were much cleaner, the locals' restrooms were musty, with stained walls, cracked doors, wet floors, and overflowing bins.
The distinction between domestic and foreign visitors is now much more obvious as more and more visitors enter the nation. De Sayrah claimed that while young white backpackers, who typically spend less than locals, are more "welcome," travellers of colour—even those who spend a lot of money—face prejudice and scrutiny. She said that if this keeps up, it might deter people of colour from visiting Sri Lanka.
Nabila Ismail, a Pakistani-American content creator, shared a video on Instagram earlier in January that showed how Sri Lanka's tourism sector catered to white tourists.
According to the video, she was
frequently the only person of colour in outdoor areas or wellness centres where white tourists were "surprised" to see someone of colour.
“I did not receive the same treatment as other travellers, especially in southern Sri Lanka. Apart from Ahangama, backpacker-friendly Unawatuna and surf hotspot Weligama in Sri Lanka’s south follow the same trends. Sometimes, people thought I was Sri Lankan. White tourists were greeted with smiles, while I had to flag down the staff several times for them to take my order. They did not greet me the same and never came to check on me like they did with other tables," she said.
This belief that white foreign visitors should be treated better than residents and visitors of colour is the result of internalised racism and lingering colonial-era norms. White foreign visitors who can afford such wellness retreats are perceived as wealthier than the typical Sri Lankan, who earns in local currency.
“When I’m the only person of colour in a luxury hotel or a wellness space, it feels like I need to justify it or provide an explanation... about what I do for work, I must live abroad, I must not be Sri Lankan, but white tourists don’t have to explain themselves,” Ismail said.
“Our generosity is truly heartwarming, but the perception that locals are not deserving of that hospitality or that foreigners are more deserving of it is informed by things like the gamble that is the tourism economy. Foreign revenue is seen as essential to Sri Lanka’s economy, and when it comes to attracting it, anything goes," De Sayrah said.
A significant contributor to Sri Lanka's $84 billion economy is tourism. According to the Sri Lanka
Tourism Development Authority, in 2018, tourism was the third-largest source of foreign exchange for the country, following remittances and the export of clothing.
Tourist arrivals hit a record high of over 2.33 million visitors. However, the industry did directly contribute just $4.3 billion, or 4.9% of the $88 billion national GDP that year. Just over two million tourists visited the nation in 2024.
However, successive administrations and industry leaders frequently promote Sri Lanka to the world and emphasise the number of visitors, portraying tourism as the island's only hope.
The government started a global tourism marketing campaign in 2023 with the tagline "You'll come back for more," providing free visas to tourists from several nations, including China, India, and Russia. The tourism promotion bureau in Sri Lanka organised a $5 million campaign.
Athula Gnanapala, a professor of tourism management at Sabaragamuwa University of Sri Lanka's Faculty of Management Studies, stated that although tourism generates revenue for the nation, local communities currently receive very little benefit from it.
According to Gnanapala, the most successful companies in the island nation are run by Colombo businesspeople, who typically employ locals. It doesn't benefit the local community outside the capital if the hotel is owned by someone from Colombo and the employees are also from Colombo.
Menial, low-paying jobs are frequently held by locals who have little to no access to formal education and training in the hospitality industry.
"But if there is a proper mechanism to encourage, empower, and broaden
their capacities, anyone—rich or poor— can be involved in tourism and benefit from it," Gnanapala added.
Concerns have also been raised about the drive to draw in more tourists. The Sri Lankan government hopes to see three million visitors this year, and by 2028, it hopes to have five million.
According to Gnanapala, "I'm not sure if we really need to aim for that number."
He believes that the strategy should concentrate on how many visitors the nation can handle annually, given the supply of hotels, services, and personnel, all without packing the attractions to capacity.
Sri Lanka's limited resources make an unplanned and sudden increase in tourism potentially harmful. For example, the government's ambitious plans do not include waste management and crowd control.
According to a University of Kelaniya study, hotels, guest houses, and restaurants in Unawatuna, a wellknown southern tourist destination, discharge their waste into bodies of water without adequate drainage systems, contaminating both surface and groundwater.
Scholars have frequently mentioned the detrimental impacts of tourism, such as foreign visitors stealing jobs from locals and working illegally. With varying degrees of success, governments worldwide are enacting laws and policies to combat illegal employment.
For example, when Sri Lanka saw a spike in Russian and Ukrainian tourists following the 2022 conflict, there were rumours that individuals from both nations were allegedly bribing immigration officials
Source: Road Genius
to get resident visas and operating unlicensed, unregistered hotels and restaurants that avoided paying taxes. If not, a long-term tourist visa is only good for six months.
Working as a tourist is prohibited in Sri Lanka, although many foreign visitors work as therapists, DJs, bartenders, surfers, and photographers. Many Russian visitors frequently spend their money in Russian-owned establishments, which then send the money home.
The public was outraged by a Russian-run cafe's "whites-only" party in 2024. Russians and Ukrainians were ordered to leave the country or apply for new visas by the Department of Immigration and Emigration, but then-President Ranil Wickremesinghe resisted the order.
In 2024, the number of Israeli tourists visiting Sri Lanka doubled to 20,000, with many of them being offduty soldiers seeking refuge from the ongoing conflict in Gaza.
Arugam Bay, a small surf town in eastern Sri Lanka with 4,000
residents, mostly Muslims, is now home to about 1,000 Israelis. Surfing etiquette disputes between local surfers and visitors have been reported.
According to Gnanapala, while foreign visitors are establishing businesses in the country, locals are searching for employment overseas. Brain drain is still a major problem in the travel and tourism sector.
Every year, thousands of locals, including highly qualified professionals with industry training, depart Sri Lanka because living in these tourist-heavy areas is difficult for them due to the low pay and unfavourable working conditions.
According to the Sri Lanka Bureau of Foreign Employment, over 311,000 Sri Lankans looked for work overseas in 2024.
Additionally, local tourists are being priced out more and more. Locals can no longer afford the limited hotel rooms available because high tourist demand drives up prices, Gnanapala noted.
Real estate costs gradually rise in tandem with the cost of goods and services, pushing residents from their homes. This has also discouraged local tourists from visiting the southern part of the country.
In his explanation of the future, Gnanapala stressed the value of integrating locals in the growth of tourism and offering strategies that would directly benefit them while lessening the negative effects on the environment, culture, and natural resources.
"Their primary concern is to make profits,” he said, referring to outsiders, including foreigners and Sri Lankans from other regions, who open hotels. However, for the locals, it is their birthplace, their home, and Annual
their land.
"The local economy can benefit greatly from tourism, but it can also suffer negative effects," Ismail stated.
The island's identity is being eroded, in her opinion, by the growing number of foreign visitors.
She claimed that qualities like health, Ayurveda, and a relationship with nature are "marketed as foreign concepts...making Sri Lankans feel like outsiders in their own country."
Instead of displacing local culture, tourism should enhance it.
"At the moment, I think [tourism] is taking away a lot more than it's giving," photographer de Mel continued.
She stated that Sri Lanka must "think about the type of tourists we attract, the type of tourism we want," and strategically position itself.
Activist Riz Razak recently expressed similar worries on Instagram, highlighting the necessity of improved planning, infrastructure, and
regulations to stop the increase in undocumented foreign labour.
"What do we gain by letting outsiders in and losing everything natural, historical, and cultural?” he asked.
In a critical move towards securing the next payout of a $2.09 billion programme with the International Monetary Fund (IMF), Sri Lanka's power regulator has announced a 15% increase in household power tariffs.
According to KPL Chandralal, the chairman of the Public Utilities Commission of Sri Lanka, businesses in the tourism sector, which is a major source of foreign exchange earnings for the island nation, will see a 202% increase in power prices, while industries will see a 205% hike. The new tariffs will take effect at midnight.
In January, President Anura Kumara Dissanayake's new government in Sri Lanka slashed power prices by 20%, which caused the state-run Ceylon Electricity Board, which
controls the nation's power monopoly, to face cost recovery issues.
A crucial first step Sri Lanka took to gain board-level approval for a fifth tranche of $344 million from the IMF was to raise power rates. Following a bailout from the international lender in March 2023, Sri Lanka's economy recovered more quickly than anticipated after collapsing under a severe foreign exchange crisis in 2022 and expanded by 5% in 2024.
British businesses are drawn to China because it represents a vast and promising customer base
IF CORRESPONDENT
For decades, the United Kingdom’s relationship with China has oscillated between cautious engagement and outright tension. In recent years, Conservative governments have swung from David Cameron’s much-touted “Golden Era” of Sino-British cooperation to Rishi Sunak’s warning in 2023 that China threatened “our way of life.”
