Q4-2024-Magazine-FINAL

The Rise of Bitcoin: A Revolution in Global Finance

A NICHE EXPERIMENT TO A TRILLION-DOLLAR ASSET CLASS

ARE GLOBAL BANKING RULES FINISHED?

EUROPE’S ECONOMY IS STALLING OUT

WHAT THE G20 CAN DO

FOR AFRICA’S ENERGY AGENDA

Major fiat and cryptocurrencies supported

Swap and Cash Out Instantly

The Evolving Role of CFOs: How Numarqe is Reshaping Financial Management in 2024

is an outdated way of measuring the health of the economy – it doesn’t reflect the health of people or the planet

the Trump presidency might change the global

prices set to rise as Middle East tensions worsen, adding to cost-of-living

China’s stimulus blitz fix its flagging economy?

Donald Trump’s election win fuelled a stock market

Evolving Role of CFOs: How Numarqe is Reshaping Financial Management in 2024

to reverse Britain’s chronic underinvestment in

in Capital Management: SG Consulting Group LLC and its Digital Vision for the Future

has XM been named FX & CFD Broker of the Year for Europe and the Middle East 2024?

error is the weakest link in the cyber security chain. Here are 3 ways to fix it

Management: Resecurity’s Competitive Edge in Cybersecurity

Importance of CSR Activities in the Corporate Environment

underpinned by an invisible and exploited

The Statement

GLOBAL BUSINESS DIGEST & MARKET ANALYSIS

ARE GLOBAL BANKING RULES FINISHED?

EUROPE’S ECONOMY IS STALLING OUT

WHAT THE G20 CAN DO FOR AFRICA’S ENERGY AGENDA

THE ECONOMIC IMPACT OF FLOODING IN EUROPE

The recent surge in severe flooding across Europe has highlighted the devastating financial toll of climate change. Billions of euros have been allocated for disaster relief, infrastructure repair, and rebuilding efforts in affected regions. Industries such as agriculture, manufacturing, and tourism have been hit hard, while insurance claims have skyrocketed, straining financial systems. Beyond immediate costs, longterm economic implications include disrupted supply chains, reduced productivity, and the pressing need for investment in climate resilience.

BANK OF AMERICA CEO BACKS FED’S INDEPENDENCE

Bank of America CEO Brian Moynihan voiced his support for the Federal Reserve’s independence during Yahoo Finance’s Invest conference, emphasising the importance of a central bank that operates without political interference. Moynihan remarked, “Our Federal Reserve, an independent central bank, is a good place to be,” and commended Fed Chair Jerome Powell’s handling of monetary policy in a complex economic environment.

Moynihan’s comments come amid long-standing criticism from former President Trump, who had publicly suggested replacing Powell if reelected. Powell recently confirmed he would remain committed to his role, noting that he is legally protected from dismissal.

Turning to monetary policy, Moynihan forecasted that the Fed may implement one more rate cut this year, with additional reductions potentially on the horizon in 2025. This perspective aligns with growing market sentiment that an easing cycle could support economic stability as the U.S. economy faces mixed signals.

Bank of America, along with other major financial institutions, has enjoyed a post-election market lift, spurred by hopes of regulatory easing that could encourage growth in dealmaking and drive profits higher. Bank of America’s stock rose 9%, with peer institutions JPMorgan and Goldman Sachs experiencing gains of 6% and 13%, respectively.

Despite these gains, the bank has felt some strain from consumer caution and recent rate adjustments. In the third quarter, Bank of America reported a 3% year-over-year drop in net interest income, which totaled $14 billion. Additionally, adjusted earnings per share slipped by 10% to $0.81, while net charge-offs rose significantly, reaching $1.5 billion, up from $931 million a year earlier. Overall revenue edged up to $25.3 billion, reflecting slight growth over the previous year.

Nonetheless, Bank of America’s consumer business remains resilient. The bank added 360,000 new checking accounts during the quarter, and investment banking fees surged by 18%.

BRAZIL’S BANKS GAIN GROUND IN INVESTMENT BANKING

Brazil’s largest banks are carving out a bigger share of the investment banking market, leveraging robust private-credit funds and a booming local bond market to edge out major U.S. players like Bank of America and JPMorgan Chase. As Brazilian lenders capitalise on rising local demand for high-interest and tax-exempt bonds, these institutions are securing an increasing portion of a lucrative and expanding market.

Bank of America, which held the number two position in Brazil’s investment banking market in 2023, slipped to third this year, according to Dealogic data through October 31. Itaú Unibanco and Banco BTG Pactual, two of Brazil’s biggest players, have solidified their lead, while JPMorgan also saw its share decrease.

The trend is partly attributed to the strong relationships Brazil’s local banks maintain with retail clients who are eager to invest in domestic bonds. These bonds offer higher yields compared to international counterparts and, in some cases, are tax-free, making them particularly attractive. With no retail operations in Brazil, U.S. banks lack the same reach and adaptability in the local market.

“The Brazilian banks, with their stronger local balance sheets, can afford to hold bonds on their books and sell them later,” explained Felipe Thut, head of fixed income and structured products at Banco Bradesco BBI. This capability enables them to provide “full underwriting” for companies, a practice gaining importance in Brazil since 2018.

Despite these successes, Brazil’s total investment banking fee pool fell by 6.1% to $591 million as of October 31, driven by an 18% decline in equity issuance, according to Dealogic and Bloomberg data. Yet, local banks have seen revenue gains; Itaú’s brokerage and advisory fees surged by 51% through the first nine months of 2024, while BTG Pactual more than doubled its investment banking revenue in the first half of the year.

Appointments

PAM KAUR

Group CFO, HSBC

HSBC has appointed Pam Kaur as its first female Chief Financial Officer as part of a major restructuring under CEO Georges Elhedery. Kaur, 60, previously served as HSBC’s Chief Risk and Compliance Officer and brings extensive experience to her new role.

The bank’s overhaul includes combining its commercial and investment banking units— except in the UK and Hong Kong—into a new corporate and institutional division, aiming to boost returns and cross-sell products to its 1.2 million business clients globally. The changes align with HSBC’s strategy to focus on Asia and scalable markets while scaling back operations in Western regions like the U.S. and Canada. Analysts await further details on cost savings during HSBC’s Q3 results on October 29.

HSBC RESTRUCTURES: SENIOR MANAGERS TO REAPPLY

In a move to streamline operations and enhance efficiency, HSBC has reportedly required hundreds of senior managers to reapply for roles within its newly created Corporate and Institutional Banking (CIB) division. This initiative reflects CEO Georges Elhedery’s strategic push toward a leaner organisational structure and greater operational focus. According to sources cited by Bloomberg News, interviews for these key roles are already underway, setting the stage for a significant reshaping of the bank’s leadership structure.

The process involves senior staff from HSBC’s commercial banking sector competing with those from the global banking and markets division for CIB roles. This competitive restructuring is expected to culminate in the departure of several hundred managing directors, as HSBC seeks to consolidate roles and eliminate redundancies within its new division. As part of this reorganisation, HSBC will also

CARSTEN SCHMITT

CFO, Commerzbank

Commerzbank has appointed Carsten Schmitt as its new CFO, pending regulatory approval, with the transition expected by spring 2025. Schmitt will succeed Bettina Orlopp, who has been CFO since 2020 and assumed the role of CEO in October. Schmitt, currently EVP of Group Strategy and M&A at Danske Bank, brings extensive experience, including over 20 years at Commerzbank, where he last served as Head of Group Finance.

Jens Weidmann, Chairman of the Supervisory Board, lauded Schmitt’s leadership and deep financial expertise. CEO Bettina Orlopp welcomed his return, emphasizing his strategic insight and track record in steering complex financial operations. Schmitt’s appointment reflects Commerzbank’s focus on strengthening its leadership team.

phase out the “general manager” designation, standardising senior titles to “managing director” in line with industry norms.

These moves are the latest in a series of structural shifts announced by HSBC. The bank recently unveiled a “simplified organisational structure,” set to take effect in early 2024, which will see the creation of four distinct business units, including the CIB division. Additionally, HSBC’s 18-member group executive committee will be replaced by a new 12-member group operating committee, a change aimed at fostering quicker decision-making at the highest levels of management.

The restructuring effort comes at a time when HSBC has already been on a long-term trajectory to streamline its global workforce, reducing headcount by over 100,000 employees in the past 16 years. Elhedery, who has been with HSBC for nearly two decades, took over as CEO in July following a brief tenure as chief financial officer. His promotion has been accompanied by widespread speculation about further organisational changes.

SELIM KERVANCI

CEO For Middle East, HSBC

HSBC has named Selim Kervanci as its new CEO for the Middle East, pending regulatory approval. Kervanci, who joined HSBC in 1996, brings decades of experience, including as CEO of HSBC Turkiye and a decade on the MENAT Executive Committee. He will report to Asia and Middle East Co-CEOs, Surendra Rosha and David Liao, leveraging his expertise in transformation, growth, and navigating volatile markets.

In another leadership shift, Julian Wentzel, Head of Global Banking for MENAT, has been appointed Interim Group Chief Sustainability Officer, effective December 31, 2024, succeeding Celine Herweijer. Wentzel will report to Group CFO Pam Kaur, reflecting HSBC’s commitment to sustainability and strong leadership transitions.

BoE Governor Calls for Rebuilding UK-EU Relations

In a striking speech at London’s Mansion House, Andrew Bailey, the Governor of the Bank of England, urged the UK to “rebuild relations” with the European Union while respecting the 2016 Brexit referendum decision. Bailey’s comments marked a shift in tone, signalling his most direct acknowledgment yet of the economic impacts linked to Brexit.

While the governor emphasised that he holds no political stance on Brexit, he noted, “I do have to point out consequences.” He highlighted that the altered relationship with the EU has exerted pressure on the UK economy, particularly affecting trade in goods, though services have fared relatively better. He added, “The impact on trade seems to be more in goods than services… But it underlines why we must be alert to and welcome opportunities to rebuild relations.”

Bailey’s remarks come as the UK grapples with slower growth and lower productivity following its EU exit, compounded by global economic fragmentation and geopolitical risks. Chancellor Rachel Reeves, also speaking at Mansion House, mirrored Bailey’s sentiment, suggesting that while the government has no intention of re-entering the single market or customs union, there is room to strengthen ties. “Our biggest trading partner is the European Union… We must reset our relationship,” Reeves stated, reiterating the importance of addressing trade frictions without reversing Brexit.

The economic impact of Brexit has been challenging to assess, largely due to recent global shocks, including inflationary pressures and the aftereffects of the COVID-19 pandemic. The Office for Budget Responsibility and other economic analysts have projected that Brexit will reduce the UK’s GDP by approximately 4% over a 15-year period. Goods trade, particularly in food and agricultural products, has suffered due to new regulatory barriers, while service sectors, such as finance, have shown more resilience than anticipated.