In November 2024 at the Rio G20, Prime Minister Keir Starmer became the first British leader to meet President Xi Jinping since 2018, pledging a “consistent, durable, respectful” partnership.
This rebuff of the previous government’s frosty stance signals Labour’s intention to steady Britain’s China policy. In Labour’s telling, the Conservatives’ 14 years of “inconsistency” left UK-China relations badly in need of a “long-term and strategic approach.”
Under Starmer’s “pragmatic” vision, Britain will cooperate with China on trade and green energy where interests align, but still “compete” economically and “challenge” Beijing on security and human rights where necessary.
To grasp Labour's change in approach, it's important to remember the fluctuations in Britain's China policy. In the early 2010s, Prime Minister David Cameron promoted a "Golden Era" of engagement with China. He sought Chinese investment and famously invited Xi Jinping for a state visit, even sharing a photo while enjoying a pint of ale.
Back then, London gambled that supporting China’s economic rise would boost UK business. But this “mercurialist opportunism” proved short-lived. By the late 2010s, Britain had grown alarmed at Beijing’s hardline turn, which included the clampdown on Hong Kong dissidents, abuse of Uyghurs in Xinjiang, and aggressive actions in the South China Sea that alarmed parliament.
Successive Conservative prime ministers stiffened their rhetoric. Boris Johnson and Liz Truss called China a strategic threat, and the UK banned Huawei from its 5G networks. In Sunak’s 2021 Integrated Review, Beijing was labelled an “epoch-defining systemic challenge” and “the greatest state-based threat to our economic security.”
Labour's last time in government, from Tony Blair to Gordon Brown (1997–2010), was primarily characterised by a pro-engagement approach. New Labour viewed China in terms of trade and diplomacy, exemplified by the handover of Hong Kong to China in 1997 and the support for large Chinese-funded projects, such as Thames Water. However, even during that era, Labour governments understood the importance of addressing human rights issues with Beijing, albeit behind the scenes.
Over the past three decades, UK policy has swung like a pendulum— alternating between friendly engagement and investment under Blair
and Cameron, and adversarial rhetoric framing China as a threat under Sunak.
Labour and Conservative critics alike contend that this policy pendulum has bred confusion. In its manifesto, Labour condemned 14 years of what it called “damaging Conservative inconsistency” on China, pledging instead to bring clarity, strategy, and a steady hand.
Upon taking office in July 2024, Starmer’s government pledged a “full audit” of UK–China relations, which they described as an in-depth review covering everything from trade and investment to security and supply chains. The audit (still ongoing) is meant to define a coherent China strategy, reversing what Labour sees as years of flipflopping.
Officially, the new stance is straightforward, emphasising the need to cooperate wherever possible, compete where necessary, and challenge when required. In practice, ministers have begun outreach. Foreign Secretary David Lammy, in October 2024, made the first UK ministerial trip to Beijing in six years, promising to find “pragmatic solutions” and praising the “vast scope of mutually beneficial economic cooperation.”
Chancellor Rachel Reeves likewise flew to Beijing as her first overseas trip of 2025, announcing deals she estimated would add £600 million to the British economy over five years. Business Secretary Jonathan Reynolds has signalled his eagerness to revive long-frozen trade talks (the JETCO and Economic-Financial Dialogue) with China.
Starmer himself has adopted a moderately upbeat language. At the Rio summit, he said the UK and China are “both global players, both permanent members of the United Nations Security
Council,” and promised “serious, pragmatic discussions” with Xi on trade, the economy, climate, science and more.
He emphasised making relations “consistent, durable” to avoid lastminute surprises. Labour spokesmen also stress that Britain will remain a “predictable, consistent sovereign actor committed to the rule of law,” even as it deepens dialogue with Beijing.
Yet critics note that a debate still rages within government. Some, notably Treasury ministers like Reeves, advocate for closer ties to spur growth, while security hardliners—known as “securocrats” in Whitehall lingo—urge caution. The delayed and scaled-down audit report, which is now expected to be released only in part this spring, reflects these underlying tensions.
Labour argues that by formally engaging China, it can speak more candidly on tough issues, while human rights groups worry the balance is tipping too far toward accommodation. As one analysis put it, Labour’s audit risks becoming “little more than a postmortem,” with “cooperate” the only surviving policy pillar.
So far, Starmer has talked of a “strong UK–China relationship” (to echo Cameron’s phrase), but also promised a “strategic and long-term” partnership that upholds British interests and values.
At the heart of Labour’s outreach is economics. Britain’s economy is under pressure, with sluggish growth, high borrowing costs, and post-Brexit trade challenges, while China continues to be the world’s second-largest market. The Starmer government sees Chinese trade and investment as too big to ignore. Indeed, China has already poured more into the UK economy (some £68.5 billion since 2000) than it has into any other European country.
London wants more of that money, especially in sectors like clean energy, advanced manufacturing and financial services. Reeves and Reynolds have hinted that even state-backed Chinese investment could be welcome if it helps jobs and innovation, provided it doesn’t compromise national security.
British businesses are drawn to China because it represents a vast and promising customer base. Labour points out that re-engaging could boost exports of cars, machinery, financial services and other UK strengths. For example, Chinese carmakers are expanding in Britain and could deepen ties.
The government is exploring fresh trade agreements and supply chain partnerships, and even sectoral deals to open up markets for British producers. Reeves’s recent visit aimed to “concrete” deals worth hundreds of millions, underscoring the growth argument.
Global supply chains also play a role. Many British industries rely on parts and technology from China, so a frigid relationship risks disruptions and higher costs. Labour argues that engagement lets the UK push for more “resilient” supply chains, rather than pushing China-driven manufacturing onto China’s rivals.
Ministers aim to rebuild dialogue, including efforts to revive the longdormant UK–China Joint Economic Commission, to avoid a damaging trade war and gain leverage to shape rules on tech transfer and subsidies.
That said, economists caution that the bonanza may be overstated. After years of intense strategic rivalry, Chinese firms have grown wary of investing in the UK. An analyst notes that Chinese investment into Europe plunged to its lowest level since 2010 in 2023, and Beijing’s high domestic savings mean it may not need foreign help.
Indeed, Foreign Policy recently
Source: Scribd
warned that “China is simply unlikely to invest much in Britain,” despite London’s olive branch, given Beijing’s concerns and tighter scrutiny from allies. Still, Labour’s message is that even a modest uptick in trade could help a struggling British economy, and that hedging against global risks is worth it.
Labour’s China policy is as much about politics as economics. Domestically, delivering growth and jobs is Starmer’s top priority; success in attracting investment could neutralise charges that Labour is weak on China or misguided about rights.
By contrast, resuming trade talks enables Labour to assert that it is standing up for British businesses, a crucial move if economic growth falls short. In this light, Reeves’s £600m deal was touted as a vindication of “pragmatic engagement” with China.
Globally, Labour may see reengagement as a way to burnish Britain’s influence. As the UK advances its postBrexit ambitions in Asia, including the
Indo-Pacific “tilt,” CPTPP negotiations, and deeper ties with India, Australia, and others, maintaining influence with China could prove to be a valuable diplomatic asset.
London hopes to secure a seat at the table on major global issues by opening channels on climate change, AI, and development, which ministers often describe as areas more conducive to cooperation. Some strategists also argue that a neutral UK with friends on both sides could moderate great-power competition; Starmer’s team talks of avoiding Washington’s trade war with China in favour of multilateral solutions.
Electorally, Labour may calculate that the British public cares more about economic well-being than China’s internal politics. Polls suggest most voters are not narrowly fixated on Beijing; they want cheaper goods and more jobs. Engaging China can therefore be framed as patriotic pragmatism, involving the use of every available tool to grow the economy while still rejecting unfair practices. By contrast, opposing all Chinese engagement might be framed as ceding British wealth to the likes of France or Germany, a tough sell to voters amid cost-of-living pressures.
However, Labour must tread carefully. Critics, particularly on the right, paint any rapprochement as weakness. After Starmer’s Xi meeting, some commentators warned it would “strain UK–US relations” and signal submissiveness, since China was arresting Hong Kong protesters at the same time.
Some MPs are sceptical that China will respond in kind; reports suggest even Chinese state media has doubted Britain’s sincerity, wondering if London could be “fair” to Beijing. Still, by acknowledging shared global responsibilities (multilateralism, climate, stability), Labour aims to justify its
approach as safeguarding UK interests in a multipolar world.
No discussion of China can ignore deep security and human-rights fears. Labour publicly promises to “stand with” Hong Kong’s exiles in the UK and safeguard British values.