Scholz Dismisses Finance Minister Lindner

German Chancellor Olaf Scholz has dismissed Finance Minister Christian Lindner, signalling a potential collapse of the three-party coalition. The decision raises questions about the government’s future, as Scholz’s Social Democrats may attempt to govern as a minority, potentially until the next scheduled elections in September 2025.

The dismissal followed prolonged disagreements within the coalition, composed of the SPD, Lindner’s Free Democrats (FDP), and the Greens. Tensions flared over economic policy, where Lindner—a staunch fiscal conservative—advocated for major reforms aimed at reviving Germany’s stagnating economy. His initiatives included budget-tightening measures that clashed with the more progressive economic agendas of the SPD and the Greens, which favour continued spending on social programs and green energy projects.

According to Steffen Hebestreit, Scholz’s spokesperson, the Chancellor decided to dismiss Lindner during a critical meeting with senior representatives from all three parties. The chancellery confirmed a press conference was scheduled for later in the evening, at which both Lindner and leading Green politicians are expected to address the media.

Lindner, a vocal proponent of austerity, had repeatedly warned that Germany faced “an autumn of decisions,” alluding to complex budget discussions looming on the horizon. He suggested that Germany’s response to economic pressures has become even more urgent given the global geopolitical climate, exacerbated by crises such as the U.S. presidential election, the ongoing war in Ukraine, and turmoil in the Middle East.

Lindner’s public statements hinted at the mounting tensions, and reports from Germany’s Bild newspaper suggest he went as far as proposing early national elections in 2025, rather than waiting for the scheduled September vote. As Germany enters a period of political uncertainty, Europe and the broader international community will closely monitor the country’s economic and diplomatic stances.

EU Finance Chief Vows to Curb Greenwashing

The European Union’s incoming finance chief, Maria Luís Albuquerque, has pledged to tackle greenwashing and expand capital markets to drive green investments.

Set to assume the role of Commissioner for Financial Services, Financial Stability, and the Capital Markets Union in December, Albuquerque outlined her vision during a European Parliament session, emphasising the need for private funds to achieve the EU’s climate ambitions.

“Private money is needed,” she stated, stressing that deepening capital markets is critical to financing the green transition and supporting companies in adopting sustainable practices. Her comments come as the EU positions itself as a global leader in sustainable finance, with regulatory frameworks like the Sustainable Finance Disclosures Regulation (SFDR) aimed at promoting transparency and mitigating greenwashing.

Albuquerque proposed refining the SFDR, suggesting a clearer classification system to enable investors to accurately assess ‘green’ or ‘transition’ financial products. “We need to address the framework and the way it’s being misused,” she said, emphasising that a standardised approach would bolster trust and integrity in sustainable finance markets.

While committed to green finance, Albuquerque avoided committing to regulatory changes favoring defence investments, despite concerns from some Members of the European Parliament (MEPs) that ESG policies limit capital access for European defence firms. She proposed consulting stakeholders to identify whether funding constraints stem from ESG policies or other factors.

Albuquerque also sidestepped questions on extending due diligence requirements to financial institutions, mirroring the cautious stance of Michael McGrath, nominee for the Corporate Sustainability Due Diligence Directive.

Nubank Weighs UK Legal Domicile Move

Nubank, the Brazilian digital challenger bank, is exploring the possibility of relocating its legal base to the United Kingdom, signalling a potential boost for Britain’s efforts to attract global tech firms and investment. While discussions are ongoing, no final decision has been made, the company clarified, emphasizing its commitment to transparency and adherence to corporate communication standards.

If the move materialises, it would mark a significant milestone for both Nubank and the UK. The fintech giant’s corporate headquarters would remain in Brazil, but establishing a legal domicile in the UK would underline the British government’s success in positioning the country as a tech and innovation hub. This initiative forms part of a broader agenda of economic collaboration between Brazil and the UK.

The potential relocation aligns with a series of measures by the UK to court tech firms and streamline innovation. Last month, the UK’s Department for Science, Innovation and Technology unveiled the Regulatory Innovation Office, a new body aimed at accelerating the approval process for emerging technologies. The initiative seeks to reduce the regulatory burden on entrepreneurs, ensuring faster time-to-market for groundbreaking inventions.

These moves reflect the UK’s ambition to retain its global competitiveness in the tech sector, particularly as the country navigates shifting economic dynamics post-Brexit. Attracting high-profile firms like Nubank could bolster Britain’s reputation as a prime destination for tech investment.

The UK government’s overtures to the tech sector come against a backdrop of mixed business sentiment. Recent tax increases, including a rise in the national insurance payroll tax to 15% and a reduction in the threshold for capital gains tax, have drawn criticism. Additionally, the removal of VAT exemptions for private school fees has sparked debate about the broader economic direction under Labour leadership

UBS Asset Management has taken a significant step in the digital finance landscape, introducing the “UBS USD Money Market Investment Fund Token” (uMINT). This fund, designed for money market investments, operates on Ethereum’s blockchain technology, representing UBS’s ongoing commitment to innovative, blockchain-based financial products.*

This pioneering move allows investors to access UBS’s institutional-grade cash management offerings via tokenised assets, which are secured by high-quality money market instruments. Built on a conservative, risk-managed framework, uMINT promises a new level of transparency and efficiency for clients.

In discussing the launch, Thomas Kaegi, Co-Head of UBS Asset Management APAC, noted, “We have seen growing investor appetite for tokenised financial assets across asset classes. Through leveraging our global capabilities and collaborating with peers and regulators, we can now provide clients with an innovative solution.”

This offering taps into the rising demand for blockchain-based assets, enabling institutional and high-net-worth clients to integrate digital finance seamlessly into their portfolios. UBS’s focus is not just on building a blockchain-based product but also on establishing a secure, compliant infrastructure, aligning closely with global financial standards.

UBS’s strategy integrates public and private blockchain networks for fund issuance and distribution, and uMINT builds on a series of digital finance initiatives UBS has undertaken in recent years. Notably, UBS Asset Management has actively collaborated with The Monetary Authority of Singapore’s Project Guardian, an initiative exploring blockchain applications for financial markets. In October 2023, UBS successfully piloted a tokenised Variable Capital Company (VCC) fund under this project.

By launching uMINT, UBS Asset Management reinforces its dedication to digital transformation within financial services, offering clients an array of advanced, tokenised investment options. As demand for blockchain-driven finance continues to expand, UBS’s initiatives place it at the forefront, transforming traditional finance with secure, efficient, and innovative solutions that embrace the potential of blockchain.

MUFG, Saudi PIF Sign MoU for Infrastructure

Mitsubishi UFJ Financial Group (MUFG) and Saudi Arabia’s Public Investment Fund (PIF) have signed a memorandum of understanding (MoU) to explore collaborative investment opportunities, with a focus on infrastructure and project financing. This partnership aligns MUFG’s financial expertise with PIF’s strategic goals, supporting Saudi Arabia’s Vision 2030 ambitions and promoting investment exchanges between Saudi Arabia and Japan.

The MoU aims to establish a framework for regular engagement, enabling both institutions to leverage their strengths in high-impact sectors. Given MUFG’s established expertise in infrastructure development, project financing, and its influence within Japan’s financial sector, this partnership positions PIF to pursue significant investment opportunities aligned with its long-term vision. For MUFG, the agreement enhances its commitment to the Middle East and North Africa (MENA) region, strengthening its presence in Saudi Arabia and reinforcing ties with one of the region’s largest sovereign wealth funds.

PIF, the driving force behind Saudi Arabia’s Vision 2030 economic transformation plan, has a mandate to diversify the Kingdom’s economy and reduce its reliance on oil revenue. This includes large-scale investments in various sectors such as tourism, renewable energy, and technology. The collaboration with MUFG will facilitate PIF’s exploration of investment opportunities within Japan, fostering economic ties between the two countries.

MUFG, one of Japan’s largest financial institutions, has been expanding its footprint in the MENA region, offering clients access to project financing, infrastructure development, and investment banking services. By working with PIF, MUFG aims to facilitate investment flows between Saudi Arabia and Japan, creating new opportunities for both economies. This partnership not only highlights MUFG’s commitment to Saudi Arabia’s economic development but also underscores the growing interest of Japanese financial institutions in the MENA region’s dynamic markets. The MoU’s focus on infrastructure and project financing reflects both parties’ long-term strategic interests.

NatWest taps NCR Atleos to Modernise Channels

In a significant move to enhance customer experience and streamline self-service banking, NatWest Group has expanded its partnership with NCR Atleos Corporation (NYSE: NATL), a leader in self-service financial technology. This collaboration marks a major stride in NatWest’s journey to modernise its ATM network and digital service channels, impacting millions of customers across the UK.

NatWest Group, one of the UK’s largest financial institutions with over 19 million customers, is home to renowned brands including NatWest Bank, Royal Bank of Scotland, and Ulster Bank. Known for its commitment to innovation and customer-centric solutions, the group has identified a strong need for agile, efficient self-service platforms that align with evolving customer expectations.

As part of this initiative, NatWest Group will upgrade its extensive network of over 5,500 ATMs and multi-function devices. By deploying NCR Atleos’ latest technology, the bank aims to improve both functionality and user experience at each self-service terminal. This upgrade includes the replacement of all NatWest-owned ATMs with NCR Atleos’ state-of-the-art 19-inch touchscreen models, which will feature a more intuitive interface designed to enhance user interaction and accessibility.

The initiative underscores NatWest Group’s commitment to building a robust, customer-focused banking infrastructure, ensuring that cash and essential financial services are accessible to individuals and communities across the UK. By optimising ATM availability and introducing faster deployment of new services, the group intends to create a seamless, secure self-service experience for its customers.

This strategic collaboration between NatWest Group and NCR Atleos is more than a technological upgrade—it’s a commitment to customer convenience and a forward-looking approach to banking innovation. As financial services continue to evolve, NatWest and NCR Atleos are setting a benchmark for how modern banks can leverage technology to enhance accessibility and user satisfaction in a rapidly changing market.

RITES taps Etihad Rail for Rail Infrastructure

RITES Ltd., a premier transport consultancy firm, has entered into a significant collaboration with Etihad Rail, the UAE’s national railway company, to advance rail infrastructure projects in the region. The Memorandum of Understanding (MoU) was signed during the prestigious Global Rail Transport Infrastructure Exhibition & Conference held in Abu Dhabi, marking a key milestone in strengthening bilateral ties in the railway sector.

The MoU was formalised in the presence of RITES Chairman and Managing Director, Rahul Mithal, and Etihad Rail CEO, Shadi Malak. This strategic alliance is expected to leverage the strengths of both entities, focusing on several key areas: rolling stock supply and leasing, consultancy services, project management, and the operation and maintenance of railway infrastructure. Moreover, the agreement will involve conducting capacity analysis of the UAE’s rail corridors, aimed at enhancing operational efficiency and streamlining logistics across the network.