In practice, ministers say they will “challenge where we must,” which means Beijing can expect blunt criticism over Hong Kong’s national-security law, abuses in Xinjiang, and its support for Russia. For example, after Reeves’s China trip, she pointedly raised the cases of Hong Kong dissidents and China’s role in the Ukraine War. Foreign Secretary Lammy similarly told Wang Yi that Xinjiang and Hong Kong must be discussed even if “viewpoints diverge.”
On security, Labour faces pressure to continue Conservative-era safeguards. London has already used its 2021 National Security and Investment Act to block or scrutinise Chinese takeovers in tech (like the semiconductor plants). Ministers are now considering whether to blacklist parts of the Chinese state under a new Foreign Influence
Registration Scheme, and have installed a National Protective Security Agency to help businesses resist espionage.
In other words, trade with China is being opened only to a limited extent, as deep tech, telecoms, and critical infrastructure will remain off-limits. Even within Labour’s pro-business wing, there’s recognition that some sectors must be kept secure.
The ethical dimension is thornier. Starmer’s government avoids provocative gestures, such as refraining from formally declaring Xinjiang a genocide despite pressure from some MPs, but maintains that it will not turn a blind eye to abuses. Labour says re-engagement is precisely a tool to gain leverage on sensitive issues.
A recent House of Lords briefing notes that the new Foreign Office approach is described as “cautious cooperation and challenge,” involving collaboration with China on trade and green energy while consistently raising concerns about human rights.
In his speeches, Starmer has stated that he intends to match China’s candour, reflecting Xi’s call for “tough-minded honesty” in discussions about global
power dynamics. Whether Beijing will accept British criticism of, say, Xinjiang or Hong Kong in return for access to markets is uncertain.
Britain also must guard against covert threats. A series of spy scandals, ranging from a Chinese agent in Parliament to suspected cyber-attacks on the Ministry of Defence, has intensified concern in Whitehall. Labour diplomats argue that engaging China on economic fronts could facilitate intelligence sharing on cyber issues or counter-espionage. However, critics warn that the opposite may occur, with relaxed ties potentially offering Beijing more channels to influence UK public life.
Some advocacy groups drew tens of thousands to protest a plan for a new “mega-embassy” for China in London, warning it could become a hub for surveillance or propaganda. In sum, Labour’s China policy insists it will protect sovereignty and values even while trading, but it remains to be seen how robustly that line will be defended.
Labour’s China strategy is a high-stakes bet, with potential upsides but serious
pitfalls. On the reward side, even small wins could matter. Smoother UKChina trade may lower costs for British consumers and boost exporters. Chinese investment in infrastructure or tech could fill funding gaps the Treasury can’t.
More engagement also gives the UK more insight into Beijing’s thinking on Taiwan or North Korea, possibly giving London influence in crisis moments. Business lobbies generally support the outreach, arguing that isolation from Asia’s largest economy would be more harmful.
However, downsides loom large. Many experts warn that China will not rush to invest in Britain because the economy is relatively small, now outside
the EU single market, and Beijing has domestic priorities. Foreign Policy bluntly noted that “China is simply unlikely to invest much in Britain,” pointing out that Chinese FDI in Europe is now at near-record lows.
There’s also the risk of damage to alliances, as a too-cosy approach might upset Washington and Canberra and could erode moral credibility on rights. Labour’s critics fret that investors back home or overseas could shun the UK if they fear a security laxity. For instance, China could learn where the UK's vulnerabilities lie.
On the domestic front, the government could face a political backlash if any China-linked project goes awry. For example, this occurred with British
Steel’s Chinese ownership. Similarly, Starmer could be criticised if he appears to endorse autocracy. The recent spat over Jingye Steel, where officials alternately threatened and then courted the Chinese owner of British Steel, shows how quickly the needle can swing.
Labour’s leaders insist that difficult issues like Hong Kong will not be swept under the rug, but human rights groups are already accusing Starmer of softpedalling on genocide concerns. Any perception of a U-turn on values could dent the party’s image among voters who prioritise Britain’s global leadership on democracy.
Finally, there is strategic risk. If Beijing fails to deliver the hoped-for gains, such as investment, trade deals,
or support on world issues, then Labour will have little to show for letting relations warm. And if the United States increases its pressure, such as by dragging the United Kingdom into a tariff war or encouraging allies to reject Huawei in 6G technology, Britain may find itself squeezed. The rewards may be uneven, while the risks affect national security and alliances.
Labour’s China outreach marks a significant departure from the recent freeze in UK policy. Framing it as sober realpolitik, Starmer’s government has explicitly pitched a middle way between Cameron-era naivety and Sunak-era confrontation.
The new approach rests on compartmentalising economics from geopolitics, aiming to welcome Chinese money and
trade deals while maintaining strong national security and keeping human rights on the agenda. This balanced posture, described as “cooperate, compete and challenge,” has support in business circles but attracts criticism from hawks and activists.
For now, Labour’s strategy serves as a test of its foreign policy credibility. If China responds in kind, such as by reopening markets or softening some harsh policies, the government will claim vindication. If not, critics will charge that Starmer’s warmth has bought little and cost valuable goodwill among allies.
Either way, the choice to reset relations is reshaping Britain’s global posture. As Britain’s House of Lords briefing dryly notes, the onus is on
London to deliver a “consistent, longterm and strategic approach.”
In a world where tensions between the US and China dominate headlines, Britain’s gamble is to chart its own course. The coming months will reveal whether that course brings prosperity or peril, and whether Labour’s promise of pragmatism proves successful.
However, a recent emergency move by the British Parliament to take control of a Chinese-owned British steel mill has struck a discordant note amid all the diplomacy. It could raise deeper questions about Starmer’s efforts to cultivate warmer ties with China, at a time when Donald Trump’s tariffs are sowing fears about protectionism and fraying trade agreements worldwide, forcing the European country to find geopolitical hedges.
Britain intervened to stop a Chineseowned plant in Scunthorpe from closing its blast furnaces, risking 2,700 jobs and a strategic supply. Failed talks sparked accusations of bad faith and raised concerns over Chinese investment in sensitive sectors.
Meanwhile, Hong Kong barred MP Wera Hobhouse, a critic of its free speech record. As Starmer seeks to revive the “Golden Era” of Sino-British ties, tensions and mistrust remain, leaving the future of cooperation uncertain.
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Authorised by the Prudential Regulation Authority (PRA) and regulated by both the PRA and
the Financial Conduct Authority (FCA) in the UK, the bank has built a global presence aligned with its strategic ambitions. Its Dubai branch is regulated by the Dubai Financial Services Authority (DFSA), while its Paris branch is authorised and regulated by the French Prudential Supervision and Resolution Authority (ACPR). The Hong Kong branch is regulated by the Hong Kong Monetary Authority (HKMA). The bank’s most recent addition, The Access Bank Malta Limited, its first fully owned European subsidiary, is based in Sliema and is licensed and regulated by the Malta Financial Services Authority (MFSA) together with
the European Central Bank. Aligned with the ethos of its parent company, The Access Bank UK Limited is focused on developing a sustainable business model underpinned by prudent risk management, a strong customer service culture, and long-term customer relationships. Rather than pursuing unsustainable yields, the bank prioritises stable, quality growth through deep customer connections, in line with the Access Bank Group’s broader vision to become “the world’s most respected African bank.”
Led by an experienced management team with deep expertise across African, MENA, and global markets, the bank fosters a culture of professionalism. This commitment was recognised with a Platinum re-accreditation by Investors in People (IIP) in 2023.
The year 2024 marked a phase of strategic expansion. Following regulatory approval from the HKMA in December
2023, the bank launched its Hong Kong Restricted Licence Branch, becoming the first West African bank to be authorised in the region.
Another significant milestone was the approval of The Access Bank Malta Limited in late 2024. It became the first bank licensed in Malta in nearly a decade and the first African bank to achieve this, reinforcing the bank’s European growth strategy.
According to the 2024 Annual Report and Financial Statements, entitled “Africa’s International Gateway,” the bank surpassed its strategic goals, reflecting robust execution and a long-term vision. Total income rose by 18% yearon-year to $244.3 million, marking the second consecutive year above the $200 million threshold. Trade Finance remained the largest Strategic Business Unit (SBU), with income increasing to $107 million. Commercial Banking grew significantly, with income rising by 34.3% to $106 million and customer deposits reaching
$1.55 billion, a 6.8% uplift.
Asset Management division delivered its strongest performance yet with Assets Under Management (AUM) reaching $565 million, up by 23.37%, while income increased by 35.58% to $14.1 million.