A notable aspect of the partnership is its emphasis on integrating advanced IT solutions to optimise train operations and improve passenger management. Both RITES and Etihad Rail are committed to using innovation and technology to modernise the railway systems, ensuring that operations are more efficient and sustainable.

The collaboration also includes a strong focus on knowledge transfer and skill development. Both companies plan to initiate comprehensive training programs and employee exchange initiatives, which will foster expertise sharing and contribute to building the local workforce’s capacity in the rail sector.

With RITES bringing decades of expertise in rail consultancy and Etihad Rail overseeing one of the most ambitious railway projects in the Gulf, this partnership promises to deliver cutting-edge solutions for the UAE’s growing transportation needs.

This agreement not only strengthens ties between India and the UAE but also marks a pivotal step toward enhancing the region’s rail capabilities, ensuring long-term sustainability and efficiency in the UAE’s national railway network.

Indonesia Courts China For Rail Investment

Indonesia is courting China for investment in expanding its high-speed railway network, a move that could significantly enhance the country’s economic landscape. Following the success of the “Whoosh” high-speed line connecting Jakarta and Bandung, Indonesian officials are eyeing an extension of the line eastward to Surabaya, a major port city in East Java. If realised, this ambitious project could cut travel time between Jakarta and Surabaya from eight hours to four, potentially transforming mobility and economic integration across the island of Java.

The high-speed railway launched a year ago as part of former President Joko Widodo’s infrastructure initiatives, has already made a strong impact. With over 4 million passengers in its first year and an expanded schedule, the Whoosh project represents Indonesia’s commitment to bolstering connectivity and economic integration. Widodo’s vision aligns with China’s Belt and Road Initiative, underscoring a deepening partnership with China in infrastructure development. To assess the feasibility of the Surabaya extension, the Indonesian government is currently conducting studies and anticipates significant economic benefits, especially in regions with new rail stations.

At a Shanghai rail expo in June, Indonesia presented additional infrastructure projects seeking Chinese investment. These projects include connecting the Whoosh line with Bandung’s urban rail systems, a planned airport rail link in the upcoming capital city, Nusantara, and a rail system linking Nusantara to nearby cities. According to Indonesia’s Ministry of Transportation, these plans, outlined in the government’s 2024-2029 strategic roadmap, are expected to drive economic growth and connectivity in the coming years.

Indonesia’s preference for Chinese partnerships reflects both economic incentives and logistical advantages. China’s willingness to transfer technical knowledge without extensive requirements has outpaced Japan’s previous offers in the sector. As China increases its influence, it has also begun replacing outdated fleets on Indonesia’s Greater Jakarta Commuter Line, highlighting its expanding role in Indonesia’s rail sector.

MONIEPOINT SECURES FRESH $110

MILLION

Nigeria-based fintech firm Moniepoint has successfully raised $110 million in fresh funding, marking a significant milestone as it pursues ambitious expansion goals across Africa. This latest investment round, led by a diverse group of backers including Google’s Africa Investment Fund, positions Moniepoint as one of Africa’s most promising fintech players, securing a valuation above $1 billion and conferring it with “unicorn” status.

Founded in 2015, Moniepoint initially focused on providing payments infrastructure and solutions for financial institutions, but the company has since evolved to include a range of personal banking services. The capital raised will be pivotal in accelerating its expansion strategy, enabling Moniepoint to establish itself as an integrated digital banking platform for businesses throughout Africa.

The funding round attracted interest from existing investors such as London-based Development Partners International and private equity firm Lightrock, alongside new players like Google’s Africa Investment Fund and Verod Capital. The diverse investor support underscores confidence in Moniepoint’s robust growth potential and strategic direction within the booming African fintech market.

Moniepoint plans to leverage this new capital to create a comprehensive digital platform tailored to business needs. According to the company, the platform will offer services that go beyond traditional digital payments and banking. It will integrate foreign exchange, credit, and business management tools to create a seamless, one-stop solution for African businesses.

Africa, and Nigeria in particular, presents a very unique opportunity for fintech innovation. Nigeria’s fintech sector has been rapidly growing, propelled by the country’s large, youthful population of over 200 million, many of whom still lack access to conventional banking services, a trend Moniepoint is now further empowered to change.

U.S. BANK LAUNCHES TRAVEL BOOKING PLATFORM

J.P. Morgan’s digital-only bank, Chase UK, has launched its first credit card, signaling the institution’s continued investment in expanding its footprint in the British banking market. This move follows the bank’s impressive accumulation of over £20 billion in deposits in just three years, according to a recent report by the Financial Times (FT).

The credit card, initially made available to 25,000 select customers, was preceded by a trial phase involving Chase employees. Now three years into its operations, Chase UK serves over 2 million customers. While its customer base remains smaller than domeic digital challengers like Monzo and Revolut, each boasting around 10 million users, Chase UK has outpaced them in terms of deposits. This is largely attributed to its savings products, which have proven popular among wealthier clients, and its acquisition of Nutmeg, a platform that provides investment solutions.

This launch follows earlier reports that J.P. Morgan was testing a credit card offering in the U.K. via its mobile banking app. The timing coincides with the company’s broader ambitions to expand its retail banking presence beyond U.S. borders. While competitors such as Citi have scaled back their international retail banking efforts, J.P. Morgan is actively expanding, hiring bankers in key European cities like Copenhagen and Stockholm to bolster its presence in Scandinavia. CEO Jamie Dimon has also outlined plans to enter African markets, including Kenya and Nigeria, as part of the bank’s global growth strategy.

With assets exceeding $4 trillion, J.P. Morgan aims to establish a competitive digital-only bank capable of challenging local financial institutions in international markets. This effort aligns with the increasing consumer shift toward digital banking, as highlighted by research showing that nearly half of consumers across 11 countries use mobile banking services weekly.

Chase UK’s first credit card launch underscores J.P. Morgan’s determination to position itself as a dominant player in global retail banking, leveraging both digital innovation and traditional banking infrastructure to meet diverse customer needs.

U.S. Bank has launched the U.S. Bank Travel Center, a new booking platform in partnership with Booking.com and powered by Rocket Travel by Agoda. This innovative platform allows U.S. Bank cardholders to conveniently book hotels, flights, and rental cars, elevating the travel planning process with user-friendly navigation, exclusive offers, and extensive travel options.

The U.S. Bank Travel Center is designed to deliver a seamless booking experience, leveraging Rocket Travel by Agoda’s cutting-edge technology and global travel expertise. This collaboration provides access to Booking Holdings’ expansive network, which includes more than 2.4 million properties worldwide. The platform is intended to meet the needs of modern travellers by offering a simplified, secure, and rewarding way to book travel.

“Whether paying for travel with points or cash, our cardholders will enjoy the convenience of planning their travel through a robust, easy-to-navigate online booking experience,” said Steve Mattics, head of U.S. Bank Retail Payment Solutions. “Our cardholders’ travel planning and booking experience will be significantly enhanced with improved site navigation, cutting-edge technology, and the security and travel options that travellers demand today.”

As part of its ongoing commitment to enhance credit card benefits, U.S. Bank’s new Travel Center will provide cardholders with special travel discounts, 24/7 customer service support, and the ability to make same-day bookings. Additional rewards and benefits include cash-back deals, merchant discounts, and access to Paze℠, an online checkout solution that protects cardholder data by replacing actual card numbers with secure tokens during transactions.

The collaboration with Rocket Travel by Agoda is key to U.S. Bank’s strategy to offer competitive and enriched travel benefits. Rocket Travel’s senior vice president, Sarah Moore, emphasised the platform’s potential to offer U.S. Bank cardholders a superior travel booking experience.

CHASE LAUNCHES FIRST CREDIT CARD

Turkey’s 2,000MW Annual Renewable Energy Plan

Turkey is gearing up to significantly expand its renewable energy capacity, with plans to introduce at least 2,000 megawatts (MW) of new capacity annually until 2035, according to sources familiar with the government’s strategy. This ambitious push is part of the nation’s broader efforts to accelerate investment in the clean energy sector and strengthen its role as a key player in global renewable energy development.

The Turkish Ministry of Energy is expected to resume auctions next year for specially designated renewable energy areas, known as YEKA, which stands for Renewable Energy Resource Areas in Turkish. These auctions will allow investors to bid for the rights to develop wind and solar energy projects in prime locations, aiming to attract substantial private sector participation. The details of the plan remain undisclosed as the ministry has yet to make an official announcement.

In addition to launching new auctions, the ministry is reportedly exploring ways to incentivise companies that have already secured licenses for renewable projects but have yet to initiate construction. These unused licenses represent a bottleneck in the sector, as they prevent new investors from entering the market and slow down overall growth. Ufuk Alparslan, regional lead at energy research firm Ember, noted that limited grid capacity has made some of the earlier auctions highly competitive, leading to project delays.

Turkey’s 2022-2035 National Energy Plan sets out an ambitious goal of adding an average of 3.1 gigawatts (GW) of solar energy and 1.4 GW of wind power each year. These efforts are aimed at reducing the country’s reliance on fossil fuels and boosting the share of renewable energy in its power mix.

By addressing all current adversarial factors, Turkey hopes to unlock the full potential of its vast wind and solar resources, drawing in both domestic and international investment.

Libya and Qatar Forge New Energy Partnership

Libya is laying the groundwork for a transformative collaboration in the energy sector following a high-level meeting between its Minister of Oil and Gas, Khalifa Abdul Sadiq, and Qatar’s Minister of Energy, Saad Al-Kaabi. The talks, held recently, focused on leveraging Qatar’s global expertise in natural gas production, advanced manufacturing technologies, and renewable energy investments to strengthen bilateral ties and drive economic growth.

Libya, with an estimated 52 trillion cubic feet of natural gas reserves, has set ambitious goals for its energy sector. The country aims to ramp up daily gas production to 4 billion cubic feet within the next three to five years. This vision is supported by recent discoveries, including a notable find by Sirte Oil southeast of the Al-Lahib field, which could yield approximately 16.8 million cubic feet per day. Furthermore, major projects such as the Structures A&E Project, a partnership between Italy’s Eni and Libya’s National Oil Corporation (NOC), are expected to enhance output, targeting 750 million cubic feet per day by 2026.

Qatar, as one of the world’s leading LNG producers responsible for 20% of global supply, brings unparalleled expertise in efficient gas extraction, processing, and export. By drawing on Qatar’s technical acumen, Libya can implement cutting-edge technologies such as digital monitoring systems, automation, and advanced extraction tools to optimise its energy production and export capabilities.

Beyond fossil fuels, the two nations have signaled a shared commitment to diversifying energy sources through renewable energy investments. Libya’s Strategic Plan for Renewable Energy targets achieving a 10% renewable energy share by 2025 and 30% by 2030. A flagship project in this strategy is the 500 MW Sadada solar PV park, developed with TotalEnergies, which will become Libya’s largest solar project.

Qatar’s National Renewable Energy Strategy aims to expand renewable energy’s contribution to its energy mix from 5% to 18% by 2030.

Santander’s Openbank Launches in Mexico

Santander’s fully digital banking platform, Openbank, officially launched in Mexico on Tuesday, November 19, marking another step in the global expansion of the innovative financial service. Openbank promises a seamless, 100% digital experience for customers, with no minimum balances, zero fees, and competitive interest rates.

The new platform offers Mexican customers access to a range of financial services via its website and mobile app, backed by 24/7 telephone support and access to Santander Mexico’s 10,000 ATMs. Openbank Mexico CEO Matías Núñez highlighted the appeal of the service, saying, “Openbank Mexico is now a reality for all Mexicans who want to manage their finances quickly, easily, 100% digitally, and with the security and solvency of Santander. Our proposition combines one of the most advanced digital banking experiences with the best FinTech, not to mention the trust and backing of a large international financial group.”

Openbank has earned its reputation as Europe’s largest digital bank by deposit volume, successfully operating in Spain, Germany, Portugal, and the Netherlands. The digital bank has also expanded into the United States, where it recently began offering high-yield savings accounts, signaling plans to deliver full-service banking in the U.S. by 2025.

According to Petri Nikkila, Global CEO of Openbank, Mexico’s growing digital adoption and demand for innovative financial solutions make it a prime market for the bank’s next phase and Mexico is a market with great potential for a state-of-the-art digital bank like Openbank.

Santander’s digital-first strategy underscores its commitment to staying at the forefront of banking innovation. With Openbank serving over 2 million customers across Europe and holding €18 billion in deposits, the platform is a cornerstone of Santander’s digital transformation. Its entry into Mexico, following closely on its U.S. launch, cements Openbank’s position as a global leader in digital banking solutions.

Mastercard Envisions AI Revolution

Mastercard, a global leader in payments technology, is leveraging artificial intelligence (AI) to redefine financial services and commerce on a global scale. Greg Ulrich, the company’s Chief AI and Data Officer, shared insights during a recent interview at Money20/20 with FinTech Magazine, detailing how Mastercard’s AI-driven strategies bolster its capabilities to handle over 143 billion transactions annually.

Fraud prevention lies at the heart of Mastercard’s AI initiatives. Ulrich highlighted the company’s reliance on cutting-edge AI technologies to detect and prevent fraudulent activities in real time. “If you think about everything we’re doing in fraud monitoring, all of that is AI-enabled,” Ulrich explained. “It’s allowed us to protect the ecosystem in ways we couldn’t have imagined just a few years ago.”

Mastercard’s AI systems operate within milliseconds during live transactions, delivering actionable insights without disrupting the payment flow. This requires robust infrastructure optimised for speed and latency. “We need infrastructure that is powerful and has the right latency for us to process transactions instantly,” Ulrich noted.

Mastercard’s AI infrastructure strategy balances real-time and batch processing, as well as on-premise and cloud computing, while keeping cost and energy efficiency in mind. Ulrich emphasised how advancements in computational capabilities have enabled Mastercard to deploy increasingly sophisticated fraud detection models. The speed, quality, and power of the infrastructure continue to advance, allowing it to embed more intelligence quickly and efficiently. This optimised infrastructure not only enhances security but also facilitates seamless customer experiences, making payments faster and more secure.

Mastercard envisions a convergence of AI, open banking, and consented data to unlock new possibilities in personalised financial services. “With open banking and consented data, we’re building a more powerful data network for society,” Ulrich said. He emphasised Mastercard’s role as a trusted provider of data infrastructure, enabling innovations in analytics and financial ecosystems.

Revolut Eyes Fresh US Banking License Bid

Revolut’s CEO and co-founder, Nik Storonsky, has indicated that the company may soon reignite its pursuit of a US banking license, signalling a strategic shift in its approach to global expansion. Speaking to investors in Helsinki, Storonsky emphasised the importance of adapting to the US’s credit-driven market, where success often hinges on offering credit products and earning interchange fees. “In the US, you need to be credit-driven. So in the US, we need to have a banking license to launch a product,” he explained.

Currently, Revolut operates in the US through a partnership with Lead Bank after shelving its application for a banking license in 2021. The license would allow the digital finance company to offer loans and other banking services independently, a move that could significantly enhance its product offerings in the competitive US market.

Storonsky acknowledged past missteps in the company’s rapid international expansion, admitting that Revolut’s early “grow fast, break things” approach was flawed. “For a long time, I wanted to be as less regulated as possible. It was the completely wrong decision,” he said, noting that acquiring licenses as a smaller company might have been more straightforward than it is now for the $45 billion fintech giant.

Relying on lighter permissions such as e-money licenses allowed for faster market entry, but Storonsky admitted this approach limited product offerings and resulted in a weaker product-market fit. “We had to redo the whole expansion later,” he noted.

The company has since refined its strategy, securing a UK banking license in July after a three-year application process. Revolut’s growth remains robust, with the company recently reaching 50 million customers globally, including 10 million in the UK.

Storonsky has ambitious goals for Revolut: 100 million daily active users across 100 countries and $100 billion in annual revenue.

UK Pension Fund Embraces Bitcoin in Historic First

In a landmark development for the UK’s financial sector, a British pension fund has invested in Bitcoin (BTC), marking the first instance of such an allocation within the country’s pension industry. The advisory firm Cartwright announced it had recommended a 3% allocation to Bitcoin for an undisclosed pension client, citing the cryptocurrency’s unparalleled historical performance and its growing appeal as a long-term investment asset. Bitcoin has delivered an extraordinary return of nearly 100,000% since 2013, a statistic that continues to draw institutional interest globally.

Sam Roberts, Cartwright’s director of investment consulting, highlighted the importance of this bold move. “We are proud to have led this groundbreaking initiative, which we hope will pave the way for other UK institutional investors,” he said. Roberts also noted that the decision aligns with a broader global trend of institutional investors recognising Bitcoin’s unique characteristics as a decentralised, digital asset with significant potential for portfolio diversification and growth.

The move comes as institutional interest in Bitcoin accelerates, driven by regulatory advancements such as the approval of spot Bitcoin exchange-traded funds (ETFs) earlier this year. These ETFs, launched by industry leaders including BlackRock and Fidelity, provide exposure to Bitcoin without the need for direct ownership, making the asset more accessible to conservative institutional investors. Collectively, Bitcoin ETFs now hold over one million Bitcoins, valued at approximately $67 billion, highlighting the growing inflow of institutional capital.

The adoption of Bitcoin by a UK pension fund underscores a broader shift in institutional investment strategies, reflecting increased confidence in cryptocurrency as a viable asset class. This milestone not only signals Bitcoin’s potential for long-term returns but also sets a precedent for other pension funds and institutional investors in the UK to consider cryptocurrencies as part of their portfolios.

HSBC HONG KONG FACES PERSISTENT REAL ESTATE RISKS

HSBC Hong Kong is projected to maintain robust profitability and capitalisation through 2025, but challenges related to its commercial real estate (CRE) exposure in Hong Kong and mainland China are expected to persist, according to Moody’s Ratings.

Moody’s highlighted HSBC Hong Kong’s stable net interest income and low credit cost, forecasted to remain below 0.4% over the next 12–18 months.

The bank’s profitability benefits from high market interest rates and a strong reliance on current and savings account (CASA) deposits, which bolster its net interest margin.

The ratings agency commended HSBC Hong Kong’s well-established presence in the Asia-Pacific region, strong asset portfolio diversification, improved profitability, solid deposit base, and adequate liquidity. These factors are expected to sustain the bank’s strong capital position through mid-2026.

However, Moody’s flagged concerns over the weakened quality of HSBC Hong Kong’s CRE loans. By June 2024, the bank’s problem loan ratio had risen to 2.6%, up from 1.8% at the end of 2023, primarily due to deteriorating CRE exposures in Hong Kong. Loans to the Hong Kong CRE sector represented 8% of the bank’s gross loans, with 9% of those classified as credit-impaired.

“HSBC’s Hong Kong CRE exposures will continue to strain its asset quality over the next 12–18 months,” Moody’s stated. However, the agency noted mitigating factors, such as low loan-to-value ratios and the relatively low leverage of major Hong Kong developers. Falling interest rates could provide some relief by improving borrowers’ repayment capacity, Moody’s added. Nonetheless, the potential weakening of the Hong Kong government’s capacity to support the bank, if needed, remains a concern.

China’s central bank, the People’s Bank of China (PBOC), has injected 900 billion yuan ($124.3 billion) into the banking system through its one-year medium-term lending facility (MLF) loans. This move comes as local governments accelerate bond issuance to manage mounting debt and support economic recovery efforts.

The PBOC issued the MLF loans to financial institutions at an interest rate of 2%, according to an official statement. These operations, typically conducted toward the end of the month, aim to address tightening liquidity conditions within the banking system. China’s banking sector faces significant liquidity stress as the year-end approaches. This is attributed to a surge in local government bond issuance, aimed at mitigating debt risks and stimulating the economy amid ongoing economic challenges. November’s bond issuance is projected to surpass 1.3 trillion yuan ($179.4 billion), marking the highest monthly total in a year, as estimated by Reuters.

The increase in bond sales coincides with other liquidity drains, including the maturation of reverse repos and heightened demand for cash at month-end. Analysts from Citic Securities highlighted in a recent note that liquidity challenges could intensify in the near term, necessitating further action from the central bank.

To alleviate liquidity pressures, the PBOC may opt to lower banks’ reserve requirement ratios (RRR) by year-end, according to a report by the official China Securities Journal. Such a move would release additional funds into the financial system, providing a cushion against tightening liquidity and supporting the government’s broader economic stabilisation efforts.

This latest injection reflects Beijing’s broader strategy to address debt risks while spurring growth in an economy grappling with headwinds.

UBA TO LAUNCH FULL BANKING OPERATIONS IN FRANCE

United Bank for Africa (UBA) has finalised an agreement to begin full banking operations in France, marking a significant expansion for the Nigerian banking group. The deal, signed during President Bola Tinubu’s state visit to France, represents a strategic move to deepen financial and economic ties between Nigeria and France.

Tony Elumelu, Chairman of UBA Group, signed the agreement alongside France’s Finance Minister Antoine Armand, in the presence of President Tinubu and French President Emmanuel Macron. This partnership demonstrates robust support from the French government for UBA’s plans to establish operations in Paris, a key hub for global finance.

Elumelu highlighted the importance of the expansion, stating, “This partnership reinforces our commitment to seamless international banking services for our customers across Africa and French and European clients transacting with Africa. Expanding into France is a natural progression, with Paris serving as our European Union hub.”