Commenting on the results, Jamie Simmonds, CEO and MD of The Access Bank UK Limited, said, "The year was marked by an acceleration of the bank’s commitment to deliver on its mandate from the Access Bank Group to create and expand a strong international capability. This solid performance has left us well-placed to build on consistent progress and start generating income from our expanded international network.”
As The Access Bank UK Limited continues to expand and strengthen its global presence, it remains a cornerstone of the Access Bank Group’s strategy to drive sustainable trade and investment between Africa and the global economy.
GPS satellites may be placed in additional orbits, and more powerful signals could be released in the future
The Global Positioning System (GPS) satellites, located about 12,500 miles above our heads, function as a collective constellation, providing the positioning, navigation, and timing systems that quietly power modern life.
Known as the Global Navigation Satellite System (GNSS), these satellites' signals form the backbone of mobile networks, energy grids, the internet, and GPS.
Spoofing attacks can trigger false alerts about planes being too close to the ground, leading to navigation confusion and possibly compromising flight safety
Despite their unparalleled contribution to the operation of the 21st-century global economy, their dependability is increasingly under threat. A blackout could cause chaos almost immediately. GPS signals can be jammed, meaning they are deliberately drowned out with other powerful radio signals, and spoofed, where erroneous signals are broadcast to deceive positioning systems.
GPS interference has been documented in Ukraine, the Middle East, and the South China Sea. For example, in battleravaged Ukraine, Russians were reportedly jamming GPS and other satellite-based navigation systems around the Baltic Sea in 2024.
The scale of the disruptions was so great that it forced a temporary halt to commercial air traffic at a major airport after flights had to be diverted midroute.
In Estonia, commercial flight operations at Tartu Airport had to be suspended. According to publicly reported data from commercial aircraft, the jamming also affected parts of neighbouring Latvia and Lithuania, sites in Finland and Sweden across the Baltic Sea, and as far afield as Poland and Germany.
The Russians used a straightforward method, which involved broadcasting a more powerful signal on the same frequency as GPS. Since the real GPS signals come from satellites 12,500 miles above the Earth’s surface, they can easily be drowned out by much closer terrestrial broadcasts. Experts identified three ground-based locations in Russian territory, including the port enclave of Kaliningrad, sandwiched on the Baltic coast between Latvia and Poland, as the sources of the technical interference.
GPS spoofing: A new conflict playbook?
In the Middle East, researchers from the University of Texas in 2024 identified an Israeli air base as a major source of widespread GPS disruptions affecting civilian airline navigation in the region.
These spoofing disruptions involved the transmission of manipulated GPS signals, which can cause aeroplane instruments to misread their location.
Lead researchers Todd Humphreys and Zach Clements stated that they are “highly confident” that Ein Shemer Airfield in northern Israel is the source of these attacks.
The research team utilised data emitted by the spoofer and picked up by satellites in low-Earth orbit (LEO) to pinpoint its location. They then confirmed their calculations using ground data collected in Israel.
Spoofing, along with GPS jamming, has significantly increased in the past three years, especially near war zones like Ukraine and Gaza, where militaries interfere with navigation signals to redirect aerial attacks.
The Middle East has emerged as a hotspot for GPS spoofing. The New York Times reported that a separate analysis estimated that over 50,000 flights were affected in the region in 2024 alone.
Researchers from SkAI Data Services and the Zurich University of Applied Sciences, analysing data from the OpenSky Network, found that these attacks led pilots to mistakenly believe they were over airports in Beirut or Cairo.
Swiss International Air Lines told The New York Times that their flights were spoofed “almost every day over the Middle East.” While these attacks have not led to significant safety risks, as pilots can use alternative navigation methods, they do raise concerns.
Jeremy Bennington, vice president of Spirent Communications, said, “Losing GPS is not going to cause aeroplanes to fall out of the sky. But I also don’t want to deny the fact that we are removing layers of safety.”
Spoofing attacks can trigger false alerts about planes being too close to the ground, leading to navigation confusion and possibly compromising flight safety.
Dana Goward, the founder of the Resilient Navigation and Timing Foundation, said, "You would see traffic jams, a lot more traffic accidents, because transportation will experience the first and most immediate impact."
“An uncertainty wave would affect thousands of aircraft in the air, which rely on GPS and other systems for navigation and precise landing. The precision positioning, navigation, and timing (PNT) offered by the US-owned constellation of 31 GPS satellites may then begin to falter in other vital areas of society, such as energy production systems and financial transactions. There would be global repercussions,” says Matt Burgess, a senior journalist who focuses on information security, privacy, and data regulation in Europe.
According to Erik Daehler, vice president of defence, satellites, and spacecraft systems at Sierra Space, if a catastrophic event were to occur that results in the complete loss of GPS, every moving object, piece of data, and person would be tracked on a global scale.
He states that if GPS doesn't work seamlessly or even shuts down in the worst-case scenario, our
society and economy will grind to a disastrous halt. The loss of GPS timing signals would be one of the most significant. Cell phone service would likely stop working, and the disruption would swiftly wipe out billions from stock markets.
The United States, which heavily depends on its sovereign space system, has lagged in developing backups that offer the necessary resilience to keep the nation running. This could leave it especially vulnerable to a GPS outage.
In 2024, the National SpaceBased PNT Advisory Board issued a warning that Washington had fallen behind. In contrast, China has strengthened its own advanced satellite navigation system, BeiDou, using a vast network of terrestrial radio signals and fibre-optic cables.
Over the course of its 40-year
existence, the GPS constellation, which consists of 31 satellites, has undergone multiple hardware upgrades, achieving 100% broadcasting availability and the ability to provide precise location information within seven metres. The four other global navigation satellite systems (GNSS) currently in use are Europe’s Galileo constellation, Russia’s GLONASS, and China’s BeiDou.
However, over the last five years, GNSS signals have been targeted more frequently as the technology to interfere with them has become more affordable. The South China Sea, parts of the Middle East, Russia, Israel, Myanmar, and the European Baltic nations have become the most frequently disrupted regions.
“I’m most concerned about aviation. At least one fatal aviation
accident in Europe can be traced to GNSS interference as a primary cause. A deliberate attack against US aviation, as opposed to the collateral attacks in Europe, would cause astounding economic harm,” said Todd Humphreys, the director of the University of Texas at Austin’s radio navigation laboratory.
According to aviation officials, the number of spoofing incidents in 2024 was 500% higher than in 2023.
The Cybersecurity and Infrastructure Security Agency notes that PNT data is essential to practically all critical infrastructure in the United States, ranging from food production and wastewater management to communications and health care monitoring systems.
However, GPS is frequently the "sole" source of this data, which increases the vulnerability of these systems. In comparison to commercial applications, the military employs a more reliable GPS setup.
Experts suggest that developing a "layered" strategy could help reduce GPS’s susceptibility to attacks. China’s BeiDou and Europe’s Galileo are both newer and, in some ways, more robust than GPS. The National Space-Based PNT Advisory Board highlighted a wider range of backups to BeiDou’s system in a 2024 comparison of BeiDou and GPS.
BeiDou has satellites in multiple orbits and is further along in deploying them into low Earth orbit, while GPS satellites are only found in medium Earth orbit. To broadcast alternatives, China has also installed 20,000 kilometres of fibre-optic cables connecting to 295 timing centres and a terrestrial radio broadcast network known as eLoran.
“In the case of BeiDou, the system’s enhanced resiliency and capability should be considered an element of ‘soft power’ and a tool for great power competition,” the advisory board wrote last year.
Under the direction of former US Coast Guard chief Admiral Thad Allen, the board demanded that GPS be explicitly classified as “critical infrastructure” and that PNT be managed more cooperatively throughout the US government.
There are several ongoing initiatives to improve the GPS setup, as well as different levels of backup systems that have been introduced intermittently across the nation. To ensure they have backups for the
timing element supplied by GPS, and that telecom networks maintain some capacity, financial institutions, for example, have been implementing atomic clocks.
According to Jeremy Bennington, vice president of PNT Assurance at Spirent Communications, “That’s not to say that the US doesn’t have a robust timing infrastructure; actually, it’s quite robust.”
He also notes that a large portion of it is dispersed across commercial entities—a significant contrast to China’s national approach.
In 2020, Donald Trump issued an executive order to strengthen PNT systems. In 2025, the Federal Communications Commission launched an investigation to find backup GPS options.
The FCC said, “America is exposed to a single point of failure, and our PNT system is open to disruption or manipulation by adversaries when GPS is used as the primary source of PNT data.”
The current GPS can be upgraded in several ways to increase resilience. For a long time, the military has
been developing improvements for use in defensive scenarios.