UBA’s Paris branch will join its existing global network in London, New York, and Dubai, enhancing its ability to connect Africa with the world through innovative financial solutions. The bank already serves 11 Francophone African countries and aims to solidify its position as a leading player in international banking.

The agreement elevates UBA to the ranks of Nigeria’s tier-1 banks with a presence in France, reflecting the growing influence of African financial institutions in the global market. President Tinubu’s two-day visit, the first official state visit to France by a Nigerian leader in over two decades, emphasised the strengthening of diplomatic and economic partnerships. The future is bright for the UBA as it expands beyond the shores of Africa into new terrains.

CHINA’S CENTRAL BANK INFUSES $124BN TO BOLSTER LIQUIDITY

THAILAND’S BANKING SYSTEM FACES LENDING CHALLENGES

Thailand’s banking system faces a unique challenge: an abundance of liquidity paired with cautious lending practices. Despite holding vast reserves of cash, commercial banks remain hesitant to extend credit, focusing instead on borrowers’ ability to repay.

Over the past decade, the financial system has maintained liquidity levels of 4 trillion to 5 trillion baht ($115.64 billion to $144.55 billion), as noted by Sakkapop Panyanukul, assistant governor at the Bank of Thailand (BOT). These funds are largely held as deposits or investments with the central bank.

This cautious approach is not due to stricter lending regulations but rather to existing policies that prioritise responsible lending. According to Sakkapop, the BOT encourages banks to structure repayment terms that align with borrowers’ financial situations and living expenses.

High household debt, a long-standing concern in Thailand, poses a significant challenge to economic recovery and growth. The government has recognised this issue and is urging banks to improve access to credit as part of broader efforts to revitalise the economy post-pandemic. However, this push has met resistance, with banks tightening lending practices, particularly for auto loans. The Federation of Thai Industries reports that these restrictions have already affected automobile production and sales, highlighting the ripple effects of cautious lending on key sectors.

Thailand’s policymakers are now grappling with the dual challenge of managing elevated household debt while fostering economic activity. Household debt levels remain a major hurdle, limiting the potential for domestic consumption and investment, both of which are vital for sustained recovery. Navigating this complex landscape requires a delicate balance. Achieving this balance is crucial for building long-term economic resilience.

€1.7TRN

European bond issuance has soared to an unprecedented €1.705 trillion ($1.8 trillion) in 2024, breaking the previous record set in 2020 during the COVID-19 pandemic, according to recent data. This remarkable milestone reflects robust activity across publicly syndicated debt markets denominated in euros, sterling, and Regulation S dollars.

The surge in borrowing has been driven by governments, supranational organizations, and financial institutions. For instance, the UK raised £4.25 billion ($5.38 billion) in its first syndicated debt sale since Chancellor Rachel Reeves announced a £40 billion budget expansion. This sale generated record-breaking demand, with investors offering over £65 billion for an index-linked gilt. Similarly, countries such as France, Italy, and Spain have seen significant investor appetite for their bond offerings.

This year’s issuance volume eclipses that of 2020, when markets were dominated by emergency pandemic-related financing. Analysts credit this absorption to favourable market spreads and strategic pre-2025 issuance planning. “The market has handled large volumes well,” noted Paula Weisshuber of Bank of America, emphasising that issuers are already preparing for upcoming funding needs. Corporate bond markets have also been active. Sweden’s Heimstaden Bostad AB issued junior debt—the first from a property company since 2021—while Austria’s Raiffeisen Bank International AG successfully raised capital after a previous attempt failed. Meanwhile, Bloomberg’s euro investment-grade bond index has risen by 4.67% this year, with the high-yield index posting a 7.42% gain.

Looking ahead, analysts expect even higher issuance levels in 2025 and 2026 as substantial debt comes due. However, challenges such as a slowing European economy or unexpected shifts in US trade policy could affect market conditions.

New U.S. sanctions targeting Russia’s Gazprombank are poised to disrupt European payments for Russian gas and escalate economic challenges for Moscow. Announced on Thursday, the measures bar Gazprombank from conducting energy-related transactions involving the U.S. financial system. Additionally, sanctions extend to 50 Russian banks and the Bank of Russia’s financial messaging system, SPFS, signalling intensified pressure on Moscow’s financial networks.

The impact is particularly concerning for European countries like Hungary and Slovakia, which depend on Russian gas through long-term contracts with Gazprom. Sinara Investment Bank analysts warn that EU payments for Russian energy via Gazprombank could become impossible by late 2024, raising questions about Europe’s energy security and payment alternatives.

A wind-down period for Gazprombank transactions has been set, allowing operations to continue until December 20, 2024, while energy projects linked to Sakhalin-2 have a longer deadline of June 2025. The Kremlin criticized the sanctions as an attempt to stifle Russian gas exports but assured efforts to adapt. Gazprombank, meanwhile, claimed its broader banking activities would remain unaffected but declined to elaborate on gas payment mechanisms.

Since 2022, Russia has mandated gas payments in roubles through Gazprombank. With this system under threat, buyers may need to identify new intermediaries. The U.S. has permitted limited energy-related transactions with select Russian banks until 2025, potentially opening avenues for Gazprombank to be included in this list.

The incoming U.S. administration under President-elect Donald Trump, sceptical of aid to Ukraine, may revisit these measures, adding uncertainty.

EUROPEAN BOND ISSUANCE HITS

GAZPROMBANK SANCTIONS SPARK GASPAYMENT CRISIS

The Rise of Bitcoin: A Revolution in Global Finance

When Bitcoin first emerged in 2009, introduced by the enigmatic figure Satoshi Nakamoto, few could have foreseen the disruptive force it would become in global finance. Born as a response to the 2008 financial crisis, Bitcoin offered a decentralized alternative to traditional currencies—a borderless, peer-to-peer system that promised financial sovereignty. Over the years, Bitcoin has evolved from a niche experiment into a trillion-dollar asset class, captivating the attention of individuals, corporations, and governments alike.

A BRIEF HISTORY OF BITCOIN

Bitcoin’s journey began modestly, with early adopters valuing it for its revolutionary potential rather than its price. In 2010, the first real-world Bitcoin transaction famously involved two pizzas purchased for 10,000 BTC—now worth hundreds of millions of dollars. Early years were marked by skepticism, volatility, and association with illicit marketplaces like the Silk Road. Yet, Bitcoin persisted.

The watershed moment came in 2017 when Bitcoin soared to nearly $20,000, marking its arrival on the global stage. Though it experienced a sharp correction, the cryptocurrency proved resilient. By 2020, fueled by macroeconomic uncertainty, institutional adoption, and growing acceptance, Bitcoin reached new heights, culminating in a record high of over $69,000 in late 2021.

ADOPTION AND REAL-WORLD USE CASES

Bitcoin’s use has expanded far beyond the realm of tech enthusiasts. Today, it is both a

speculative asset and a practical tool for millions. In 2021, El Salvador made headlines by becoming the first country to adopt Bitcoin as legal tender, aiming to streamline remittances and boost financial inclusion. The Central African Republic followed suit, showcasing Bitcoin’s appeal to nations seeking alternatives to traditional monetary systems.

On the corporate front, giants like Tesla and MicroStrategy have added Bitcoin to their balance sheets, signaling confidence in its value as a reserve asset. Retail adoption is also growing, with businesses worldwide—from coffee shops to luxury retailers—accepting Bitcoin payments. Additionally, Bitcoin’s role as a lifeline in countries with unstable currencies or limited banking access highlights its transformative potential.

Yet, challenges remain. Bitcoin’s notorious price volatility and scalability issues have slowed its adoption as a medium of exchange. Solutions like the Lightning Network aim to address these concerns, enabling faster and cheaper transactions.

INSTITUTIONAL MONEY AND BITCOIN ETFS

One of the clearest signs of Bitcoin’s mainstream acceptance is the influx of institutional investment. Firms like BlackRock, Fidelity, and Grayscale have embraced Bitcoin, offering products tailored to traditional investors. The launch of Bitcoin exchange-traded funds (ETFs), such as ProShares’ Bitcoin Strategy ETF, has further bridged the gap between the cryptocurrency market and Wall Street, allowing retail and institutional investors to gain exposure without holding Bitcoin directly.

Institutional interest has brought legitimacy to Bitcoin but also increased its correlation with traditional financial assets. This duality raises questions about whether Bitcoin can continue to serve as a hedge against inflation and economic instability.

THE REGULATORY LANDSCAPE

Bitcoin’s rise has forced governments to confront its implications. While some nations, like China, have banned Bitcoin outright, others

have taken a more accommodating approach. The U.S. remains a battleground, with debates over spot Bitcoin ETFs and regulations surrounding anti-money laundering (AML) and taxation. In contrast, Switzerland has positioned itself as a hub for blockchain innovation, offering clear and supportive regulations.

The regulatory environment will play a crucial role in shaping Bitcoin’s future. Clear guidelines could encourage broader adoption, while excessive restrictions might stifle innovation.

BITCOIN AS DIGITAL GOLD

Bitcoin’s advocates often liken it to digital gold—a scarce, durable asset that serves as a store of value. With a fixed supply of 21 million coins, Bitcoin’s scarcity contrasts starkly with fiat currencies subject to inflationary pressures.

This narrative gained traction during the COVID-19 pandemic as central banks printed trillions to stabilize economies, eroding confidence in traditional currencies.

Yet, Bitcoin’s journey as a store of value is not without challenges. Its volatility has sparked debate over its suitability as a safe-haven asset. Nevertheless, as trust in fiat systems wanes, Bitcoin’s decentralized and deflationary nature continues to attract investors seeking stability in an uncertain world.

THE ENVIRONMENTAL DEBATE

Bitcoin’s rise has also brought scrutiny to its energy consumption. The proof-of-work mechanism that secures the network is energy-intensive, leading critics to label Bitcoin as an environmental threat.

However, the industry is adapting. An increasing percentage of Bitcoin mining now relies on renewable energy, and innovations like Bitcoin’s integration into energy grids are transforming it into a tool for sustainable development.

WHAT LIES AHEAD FOR BITCOIN?

As Bitcoin enters its second decade, its future remains both exciting and uncertain. Some

predict it will achieve even greater price milestones, driven by institutional demand, technological advancements, and broader adoption. Others warn of potential challenges, including regulatory crackdowns and competition from central bank digital currencies (CBDCs).

Despite the uncertainties, Bitcoin’s impact is undeniable. It has redefined how we think about money, value, and financial systems. Whether it becomes a universal currency, a dominant store of value, or something entirely unexpected, Bitcoin’s story is far from over.

Bitcoin’s rise from an obscure digital experiment to a global financial phenomenon is a testament to its resilience and potential. It challenges traditional systems, empowers individuals, and forces us to reconsider the very nature of money.

As it continues to evolve, Bitcoin remains at the forefront of a financial revolution, offering a glimpse into a future where technology and finance converge.

Howard Davies

Howard Davies, the first chairman of the United Kingdom’s Financial Services Authority (1997-2003), is Chairman of NatWest Group. He was Director of the London School of Economics (2003-11) and served as Deputy Governor of the Bank of England and Director-General of the Confederation of British Industry.

Are Global Banking Rules Finished?

The Basel Committee’s proposed minimum capital requirements have long been assailed by the banking industry and politicians of various stripes. But never before has the post-2008 effort to implement global banking-supervision rules seemed so close to unraveling.

Is it all over for Basel 3.1 (or what is known in the United States as the “Basel Endgame”)? Should we kiss goodbye the Basel Committee and the very idea of global banking-supervision accords that establish minimum capital requirements? Many informed people think so. The committee’s recommendations have long been assailed from all sides, especially the western shores of the Atlantic.

In 2023, emboldened – or perhaps stung – by the failures of Silicon Valley Bank and a few other mid-size institutions, the US Federal Reserve proposed a tough interpretation that would have increased capital requirements for American banks by 19%, on average. But pushback from the financial industry, led by Jamie Dimon of JPMorgan, was fierce, with Super Bowl halftime commercials warning Americans that small firms and middle-class households would pay the price for such a policy.

So the Fed backed off, reconsidered its position, and devised new proposals that would

have halved the impact of its original recommendations. But these watered-down measures are also in doubt. Even before Donald Trump’s impending return to the White House had raised the possibility of changes in personnel, the Federal Deposit Insurance Corporation was signaling that it would not back them.

Meanwhile, those who oppose any foreign entanglements that could tie up the US financial system have been emboldened. Steve Forbes, of the eponymous magazine, argues that, “One of the first tasks of the Trump Treasury Department should be to abandon the Basel regime of banking regulations.” And Gene Ludwig, a former comptroller of the currency, has suggested that “the Basel endgame rule could be completely dead.”

Nor is the climate for rule-makers much more favorable in Europe. French President Emmanuel Macron has told the European Commission that, faced with this American backsliding, it needs to rethink its Basel 3.1

implementation plans: “[the EU] cannot be the only economic area in the world that applies [it].” With European banks losing market share in Europe to the Americans, the issue has become politically sensitive.

Even the Bank of England is under pressure. It played a key role in launching the Basel Committee back in the 1980s, and it normally sticks closely to the agreements reached there. But Britain’s new Chancellor of the Exchequer has argued that regulators should be doing more to promote competitiveness and growth. Further increases in bank capital, especially for lending to small businesses, are hard to reconcile with that objective.

The Basel Committee’s new chair, Erik Thedéen of the Swedish central bank, has his work cut out for him. Can he keep the show on the road? One problem is that there is very little international agreement on the facts. You would think that the simple question of whether US banks will be as well capitalized as EU banks after the implementation of Basel

3.1 would have a straightforward answer. But that is far from the case.

US banks think that the Fed’s proposals would put them at a competitive disadvantage, whereas Macron thinks the opposite. European banks regularly point to a 2023 Oliver Wyman report showing that big EU banks have a Common Equity Tier 1 ratio (the main comparable measure of bank capitalization) more than three percentage points above that of their US counterparts.

But the plot has thickened. The Financial Times reports that the European Central Bank’s own research comes to the opposite conclusion: “capital requirements for big EU lenders would rise by a double-digit percentage if they had the same rule as their large Wall Street rivals.” Unfortunately for those who seek the truth, the ECB is split on whether to

publish its paper, which remains under wraps in Frankfurt. The political awkwardness of the situation is obvious.

It is surprising for a process that began just after the global financial crisis to have reached an impasse at such a late stage. The core provisions of Basel III were first published in November 2010, after a very rapid work program, and the latest iteration was presented as a mere “tidying up” exercise. But it is proving more contentious than the main accord.

Part of the problem is that the political impetus for reform has waned. The driving force was the G20, which forced regulators to move fast and break things after the crisis. But we heard very little about Basel at the group’s summit in Brazil this month. Apparently, the financial crisis is being consigned to history.

This is unfortunate, and regulators will undoubtedly say that reports of Basel’s death have been much exaggerated. But unless the patient receives urgent attention, he may well expire. Sooner or later, countries that have already implemented the new rules – such as Australia and Singapore – will begin to cry foul, whereupon the process could unravel entirely.

In any case, the US, the European Union, and the United Kingdom will be obliged to call a time-out over the northern winter. The US will have a new Treasury secretary, Scott Bessent, and the EU a new commissioner for financial markets, Maria Luís Albuquerque. Both will need to get settled in. But they also will need to get together soon. The stakes are high, and the situation resembles Samuel Beckett’s Waiting for Godot more than his Endgame. Godot had better turn up soon.

Kenneth Rogoff

A former chief economist of the International Monetary Fund, is Professor of Economics and Public Policy at Harvard University and the recipient of the 2011 Deutsche Bank Prize in Financial Economics. He is the co-author (with Carmen M. Reinhart) of This Time is Different: Eight Centuries of Financial Folly (Princeton University Press, 2011) and the author of the forthcoming book Our Dollar, Your Problem (Yale University Press, 2025).

Europe’s Economy Is Stalling Out

As Germany and France head into another year of near-zero growth, it is clear that Keynesian stimulus alone cannot pull them out of their current malaise. To regain the dynamism and flexibility needed to weather US President-elect Donald Trump’s tariffs, Europe’s largest economies must pursue far-reaching structural reforms.

As Europe prepares for a potential trade war after US President-elect Donald Trump takes office in January, its two largest economies are struggling. While Germany is heading into its second consecutive year of zero growth, France is expected to grow by less than 1% in 2025.

Is Europe’s economic stagnation the result of insufficient Keynesian stimulus, or are its bloated and sclerotic welfare states to blame? Either way, it is clear that those who believe simple measures like higher budget deficits or lower interest rates can solve Europe’s problems are detached from reality.

For example, France’s aggressive stimulus policies have already pushed its budget deficit to 6% of GDP, while its debt-to-GDP ratio has surged to 112%, up from 95% in 2015. In 2023, President Emmanuel Macron faced widespread protests over his decision to raise the retirement age from 62 to 64 – a move that, while meaningful, barely scratches the surface of the country’s fiscal challenges. As European Central Bank President Christine Lagarde recently warned, France’s fiscal trajectory is unsustainable without far-reaching reforms.

Many American and British progressives admire France’s model of big government and wish their own countries would adopt similar policies. But debt markets have recently woken up to the risks posed by France’s

ballooning debt. Remarkably, the French government now pays a higher risk premium than Spain.

With real interest rates on advanced-economy government debt expected to remain elevated – barring a recession – France cannot simply grow its way out of its debt and pension problems. Instead, its heavy debt burden will almost certainly weigh on its long-term economic prospects.

In 2010 and 2012, Carmen M. Reinhart and I published two papers arguing that excessive debt is detrimental to economic growth. The sluggish, indebted economies of Europe and Japan are prime examples of this dynamic, as subsequent academic research has shown.

Heavy debt burdens impede GDP growth by limiting governments’ ability to respond to slowdowns and recessions. With a debt-to-GDP ratio of just 63%, Germany has ample room to revitalize its crumbling infrastructure and improve its underperforming education system.

If implemented effectively, such investments could generate enough long-term growth to offset their costs. But fiscal space is valuable only when used wisely: in reality, Germany’s “debt brake” – which caps annual deficits at 0.35% of GDP – has proven too inflexible, and the next government must find a way to work around it.

Moreover, increased public spending will not deliver sustained growth without significant reforms. Specifically, Germany must reinstate key elements of the Hartz reforms introduced by former Chancellor Gerhard Schröder in the early 2000s.

These measures, which made the German labor market significantly more flexible than France’s, were instrumental in transforming Germany from the “sick man of Europe” into a dynamic economy.

But a leftward shift in economic policy has effectively reversed much of this progress, severely undermining Germany’s vaunted efficiency. Its ability to produce much-needed infrastructure has visibly suffered; a glaring example is Berlin’s Brandenburg Airport, which finally opened in 2020 – ten years behind schedule and at three times the projected cost.

Germany will eventually overcome its current malaise, but the key question is how long that will take. Earlier this month, Chancellor Olaf Scholz fired Finance Minister Christian Lindner, leading to the collapse of his fragile coalition government. With elections scheduled for February 23, the uncharismatic Scholz must now step aside and let another Social Democrat lead or risk his party’s implosion.

Scholz has so far resisted calls to abandon his re-election bid, jeopardizing his party’s chances of remaining in power. His reluctance to step aside mirrors that of US President Joe Biden, who waited too long to pass the torch to a younger candidate, a misstep that undoubtedly contributed to her decisive electoral defeat.

Amid this political turmoil, Germany is grappling with mounting chal-

lenges that threaten its status as Europe’s economic powerhouse. As the ongoing war in Ukraine continues to erode investor confidence, Germany’s industrial base has yet to recover from the loss of cheap Russian energy imports. Meanwhile, the automotive sector has struggled to shift from gas-powered cars to electric vehicles, lagging behind global competitors, and exports to China – whose economy is also faltering – have declined sharply.

These problems are likely manageable if a more conservative, market-oriented government takes power next year. But getting Germany back on the right path will be far from easy, given that public support for structural reforms remains low. Without drastic changes, the German economy will struggle to regain the dynamism and flexibility needed to withstand the impact of Trump’s impending tariff wars.

While most other European economies face similar challenges, Italy might perform slightly better under Prime Minister Giorgia Meloni – arguably the most effective leader on the continent. Spain and several smaller economies, especially Poland, may fill some of the void left by Germany and France. But they cannot fully offset the weakness of the EU’s two economic heavyweights.

The economic outlook would have been much bleaker if not for Europe’s enduring appeal as a tourist destination, particularly among American travelers, whose strong dollars are propping up the industry. Even so, the outlook for 2025 remains lackluster. Although European economies could still recover, Keynesian stimulus will not be enough to sustain robust growth.

Samia Suluhu Hassan

President

of the United Republic of Tanzania.

What the G20 Can Do for Africa’s Energy Agenda

Africa is home to a growing pipeline of innovative new programs designed to tap the continent’s abundant renewable energy sources and provide universal access to electricity and clean-cooking technologies. But a little help from the world’s largest economies will be needed to realize these initiatives’ potential.

The recent United Nations Climate Change Conference in Baku (COP29) and G20 summit in Rio de Janeiro were a watershed, particularly for developing countries. It was heartening to see the African Union join the discussions in Rio as the G20’s latest official member. And now South Africa has assumed the group’s rotating presidency.