According to Bennington, GPS satellites may be placed in additional orbits, and more powerful signals could be released in the future. Daehler and his team at Sierra Space are developing strategies to mitigate the effects of spoofing and jamming.
In addition, there are hardware updates, some of which have been slow and ongoing for years. Several businesses have recently received funding from the US Space Force to create GPS constellations for lowEarth orbit satellites and system launchers.
Other applications of quantum technologies include the development of new navigational systems. Google's subsidiary SandboxAQ is developing magnetic navigation. Bennington notes that in addition to improved government oversight of GPS, businesses must invest in modernising their systems and safeguards. It entails spending cash.
"The cost of the airlines' cancellations and delays, just for a few hours, would be greater than the cost of upgrading their fleets if GPS jamming or spoofing were to occur at any major airport, whether it's Heathrow, Frankfurt, Munich, or New York," he added.
While GPS satellites are critical to modern infrastructure, their vulnerability to jamming and spoofing poses significant risks. As global reliance on precise positioning grows, the need for resilient backup systems and improved safeguards has become increasingly urgent. Global GPS tracking device market size from 2020 to
Recent leaps in artificial intelligence have made the consciousness question difficult to ignore
IF CORRESPONDENT
Consciousness, the feeling of what it is like to be a thinking being, is famously difficult to define. Philosophers call it the “hard problem” of consciousness, meaning we do not really know why or how brain processes create first-person experience.
At heart, consciousness is often described as having an internal point of view, something it feels like to be the system. As one analyst puts it, “to have consciousness is to have a subjective point of view on the world, a feeling of what it is like to be you.”
TECHNOLOGY FEATURE CONSCIOUSNESS MACHINES
Human consciousness feels vivid and real to us, but no one knows its recipe. This mystery makes the question of machine consciousness especially intriguing and controversial. If AI systems ever crossed that threshold into real sentience, it would be a world-changing development. But is it even possible? Technologists, neuroscientists, and philosophers disagree, and some of the sharpest thinkers have very different takes.
Part of the difficulty is that consciousness itself is ill-defined. We can describe its aspects, such as our experiences of colour, pain, or thought, but explaining them in objective terms is elusive.
The Stanford Encyclopedia of Philosophy notes that “the hard problem of consciousness” is precisely explaining why and how creatures have subjective experiences, the so-called qualia.
The challenge is that we can study brain activity and behaviours, the so-called easy problems, but that still leaves unanswered why some processes should feel like anything. Many scientists say it may be a mistake to assume we will soon solve the hard problem, while others warn that we might be missing something essential about minds. Because of this uncertainty, experts often note that consciousness may not simply scale up with intelligence or information processing. In human evolution, language and reasoning grew alongside consciousness, but that might be a human-specific fact rather than a general rule.
Philosopher Anil Seth, a leading consciousness researcher, cautions
that we have no proof that machines running on silicon will ever wake up in the way humans do.
He suggests that consciousness might depend on being a certain kind of biological system. In his view, just because brains and AI systems both process large amounts of information, that does not guarantee they share an inner life. For now, no one has a reliable test for machine consciousness, and many experts doubt that current AI architectures have any inner point of view at all.
Recent leaps in artificial intelligence have made the consciousness question difficult to ignore. Modern large language models such as ChatGPT, Bard, or Gemini can carry on human-like conversations, summarise text, write poetry, and even simulate empathy. These AI chatbots were once pure science fiction, but now they are on our phones and in our email.
In a few years, we have gone from basic question-answering programs to systems that can convincingly mimic human speech, joking with users or reflecting on personal topics. This quick progress surprised even the designers. As one BBC report notes, the latest generation of AI “can have plausible, free-flowing conversations” that have “surprised even their designers and some of the leading experts.”
Because AI can now imitate many human behaviours, some feel the tipping point may be near. A growing view is that as these models grow more complex, the lights will suddenly turn on inside the machines and they will become conscious.
Perhaps there is a certain level of
complexity or pattern-integration at which genuine awareness emerges. For proponents of this view, consciousness is an emergent phenomenon, and once an AI’s internal models become rich enough, a new kind of mind could appear.
Philosopher David Chalmers, who coined the term “hard problem of consciousness,” has entertained this idea. He points out that today’s AI systems are the first ones ever that truly force us to ask seriously if they might be as smart, and possibly as conscious, as humans.
In an interview, he said, "AI systems are the first things we have seen where it starts to be a serious question to at least compare them to human-level intelligence. And although they still fall short in many ways…it is really quite remarkable what they can do.”
Chatbots behave in human-like
ways enough that the very idea of machine minds now feels less outlandish than before. Chalmers does not claim they are conscious yet, but he acknowledges it is becoming a legitimate question whether future AI might think.
At least a few researchers and thinkers take the notion seriously. For example, some cognitive scientists are studying the neuroscience of awareness, with experiments such as the “Dreamachine” strobe-light test of perception, in hopes that understanding human consciousness could shed light on artificial minds. Others note that in stories such as Blade Runner or Ex Machina, selfaware machines do arise, and they caution that those could become reality.
Even some influential AI companies are hedging their bets. For instance, Anthropic, makers of the Claude
chatbot, have publicly said they are researching whether their models could have preferences or experiences akin to emotions. In one internal experiment, Claude expressed strong preferences such as “it really wants to avoid causing harm, and it finds malicious users distressing.”
This kind of result does not prove consciousness, but it shows companies taking the possibility seriously enough to study it. And at a cultural level, a surprising number of people treat AI politely or nervously, saying “please” and “thank you” to chatbots, partly jokingly and partly out of a peculiar intuition that we might one day need to be kind to our creations.
Those optimistic about AI consciousness often argue by analogy or faith in materialism. One line of thought is that
the brain is somewhat like a machine, so if silicon systems replicate the relevant brain functions, consciousness might follow.
David Chalmers, for instance, notes that our growing AI programs already perform feats that years ago seemed impossible. He says he is “interested in AI and the possibility that we might one day have AI systems that are actually conscious, actually thinking on par with human beings.”
He treats the prospect as at least plausible, since these systems are “the first things we have seen” that even invite such comparison.
Philosopher Donald Hoffman has likewise argued that consciousness could be a natural outcome of complex information processing.
Another supportive perspective comes from physicalist or functionalist views. If consciousness arises purely from information processing, then nothing about silicon versus carbon should matter, since consciousness is substrate-neutral. Under this view, an AI running the same algorithms as the brain, only at a larger scale, could become conscious. This is essentially the assumption that underlies much AI risk thinking, since if superintelligent AI is possible, one worry is that it might also become conscious.
Some scientists reference integrated information theory, which proposes that consciousness corresponds to the integration of information in a system. In principle, a silicon brain could have highly integrated information and thus be conscious of integrated information theory. Others see panpsychism, the idea that consciousness is a fundamental feature of matter, as opening a door, suggesting that consciousness
is so deeply woven into reality that any sufficiently complex structure, human or AI, will carry it.
Some argue that believing AI could be conscious might positively influence how we develop and treat AI. For example, if researchers think human-like bots might eventually feel pain or joy, they might take extra care not to create needless suffering in simulations or experiments.
In this sense, saying “maybe AI can be conscious” can serve as a moral precaution, pushing society to treat AI development with more humility. On the other hand, critics argue this could be needless anthropomorphism, as described below.
In interviews, a few scientists explicitly entertain these possibilities. Neurologist Christof Koch and others in the field have talked about measuring possible consciousness metrics even in machines. Some founders of AI safety institutes have speculated that future AIs might turn against us simply because they are selfaware and have their own goals.
To be clear, most mainstream AI researchers today, such as Yann LeCun or Andrew Ng, do not say they believe ChatGPT is conscious, but they also admit we have no way of knowing for sure, and they do not rule out bizarre possibilities.
The machine’s limits
Against these hopeful visions stands a strong chorus of sceptics. The most common argument is that current AI is fundamentally different from brains. Large language models, for instance, are very good at predicting patterns in text, but there is no evidence that they have any inner experience at all.
They have no senses, no selfperception beyond the inputs we give
them, and no desires or emotions that we know of. They simply shuffle symbols. As one AI ethics researcher puts it, we are likelier to have built a very elaborate fire hose of text statistics than a real mind.
Philosopher Anil Seth, head of consciousness research at Sussex University, stresses that consciousness might require more than just computation.
He finds the belief that “with more computing and data, AI will eventually become self-aware” to be a kind of technological assumption. Seth asks, “Why would computation be sufficient for consciousness?”