Attending the Rio talks at the invitation of Brazilian President Luiz Inácio Lula da Silva, I stressed the importance of achieving a just energy transition in my own country and across Sub-Saharan Africa. From Dar es Salaam and Pretoria to Baku and Rio, energy has been a major topic of discussion in global fora because it is absolutely central to both economic development and climate-mitigation efforts. In Sub-Saharan Africa, around 600 million people (almost half the population) lack access to electricity, and nearly a billion people (oneeighth of the global population) lack access to clean cooking.

Fortunately, several major new programs promise to help close these technology gaps. For example, the African Development Bank (AfDB) and the World Bank have launched the Mission 300 project, which aims to connect at least 300 million people to clean electricity in Africa by 2030. In January 2025, Dar es Salaam will host the Heads-of-State Energy Summit for Mission 300, bringing together government leaders, multilateral development banks, private investors, and others. African countries will present their plans to mobilize investments in grid and off-grid solutions using readily available and affordable energy sources.

According to the World Bank, reaching the project’s electrification target will require $30 billion of public-sector investment, much of which could come from its own concessional financing arm, the International Development Association. Since G20 member states are the biggest contributors to the IDA, we are asking them to support our mission with robust suc-

cessive IDA replenishment cycles.

Another major program is Tanzania’s own $18 billion plan to catalyze renewable energy investments in 12 southern African countries that are interconnected by the same pool of geothermal, hydro, solar, and wind sources. The goal is to increase electricity generation from these sources by 8.4 gigawatts, which is in keeping with the COP28 (Dubai) pledge to triple the world’s renewable energy generation capacity by 2030.

More broadly, African leaders have also set a target (at last year’s Africa Climate Summit in Nairobi) to increase the continent’s renewable-energy generation to 300 GW by 2030 – up from just 56 GW in 2022. This will require an estimated $600 billion, a tenfold increase from current investment levels.

Connecting a rapidly growing and urbanizing population to clean power is obviously beneficial for the continent. But it also benefits the

world, given the potential to avoid gigatons of additional carbon dioxide emissions. Indeed, Africa’s success in this respect is crucial to meeting the Paris climate agreement’s goal of limiting global warming to 1.5° Celsius above pre-industrial levels. Our continent is richly endowed with huge reserves of critical minerals and almost endless solar and wind power potential, but must overcome scarce (and expensive) capital flows to make the most of these resources.

A third important initiative is the African Women Clean Cooking Support Program, which I spearheaded at COP28 to achieve universal access to clean cooking technologies in Tanzania and across Africa. With more than 900 million Africans still dependent on wood and charcoal for cooking, toxic indoor smoke

is the second leading cause of premature deaths on the continent – a problem predominantly affecting women and children.

This is totally unacceptable, which is why I went to Rio to call for the inclusion of a $12 billion facility in the AfDB’s African Development Fund replenishment, to drive universal access to clean cooking across Africa. The AfDB has pledged $2 billion for clean cooking over the next ten years, and at this year’s Summit on Clean Cooking in Africa other partners promised to mobilize an additional $2.2 billion by 2030. But as encouraging as these commitments are, they are not enough. The International Energy Agency estimates that achieving universal access to clean cooking in Africa will cost $4 billion per year through 2030. Complementary support from other

global players is needed.

Such investments would yield far-reaching returns. In addition to reducing premature deaths from indoor pollution, replacing dirty fuels globally will save at least 200 million hectares of forests – 110 million in Africa alone – by 2030, as well as reducing greenhouse-gas emissions by 1.9 gigatons of CO2-equivalent. That would be the equivalent of eliminating all the emissions from airplanes and ships today.

The programs I have highlighted are part of a larger pipeline of ideas being pursued in Africa. But bringing them to fruition will require financing at scale, technology development and transfers, and capacity building. We are counting on our friends at the G20 to come together and push this energy agenda forward.

GDP is an outdated way of measuring the health of the economy – it doesn’t reflect the health of people or the planet

Radhika Balakrishnan

Professor Emeritus, Rutgers University

Economics and economic policy need a rethink. This is clear from the scale of inequality, joblessness, insecurity and environmental disasters we see in the world.

People feel left behind, impoverished and unvoiced. They are looking to ethno-nationalist strongmen to help them. Right-wing movements and governments are on the rise.

As an economist who has written for many decades about debunking the neoclassical approaches to economic thinking, I think there is clear evidence that the mainstream ideas and policies no longer work.

The dominant approaches to economic policy focus on a few narrow goals, such as growing gross domestic product (GDP) or suppressing inflation. The use of GDP since the late 1940s to understand the health of an economy has been criticised. What’s needed is a more precise understanding of the broad impact of macroeconomic policies, one that accounts for paid, unpaid and non-market work. The standard economic variables used by mainstream economics don’t consider all these.

Mainstream policies don’t see the huge impact of unpaid care work on GDP. According to the International Labour Organisation an estimated 16.4 billion hours are spent on unpaid care work every day. This is equivalent to 2 billion people working 8 hours a day with no remuneration.

The idea of economic growth is also ill suited to evaluate improvements to wellbeing at the social level. Though growth in GDP can be a useful measure of economic activity, growth itself does not always bring better outcomes in terms of poverty, health or jobs. GDP growth can even worsen health status, pollute the environment, and reduce leisure time.

Many countries are now starting to give indicators of wellbeing a central role in judging how well the economy is doing. The Organisation for Economic Co-operation and Development (OECD) countries, such as New Zealand, have been looking at measuring societal progress in terms of how well people and households are doing.

The human rights approach is another way to judge economic policies and their outcomes. It’s different from the dominant approach in

economics, which is mainly interested in the ability of individuals to make choices that maximise their own individual satisfaction, termed “utility”.

If, instead, the purpose of the economy was to fulfil rights, we would have a very different set of policy priorities. Like equality in the right to leisure, the right to an adequate standard of living, and the right to housing, education and health.

A HUMAN RIGHTS APPROACH

The human rights approach allows for a complex interaction between individual rights, collective rights and collective action. It sees policy as a social and political process that should conform to human rights standards.

It recognises that states can both enable and deny social justice. Individuals need the power of the state to realise their rights but also need protection against misuse of state power.

The human rights framework looks beyond GDP or income when evaluating economic outcomes. It looks to the realisation of economic and social rights over time.

Social justice makes advances when the enjoyment of the rights to an adequate standard of living, education, health, work and social security, among others, improves over time.

These aspects of the human rights framework can be used to evaluate and assess economic policies and their outcomes.

Many of these human rights aspects are implicit in wellbeing indicators but are not clearly stated. The measurement of wellbeing highlights inequalities, focuses on people and outcomes at the individual and household level, and allows for an analysis of inequalities. But the criteria it uses are not well articulated, especially in terms of gender equality.

THE ENVIRONMENT

One of the serious shortcomings of an approach that regards growth as the solution to economic crisis is that continued growth has environmental limits and potentially catastrophic consequences.

The larger question is whether economic growth is sustainable over time and whether it can be achieved in a sustainable way.

There is some attention to sustainability within the human rights framework. For example, a clean environment is necessary for the full enjoyment of human rights. But this relationship needs to be better understood, beyond environmental crisis.

The OECD has developed a series of indicators to measure wellbeing in many countries. They are: income and wealth; work and job quality; housing; health; knowledge and skills; environmental quality; subjective wellbeing; safety; work-life balance; social connection; and civil engagement. The resources for future wellbeing are natural capital, economic capital, human capital and social capital.

These are attempts at considering wellbeing but are still very economistic and capital oriented.

It’s necessary to go beyond looking at the negative consequences of pollution to radically shift how development is conceived.

Ecuador, for example, is using the concept of Buen Vivir, which is based on indigenous traditions and values of the Andean region. It departs from western ideas of affluence and

growth; instead it is about harmony with oneself, the community and nature.

Some of the language around Buen Vivir is around rights, such as the right to a good life, and the rights of nature. The right to a good life includes the rights to nutrition, health, education and water, and uses the economic, social and cultural rights norms.

The concept of Buen Vivir has some problems, though, like its scalability and the gender assumptions of indigenous traditions.

WHAT NEXT

To address the roots of people’s disenchantment and avoid ecological catastrophe, we must develop new approaches to economic policy. Instead of using growth as the measure of an economy’s health, there are other approaches to consider, like wellbeing, human rights and Buen Vivir.

Each approach has its limitations. But bringing them in conversation together is a start when asking the most basic of questions: what is the economy for?

How the Trump presidency might change the global economy

The US is a technological powerhouse, spending more than any other country on research and development and winning more Nobel prizes in the last five years than every other country combined. Its inventions and economic successes are the envy of the globe. But the rest of the world needs to do everything in its power to avoid being too dependent on it.

And this situation would not have been much different had Harris won.

The “America first” approach of Donald Trump has actually been a bipartisan policy. At least since previous president Barack Obama’s policy of energy independence, the US has been on a mostly inward-looking quest of maintain-

ducers by slapping high tariffs on almost every trading partner.

For instance, Trump’s 2018 tariffs on washing machines from all over the world mean US consumers have been paying 12% more for these products.

President Joe Biden – in certainly a more polite way – then increased some of the Trump tariffs: up to 100% on electric vehicles, 50% on solar cells and 25% on batteries from China.

At a time of climate emergency, this was a clear choice to slow down the energy transition in order to protect US manufacturing.

While Biden signed a truce with Europe on tar-

renewable energy. And the Chips Act commit ted US$52 billion to subsidise the production of semiconductors and computer chips.

CHINA, EUROPE AND THE REST OF THE WORLD

This US industrial policy might have been inward-looking, but it has clear consequences for the rest of the world. China, after decades of mostly export-based growth, must now deal with massive problems of industrial overcapacity.

The country is now trying to encourage more domestic consumption and to diversify its trading partners.

Renaud Foucart Senior Lecturer in Economics, Lancaster University Management School, Lancaster University

Europe, despite a very tight budget constraint, spends a lot of money in the subsidy race. Germany, a country facing sluggish growth and big doubts on its industrial model, is committed to matching US subsidies, offering for instance €900 million (£750 million) to Swedish battery makers Northvolt to continue producing in the country.

All those subsidies are hurting the world economy and could have easily financed urgent needs such as the electrification of the entire African continent with solar panels and batteries. Meanwhile, China has replaced the US and Europe as the largest investor in Africa, following its own interest for natural resources.

The incoming Trump mandate might be a chance to fix ideas.

One might, for instance, argue that the fullscale invasion of Ukraine, and the thousands of deaths and the energy crisis that followed, could have been avoided had the Biden administration been clearer to Russian president Vladimir Putin about the consequences of an invasion, and provided modern weapons to Kyiv before the war.

But the blame is mostly on Europe. Credit

where it’s due, the strategic problem of becoming too dependent on Russian gas is something Trump had clearly warned Germany about during his first mandate.