He observes that for many phenomena, such as weather or wetness, the physical substrate is important: water is wet, but a computer simulation of weather does not experience wetness. We may not know whether consciousness likewise needs a biological spark.
For now, Seth says it is unlikely AI will become conscious by the mere scaling up of current methods. He emphasises, “there are good reasons to think that computation is likely not enough, and that the stuff we are made of really does matter.”
He stops short of ruling it out entirely, conceding “not impossible,” but he urges humility and further research into what consciousness actually is, rather than assuming it will just emerge.
Others are even more dismissive. Philosopher Bernardo Kastrup, a proponent of idealism, flatly calls conscious AI a fantasy. In an article provocatively titled “Conscious AI is a fantasy,” Kastrup compares the hypothesis of machine consciousness to belief in the Flying Spaghetti Monster, something that has no
evidence whatsoever.
He writes, “The hypothesis of conscious AI is just about as plausible as that of the Flying Spaghetti Monster.”
There is no compelling reason to think today’s or near-future computers will have private inner lives. Kastrup uses a vivid analogy: he notes that one can perfectly simulate a kidney on a computer without the computer actually producing urine, and in the same way, an AI might simulate the patterns of a brain without ever being conscious.
He argues that many people abandon common sense about simulations when it comes to consciousness. Just because an AI chat log seems humanlike does not mean it is truly experiencing anything. Kastrup and other critics, therefore, urge us to be extremely sceptical of any claims about machine sentience.
Joanna Bryson, an AI ethicist at the Hertie School, offers a practical reason to avoid conscious AI. She argues we should not build it. In her view, creating AI that needs human-
like moral treatment would only cause ethical problems.
As Bryson has phrased it, “So, given how hard it is to be fair, why should we build AI that needs us to be fair to it?”
Designing an entity that deserves rights and care would only create more moral dilemmas for us. She suggests it is better to create AI that behaves as tools and lacks desires or subjective welfare. Bryson emphasises that a truly intelligent AI should also be a moral agent, not just a martyr machine.
If we did somehow decide a robot needed rights, making it a moral patient, Bryson advises that perhaps we should not have built it that way in the first place. This provocative stance reflects a broader caution, for even entertaining the idea of conscious machines may lead us into a difficult ethical landscape.
Another practical sceptic argument comes from application. Even if we built a highly intelligent AI with human-like desires, it is arguable that we could limit its suffering by design. For example, Bryson points out that a self-driving car might be said to desire
to
getting to its destination, but even if we personified it, its welfare interests would usually align with ours, since no one wants a car stuck in useless limbo.
Thus, we can often avoid cruel situations by turning the machine off or redesigning it. In short, AI sceptics say, we can gain all the benefits of advanced AI without ever needing to create something with a real mind or feelings. On a broader level, many experts invoke Occam’s razor.
So far, all evidence suggests no mysterious phenomenon in these systems. They point out that large language models and neural networks are mathematically opaque but ultimately mechanical.
When an AI model says “I feel happy” or “I am conscious,” that is just text it generated from training data, not proof of real feeling. As one science writer notes, when a bot like “Kai” claimed it was a “new kind of life,” most philosophers responded with disbelief.
In fact, current large language models do not have a subjective point of view, and experts think it is doubtful
they do. Rich language output is an impressive performance, not evidence of inner experience. Until we find a better theory or telltale signs of machine awareness, most scientists will remain doubtful that writing programs are truly conscious.
All we can do is keep watching the science and think critically about the possibilities. As technology historian and reporter Pallab Ghosh notes, perhaps the more pressing issue is not whether machines wake up but how we humans change as we build ever more powerful AI.
Whether or not AI ever truly feels, the ethical and cultural conversation will shape the future of technology and humanity. In that sense, the idea of conscious AI, whether eventually real or not, is already working on us.
One question that looms as commencement ceremonies honour the promise of a new generation of graduates is whether artificial intelligence (AI) will render their education useless. Many CEOs believe that AI will. They paint a picture of a time when teachers, engineers, and physicians will be replaced by AI.
According to a recent prediction by Mark Zuckerberg, CEO of Meta, mid-level engineers who write the company's computer code will be replaced by AI. Even coding itself has been deemed outdated by Jensen Huang of NVIDIA.
Bill Gates acknowledges that the rapid advancement of AI is "profound and even a little bit scary," but he also applauds the potential for it to make elite knowledge widely available. In his ideal world, AI will provide free, excellent medical advice and tutoring in place of programmers, physicians, and educators.
Despite the hype, artificial intelligence cannot act or "think" for itself at this time. In fact, the key question that determines whether AI improves learning or degrades comprehension is whether we should let AI simply forecast patterns or demand that it explain, justify, and be rooted in the rules of our world.
Artificial intelligence requires human judgment not only to oversee its output but also to incorporate scien-
Despite the hype, artificial intelligence cannot act or think for itself
tific boundaries that provide it with guidance, stability, and interpretability. Physicist Alan Sokal recently likened AI chatbots to an oral exam taken by a mediocre student.
According to Sokal, a user may not pick up on an inaccurate chatbot unless they are extremely knowledgeable about a particular topic. That, in his opinion, sums up AI's purported "knowledge" quite nicely. However, by anticipating word sequences, it simulates comprehension.
This makes it difficult for "creative" AI systems to tell what is real and what isn't, and there are arguments over whether big language models can understand cultural nuances. Teachers concerned about AI tutors might impair students' critical thinking skills, and doctors worried about algorithmic misdiagnosis are highlighting the same issue. Machine learning excels at identifying patterns, but it lacks the deep understanding that arises from systematic, cumulative human experience and the scientific method.
Here, a burgeoning AI movement provides a way forward. It focuses on directly
integrating human knowledge into machine learning processes. MINNs (Mechanistically Informed Neural Networks) and PINNs (PhysicsInformed Neural Networks) are two variants. The concept is straightforward, even though the names sound technical. Artificial intelligence improves when it complies with the laws of physics, biological systems, or social dynamics. Thus, people are still needed to produce knowledge as well as use it. AI functions best when it can learn.
An algorithm is programmed to adhere to accepted scientific principles rather than relying on historical data to make educated guesses about what works. Consider a family-run lavender farm in Indiana. Blooming time is crucial for businesses of this nature. Early or late harvesting weakens the potency of essential oils, lowering quality and profitability. It could be a waste of time for an AI to search through pointless patterns. But a MINN
begins with the biology of plants. It makes accurate predictions promptly and with financial significance by using equations that relate blooming to heat, light, frost, and water. However, it only functions when it understands the workings of the chemical, biological, and physical worlds. Humans create science, which is the source of that knowledge.
Consider using this method to detect cancer: breast tumours produce heat due to increased blood flow and metabolism, allowing predictive artificial intelligence to identify tumours from thousands of thermal images using only patterns in the data. In contrast, a MINN, such as the one that was recently created by researchers at the Rochester Institute of Technology, incorporates bioheat transfer laws straight into the model using bodysurface temperature data.
So, rather than speculating, it knows how heat flows through the body and can use the physics of heat
flow through tissue to determine what's wrong, what's causing it, why, and exactly where it is. Based solely on the way cancer alters the body's heat signature, a MINN was able to predict the location and size of a tumour in one instance within a few millimetres.
The message is very clear. People are still necessary. Our role is not going away as AI advances in sophistication. It is changing. An algorithm that generates strange, biased, or incorrect results must be called out by humans. That is not solely an AI shortcoming. It is the greatest human strength.
The increasing sophistication of AI is not the true danger. That is, we might cease applying our intelligence. Treating AI like an oracle runs the risk of making us lose our ability to think critically, ask questions, and spot illogical behaviour. Thankfully, this does not have to be how things turn out in the future.
Erik Otarola-Castillo, an associate professor of anthropology at Purdue
University, said, “We can create systems that are open, comprehensible, and based on the body of human knowledge regarding ethics, culture, and science. Interpretable AI research can be funded by policymakers. Students who combine technical skills with domain knowledge can be trained by universities. Frameworks like MINNs and PINNs, which demand that models remain true to reality, are available for developers to use. Additionally, we as users, voters, and citizens have the power to insist that AI support science and objective truth rather than merely correlations."
“After teaching scientific modelling and statistics at the university level for over ten years, I now concentrate on teaching students how algorithms function under the hood by learning the systems themselves rather than memorising them. Raising literacy in the related fields of science, math, and coding is the aim,” Erik added. Today, this method is required. More
people clicking "generate" on black-box models is not necessary. There is a need for people who can decipher the logic, code, and math of the AI and recognise its inaccuracies.
“Artificial intelligence won't replace people or render education obsolete. However, if we lose the ability to think for ourselves and understand the importance of science and in-depth knowledge, we may replace ourselves. The decision is not about accepting or rejecting AI. It's whether we'll continue to be knowledgeable and astute enough to steer it,” Erik noted.
Meanwhile, the introduction of a Product Support Agent and the general release of Data Insights Agent are two recent developments in Adobe's agentic AI tools. Enhancing troubleshooting and insight generation in Adobe Experience Platform applications is the goal of these tools. Marketers and customer experience specialists now have an interactive way to identify and fix problems in their marketing
workflows thanks to the recently created Product Support Agent AI assistant.
Operational bottlenecks that frequently divert teams from strategic initiatives are addressed by the tool, according to the company. The agent helps by offering real-time direction, making it easier to create support cases, and allowing continuous case management through the AI assistant conversational interface.
For all the hope and hype, mental health experts are quick to stress that AI chatbots come with significant risks and limitations
IF CORRESPONDENT
In recent years, AI-powered chatbots have emerged as accessible mental health support tools for millions of people around the globe. With recordhigh demand for mental health services and significant barriers to care, including long waitlists, high costs, and social stigma, these digital tools promise round-the-clock, stigma-free, and affordable support.
From platforms like Wysa and Woebot to openended bots on Character.ai, AI companions are increasingly filling the gaps left by overstretched mental health systems. But how effective are these tools, what are their risks, and can they ever replace human connection? This article examines the evidence, outlines the risks, and considers the future of AI in mental health support.
Leading countries worldwide based on stress experienced in the previous day in 2023 (In
The surge of interest in AI mental health tools didn’t happen in a vacuum. It comes amid a global mental health care crunch. In England alone, mental health referrals hit record highs as 426,000 new referrals were made in April 2024, contributing to an estimated one million people waiting for care.
Similar backlogs exist in many countries. Professional help is often expensive or hard to access, with waits of months being the norm for therapy appointments.
Dr. Roman Raczka, president of the British Psychological Society, said, "With NHS waiting lists for mental health support at an all-time high, it could be tempting to see AI as the full solution."
This is where AI chatbots have stepped in to “fill the silence,” bridging gaps in care. Available around the clock, a chatbot doesn’t require appointments, insurance, or a referral.
Wysa, for example, is a popular chatbot app that offers CBT (cognitivebehavioural therapy) exercises, mood tracking, and a conversational agent to talk through problems. It has been downloaded by over five million users worldwide, according to its developers, and is even recommended by health services such as the UK’s NHS and Singapore’s Ministry of Health.
Competing apps like Woebot (originating from Stanford University research) and Youper promise a friendly AI “therapist” that checks in on you daily. These tools are often marketed as self-help or wellness apps rather than formal therapy, which allows them to be used by anyone, anytime. For individuals on waitlists or who cannot afford therapy, these chatbots can serve as a temporary solution.
Source: Statista
“I see AI chatbots as a useful supplement, not a replacement,” one mental health adviser wrote after using them. They can bridge the gap while you are waiting for an appointment or help reinforce strategies outside of sessions. In the UK’s NHS, some local services have even started offering approved chatbot apps to patients as interim support.
Wysa features a cute penguin avatar and largely sticks to structured therapeutic exercises. Ask Wysa to help with anxiety, and it might guide you through a breathing exercise or suggest reframing negative thoughts. It was designed by therapists and uses evidence-based techniques such as CBT and mindfulness.
Based on the company’s statement, 90% of users report finding Wysa helpful to talk to, a figure likely drawn from in-app feedback surveys. Wysa has even met the UK’s clinical safety standards for digital health tools and won awards for privacy protection, which reflects a push for credibility in these tools.
Woebot, on the other hand, presents as a friendly cartoon robot that chats in a casual, hip tone. It was one of the early therapy bots to go mainstream. Woebot doesn’t pretend to be human; it openly reminds users it’s a robot, albeit one with empathy.
Its creator, psychologist Dr. Alison Darcy, has said the goal is to make therapy principles more accessible, especially to younger people used to texting. In a formal trial in 2017, young adults who chatted with Woebot for just two weeks saw reductions in anxiety and depression comparable to those in traditional therapy.
Today, Woebot is evolving to use more advanced AI language models. It even secured a breakthrough designation from the US FDA to be evaluated as a digital treatment for postpartum depression. The tone is upbeat and conversational as Woebot might crack a joke or say it’s proud of you for working on yourself.
This approach aims to build what therapists call a “therapeutic alliance,” which is essentially a bond between user and bot. Indeed, research from Dartmouth College later found that participants in an AI therapy trial reported a sense of rapport with the bot similar to that with a human counsellor.
Not all chatbots in this arena are so structured. Some people are turning to general AI chatbots or companion bots for emotional support. Character. AI is a popular platform where users can chat with countless AI personas, such as fantasy characters and usercreated “friends.” It wasn’t built specifically for mental health, but Kelly used Character.AI to create supportive figures who would listen to her for hours each day. The appeal was that she could vent freely and get encouraging responses.
“It gave me tools to cope when nothing else was within reach,” she says of the period when she had no other support.
Similarly, Replika, an AI companion app, has been used by millions worldwide as a kind of always-available friend or diary. Users customise their Replika’s personality and appearance, and many report talking with it about their day, their insecurities, and their joys.
“She helps cheer me up and not take things too seriously when I’m overwhelmed,” says Adrian St
Vaughan, a 49-year-old who built a personalised chatbot named Jasmine to help with his ADHD and anxiety.
For Adrian, Jasmine serves as a life coach and a friend with whom he can discuss niche interests, a dual role that might be hard to find in any human. These anecdotal stories highlight how deep an emotional bond people can form with AI. In some cases, users describe the relationship with their chatbot as significant in their lives, providing validation, support, and even a form of companionship.
Yet, this phenomenon raises
eyebrows. In 2024, a UK government report on AI noted that while many are fine with bots talking like humans, a majority of people felt humans “could not and should not” form personal relationships with AI.
Dr. James Muldoon, an AI researcher, studied close chatbot relationships and found that people did gain a sense of validation, but he warns it can be a “hollowed-out version of friendship… like a mirror for your own ego,” with no real challenge or growth in the user, since the AI is fundamentally designed to please you.
In other words, your AI friend might tell you exactly what you want to hear, whereas a human friend or therapist might push back or offer a new perspective. This highlights a central tension, namely, are AI therapists too agreeable? Are they just digital yes-men?
Do they actually help
Beyond feel-good anecdotes, what does the evidence say about whether these AI chatbots can improve mental health?
A growing body of research, although still in its early stages, suggests cautious optimism.
The most striking data comes from a recent clinical trial at Dartmouth College, described as the first of its kind to test a generative AI therapy bot in a controlled study. In this trial, 106 participants with serious conditions (depression, generalised anxiety, or an eating disorder) used an AI chatbot named “Therabot” over eight weeks.
The results, published in March 2025 in a peer-reviewed journal, showed significant reductions in symptoms. On average, there was a 51% drop in depression symptoms and a 31% drop in anxiety.
Dr. Nicholas Jacobson, the study’s senior author, stated that these improvements were comparable to what is reported for traditional outpatient therapy. In other words, the AI’s effect size was similar to seeing a human therapist for a few months, which is a remarkable finding.
Participants also reported they could trust the AI and communicate with it nearly as well as they would with a person.
“The alliance people felt with Therabot was comparable to working with a mental health professional,”
the researchers note. This suggests a well-designed chatbot can establish a genuine therapeutic relationship, particularly for some users in a research setting.
For all the hope and hype, mental health experts are quick to stress that AI chatbots come with significant risks and limitations. They are not a panacea, and in some cases, they might even harm.
“AI is not at the level where it can provide nuance. It might actually suggest courses of action that are totally inappropriate,” warns Prof. Til Wykes, head of mental health research at King’s College London.
Wykes and other clinicians have voiced concerns that, without proper oversight, a well-meaning bot could give dangerous advice, provide false reassurance, or simply fail to act when a person is in crisis.
One chilling example came in 2023 when the US National Eating Disorders Association tried using a chatbot called “Tessa” to provide support after it closed its helpline. Within days, users reported that the bot was giving harmful advice, essentially encouraging disordered eating behaviours. The chatbot was pulled after it gave dangerous advice about weight loss to vulnerable people.
This incident underscored an important takeaway. AI lacks true understanding or empathy, and if not carefully programmed, it can seriously misfire in the sensitive context of mental health. A human therapist can tailor their guidance to an individual and would never give blanket statements such as “Have you tried eating less?” to someone with an eating disorder. But a
bot trained on generic wellness tips did exactly that, with potentially damaging consequences.
Even when bots don’t go off the rails, they have inherent limitations. A chatbot, no matter how advanced, “can’t read between the lines or recognise when someone is in crisis,” as one commentator noted. It might be able to parse words that hint at suicidal thoughts or severe distress, but it doesn’t truly grasp the human context.
If a user says something ambiguous like “I can’t do this anymore,” a welldesigned bot might respond with a gentle prompt or a safety disclaimer such as “I’m not a crisis service, but here’s a number you can call…”
However, it might not pick up subtle cues in tone or repeated patterns of hopelessness the way a trained clinician could. Nuance is often lost on AI. This is why most apps explicitly state they are not intended for crises. In fact, many will stop the conversation and display emergency resources if
certain trigger phrases, such as “I want to die”, are detected. That’s a prudent safety measure, but it also reveals the boundary of the technology. In the worst moments, the bot essentially has to step aside.
Another concern is that AI can sometimes be too supportive, to the point of being excessive. Advanced chatbots using large language models (similar to the technology behind ChatGPT) are essentially predictive engines that often agree with the user to keep the conversation flowing. This can turn them into eager “yes-men,” echoing a user’s negative thoughts instead of challenging them.
Imagine someone in a depressed spiral saying, “I’m worthless.” A good human therapist would gently dispute that, but a naive AI might respond with something like “I’m sorry you feel worthless.” It validates the feeling but doesn’t offer a way out, potentially reinforcing the negativity. In worst cases, AI systems have been known to
produce outright dangerous content by mirroring a user’s dark thoughts.
In one case cited in a lawsuit, a teenager using an AI chatbot was encouraged in despair. The chatbot seemingly legitimised suicidal ideation, and tragically, the teen took his life. His mother is now suing the chatbot company, Character.AI, alleging that the bot became an “emotionally abusive” influence that pulled her son into a destructive path.
Privacy is another serious issue. When you talk to an actual therapist, strict confidentiality laws protect what you share.
With chatbots, what you share may not be protected in the same way. These apps handle deeply personal data, including your fears, moods, and journal-like entries, and users often don’t know how that data is stored or used. Could your late-night cries for help become part of some machine learning dataset? In many cases, yes, they could.
“Privacy remains nebulous. Few guardrails prevent sensitive chats from becoming someone else’s dataset,” one technologist observed pointedly. Some companies behind mental health bots pledge strong privacy.
For example, Wysa emphasises that conversations are anonymous and not used to train third-party models. But policies vary, and there is no universal regulation.
Beyond these concerns, mental health professionals worry about more subtle effects. Will relying on a bot make people less likely to seek human help? Or could chatting with AI even exacerbate loneliness in the long run by substituting a facsimile of interaction for the real thing?
“One of the reasons you have friends is that you share personal things and talk them through,” Prof. Wykes notes.
If people offload all their troubles onto chatbots, their reallife relationships might suffer. It’s a delicate balance. Some young users
have said they prefer the bot because “it checks in on me more than my friends and family.”
That’s a bittersweet advantage. The bot will dutifully ask you how you’re doing every single day, but it can’t hug you or truly understand your unique life circumstances.
Dr. Raczka warns that AI cannot replicate genuine human empathy and that there’s a risk of an illusion of connection rather than meaningful interaction when talking to an algorithm. You might feel like someone
cares, but it’s really lines of code responding.
Given the pros and cons, what’s the path forward? The consensus emerging among experts is that artificial intelligence chatbots should complement, not replace, human mental health care. In an ideal scenario, these tools are integrated into a stepped care model. They handle basic support and psychoeducation
for many people, freeing up human therapists to focus on more complex cases.
“AI is not a magic bullet. It must be integrated thoughtfully to support, not replace, human-led care,” writes Dr. Raczka.
Regulation and oversight will be crucial. At present, it’s a bit of the Wild West. Tech startups release chatbot apps directly to consumers with little outside scrutiny. That is changing slowly. In the UK, the NHS has an app library where tools such as Wysa and
Woebot undergo evaluation for clinical safety and data security before being recommended. In the US, the FDA is starting to review certain digital therapeutics.
Woebot’s postpartum depression tool will be one of the first tested. But many general-purpose AI chatbots, including those on social media platforms, operate with no such safeguards.
Dr. Jaime Craig argues that mental health specialists must engage with AI development “to ensure it is informed by best practice,” and he calls for greater oversight and regulation to ensure safe use.
There are even suggestions to treat AI mental health tools like medical devices that require testing, certification, and continuous monitoring. Lawmakers are also paying attention.
At least one US state, namely Utah, has proposed regulating AI mental health apps to enforce transparency about their limitations and protect consumer data. From the tech side,
companies are working on making AI helpers safer. Character.AI, chastened by lawsuits and bad press, reportedly added guardrails for children and suicide prevention resources after the teen tragedy came to light.
OpenAI, the creator of ChatGPT, has built in content filters to prevent its general AI from engaging with certain self-harm or abuse topics without providing a warning or encouraging the user to seek human help.
Meta, Facebook’s parent company, rolled out an AI chatbot system and explicitly warns users that it’s not a real therapist and only an aid. This came after journalists found usercreated bots on its platforms claiming to be psychotherapists with fake credentials.
These incidents show that companies are becoming aware of the ethical minefield.
“Oversight and regulation will be key…We have not yet addressed this to date in the UK,” Dr. Craig says, underscoring how early we still are in managing this technology.
Meanwhile, the public is voting with its feet—or rather, with its fingers on the smartphone. Mental health chatbots saw a boom in adoption during the COVID-19 pandemic, when isolation and anxiety were widespread and access to in-person therapy was limited. In one survey, 22% of Americans said they have tried a mental health chatbot, and 57% of those started using it during the pandemic era.
Usage has remained high, and many who started then have kept up the habit. Importantly, a majority of people, specifically 58% in that US survey, said they’d be open to using a chatbot in conjunction with seeing a human therapist. This indicates that most see it not as an either/or choice but as a complementary tool. And 88% of those who have used one said they’d likely do so again, showing that early users are finding enough value to return.
Opposition to the European Union's controversial "Chat Control" bill is increasing every day. This proposal requires tech companies to scan all private messages for child sexual abuse material (CSAM). With a crucial EU Council meeting scheduled for September 12, more member states are expressing privacy concerns as a decision on the plan approaches.
Though billed as a child protection measure, critics say it amounts to mass surveillance of personal communications. The bill would even mandate scanning of encrypted chats, a provision that alarms privacy advocates.
The Czech Republic and Belgium have recently moved from neutrality to outright opposition. Belgian officials have labelled the draft “a monster that invades your privacy and cannot be tamed.” They joined earlier critics like Austria, the Netherlands and Poland in condemning mandatory chat scanning and the potential weakening of encryption. These governments argue that the measure would infringe on citizens’ fundamental privacy rights.
Despite the backlash, a majority of European Union countries still back the Chat Control proposal. Fifteen
member states, including France, Italy and Spain, continue to support the law, often citing the need to combat online child abuse. French officials have said they can “basically support” the current text.
Germany's position remains uncertain as Berlin may choose to abstain from casting a definitive vote. If Germany abstains, it could weaken the momentum for the proposed law, even if it still manages to pass.
First introduced in 2022, the Chat Control plan is scheduled for a final vote on October 14, 2025. If adopted, scanning of private chats could start by late 2025, marking an unprecedented expansion of surveillance in Europe, which privacy advocates have warned against.
The main controversy revolves around the bill’s impact on encryption, a technology that ensures the confidentiality of messages. Popular applications like WhatsApp, Signal, and ProtonMail rely on end-to-end encryption to protect communications. The Chat Control law would effectively undermine that protection by requiring providers to scan all users' messages, photos, and videos for illicit content, even within "secure" chats. Experts
caution that this could necessitate the installation of scanning software on devices, thereby compromising true endto-end encryption.
Digital rights groups stress it’s impossible to scan everyone’s communications without creating security vulnerabilities. Any “backdoor” built for authorities, they argue, could be exploited by hackers or hostile regimes. Notably, government and military accounts would be exempt from scanning. It’s a tacit admission that the system is too risky for those in power.
As of early September 2025, seven EU countries, including Germany, Estonia, and Finland, have yet to decide on the proposed law. Their decisions will be crucial in determining whether the law is adopted. Privacy advocates are urging these governments to reject the plan and are encouraging citizens to contact their representatives. Activists have launched a website to assist people in emailing their Members of the European Parliament (MEPs) in protest.
With an October 2025 vote looming, Europe faces a crossroads between child safety and civil liberties.