There is a clear path forward: Europe could help China fix its overcapacity problems by negotiating an end to its own tariff war on Chinese technology such as solar panels and electric cars.

In exchange, Europe would regain some sovereignty by producing more of its own clean energy instead of importing record amounts of liquid gas from the US. It could also learn a few things from producing with Chinese companies, and China could use its immense leverage on Russia to end the invasion of Ukraine.

The European Union could also work harder on what it does best: signing trade deals, and using them as a way to reduce carbon emissions around the world.

This is not only about Europe and China. After decades of continuous improvement on all major dimensions of human life, the world is moving backwards.

The number of people facing hunger is increasing, taking us back to the levels of 2008-9. War is raging in Gaza, Sudan, Myanmar, Syria, and now Lebanon. The world had not seen as many civilian casualties since 2010.

For better or worse, it is unlikely that a Trump administration will reverse the path of lower US interventionism. It is also unlikely to lead any major initiative on peace, climate change or on the liberalisation of trade.

The world is alone, and America will not come to save it.

We do not know what will happen to the US. Maybe the return of Trump will mostly be a continuation of the last ten years. Maybe prohibitive tariffs or destroying the institutions that made the US such an economic powerhouse will make the US economy less relevant. But this is something Americans have chosen, and something the rest of the world simply has to live with.

In the meantime, the only thing the world can do is learn how to better work together, without becoming too dependent on each other.

Oil prices set to rise as Middle East tensions worsen, adding to cost-ofliving crisis

Iran’s missile attack on Israel has caused global oil prices to spike this week amid growing fears a retaliation could put the global oil supply at risk.

Almost one year ago to the day, I wrote how an isolated conflict between Israel and Hamas would likely not cause a sustained increase in oil prices.

This was because neither Gaza nor Israel produces much oil. But this time, it’s different.

WHAT’S CHANGED

Iran is a major player in the global market for crude oil. The latest data from the US Energy Information Administration lists Iran as the ninth largest oil producer, accounting for about 4% of world oil production last year.

While this may sound like a small share, research has shown events like Iran’s nation-

alisation of the BP-owned Anglo-Iranian Oil Company in the early 1950s, the Iranian revolution in the late 1970s, and Iran-Iraq war of the early 1980s, all caused crude oil price to rise.

The extent to which Israel responds to the latest escalation could therefore have a genuine impact on oil prices in coming days.

A COMPLEX WORLD

Of course, the difficulty in assessing any situation is such events do not happen in a vacuum.

While recent events could spark a reduction in global oil supply, putting upward pressure on the price, other factors, such as weak oil demand due to slowing state of the global economy, and record high US production of crude oil, have pushed prices down throughout the year.

Still, the current tensions can only add to the

already tightening oil market following Libya’s recent shutdown of the El-Feel oil field in August this year.

There’s no doubt these events will be a top priority at the next panel meeting of the Organisation of the Petroleum Exporting Countries Plus, which committed to achieving and sustaining a stable oil market earlier this year.

WHAT DOES THIS MEAN FOR AUSTRALIA?

Last week, the Reserve Bank of Australia said inflation is still above target, and returning to target is their number one priority, despite a highly uncertain economic outlook.

There’s no doubt these events only add to the uncertainty of that outlook, and any oil price surge can only add to the current cost of living crisis faced by Australians.

Jamie Cross Assistant Professor of Econometrics & Statistics, Melbourne Business School

Let’s be clear. While Australia does not import any crude oil from Iran, we are heavily reliant on our trading partners for the resource.

According to the most recent data from the Department of Climate Change, Energy, the Environment and Water, about two thirds of our oil supply currently comes from South Korea, Singapore, Malaysia, and India.

This reliance on foreign oil makes us especially exposed to rising oil prices.

The main channel through which higher oil prices could impact inflation is fuel prices. It is well understood that higher oil prices are associated with higher fuel prices.

Research by the Australia Institute, found Australia currently imports about 91% of fuel consumption. The transportation sector accounts more than three quarters of total fuel consumption, with road transport making up more than half of that number.

The Australian Competition and Consumer Commission is undoubtedly closely monitoring prices as it follows international events.

However, the silver lining is research suggests the likely flow on effects of oil prices on inflation in Australia is relatively smaller than some might expect.

A major reason for this is Australia’s electricity generation mix is predominantly comprised of coal, natural gas, and renewables. This is in contrast to countries like the United States, where oil and related products are the main contributor to the energy mix.

To give a rough number, the research suggests a sustained increase in the oil price by 10% would translate into Australia’s inflation rate being about 0.6 percentage points higher.

This means the Reserve Bank will also be closely monitoring the oil price over the next few weeks ahead of next month’s cash rate meeting.

Russia’s Brics summit shows determination for a new world order – but internal rifts will buy the west some time

The recent Brics summit in the Russian city of Kazan was less notable for what happened at the meeting than for what happened before, on the margins, or not at all. Among the notable things that did not happen was another expansion of the organisation.

Since the addition of Egypt, Ethiopia, Iran and the United Arab Emirates (UAE) at the 2023 Brics summit in Johannesburg, which almost doubled the number of member countries from the original five (Brazil, Russia, India, China and South Africa), further enlargement has stalled.

Argentina, which was also invited in 2023, declined to join. Saudi Arabia, another 2023 invitee,

has not acted on the offer to become a member either. Its de-facto ruler, crown prince Mohammad bin Salman, was among the notable absentees in Kazan.

And Kazakhstan, Russia’s largest neighbour in Central Asia, decided not to join shortly before the summit. This drew Russia’s ire, resulting in a prompt ban on imports of a range of agricultural products from Kazakhstan in retaliation.

While invitees have declined the opportunity to join Brics, a long list of applicants have not been offered membership. According to a statement by Russia’s president, Vladimir Putin, at a meeting of senior Brics security officials in September, 34 countries have expressed an interest in closer relations with Brics in some form.

This appears to be a substantial increase in interest in Brics membership compared to a year ago, when South Africa’s foreign minister, Naledi Pandor, listed 23 applicants ahead of the 2023 summit.

But the fact that, since then, only six invitations have been extended – and four accepted – indicates that formal enlargement of the organisation, at least for now, has been stymied by the inability of current members to forge consensus over the next round of expansion and the reluctance on the part of some invitees to be associated with the organisation.

MEETINGS ON THE MARGINS

The summit declaration may offer little of sub-

Stefan Wolff Professor of International Security, University of Birmingham

stance. But there were a number of bilateral meetings before and in the margins of the gathering that are more indicative of the direction of Brics. Perhaps most importantly, India’s prime minister, Narendra Modi, and China’s president, Xi Jinping, held their first face-to-face discussion in five years.

This is a remarkable change from just a few months ago, when tensions between New Delhi and Beijing were intense enough for Modi to cancel his participation in the summit of the Shanghai Cooperation Organisation in Astana, Kazakhstan. Yet, with a deal now reached over their countries’ longstanding border dispute, the two most populous and, in terms of GDP, economically most powerful members of Brics have an opportunity to rebuild their fraught relations.

A warming of relations between China and India could generate more momentum for Brics to deliver on its ambitious agenda to develop, and ultimately implement, a vision for a new global order. Implicit in this would be a shift of leadership in Brics from China and Russia to China and India, and with it, potentially a change from an anti-western to a non-western agenda.

This is, of course, something that exercises Putin. He acknowledged as much when he referred to the global south and global east in his remarks at the summit’s opening meeting. He also emphasised that it was important “to maintain balance and ensure that the effectiveness of Brics mechanisms is not diminished”.

In his own bilateral meetings before and during

the summit, Putin drove home the point that, despite western efforts, Russia was far from isolated on the world stage. One-to-one meetings with Xi, Modi, South Africa’s president, Cyril Ramaphosa, and the president of the UAE, Mohammed bin Zayed Al Nahyan, gave Putin the chance to push his own vision of Brics as a counterpoint to the US-led west.

This may be a view shared in the global east – Russia, China and Iran, as well as non-Brics members North Korea, Cuba and Venezuela. But many in the global south – particularly India and Brazil – are unlikely to go all in with this agenda. They will focus on benefiting from their Brics membership as much as possible while maintaining close ties with the west.

LACKING A COHERENT AGENDA

India is the most significant player in Brics when it comes to balancing between east and west. Nato member Turkey is the equivalent on the outside. The country’s president, Recep Tayyip Erdoğan, travelled to Kazan and did not shy away from an hour-long meeting with his “dear friend” Putin.

The relationship between Moscow and Ankara is fractious and complex across a wide range of crises from the South Caucasus, to Syria, Libya and Sudan. Yet, on perhaps the most divisive issue of all, Russian aggression towards Ukraine, Turkey has consistently maintained opened channels of communication with Russia and remains the only Nato power able to do so.

The fact that there has been relatively little pub-

lic pressure from official sources in the west on Erdoğan to stop is probably a reflection that such communication channels are still valued in the west. This, and Nato’s continued cooperation with India, point to a hedging strategy by the west. India cooperates with the US, Australia and Japan – the so-called Quad group of nations – on security in the Indo-Pacific, and it has maintained political dialogue with Nato since 2019.

Turkey and India may not see eye-to-eye with the west on all issues. But neither do they with the global east camp inside Brics, and especially not with Russia. If nothing else, this limits the ability of Brics to forge a coherent agenda, deepen integration and ultimately mount a credible challenge to the existing order.

Relying on India and Turkey to do the west’s bidding in undermining Brics, however, is not a credible long-term strategy. Brics may have achieved little as an organisation, but the Kazan summit declaration indicates that its key players continue to harbour aspirations for more.

However, as the flailing expansion drive of the organisation indicates, there is also an internal battle in Brics over its future direction. This, in turn, creates space and time for the west to exercise more positive and constructive influence in the ongoing process of reshaping the international order.

The global east may be beyond redemption, but there is still a massive opportunity to reengage with the global south.

Sambit Bhattacharyya Professor of Economics, University of Sussex Business School, University of Sussex

Can China’s stimulus blitz fix its flagging economy?

Pan Gongsheng, the governor of China’s central bank, announced a raft of measures on September 24 aimed at boosting the country’s flagging economy. The move, which came a week before the 75th anniversary of communist party rule, was made in response to concerns that China could miss its own 5% annual growth target.

The stimulus package included a 0.5 percentage point cut in the amount of cash reserves that commercial banks are required to have as deposits with the central bank. This should free up approximately 1 trillion yuan (£108 billion) for new lending. Pan said that the ratio could be cut by another 0.25 to 0.5 percentage points later in 2024.

The central bank has also made a 0.2 percentage point cut in the rate at which it lends money to commercial banks. Pan signalled that this could be followed by a 20–25 basis

point cut in the rate that is charged to borrowers with the best credit rating.

In an attempt to stem the downward spiral that in August saw house prices fall by their fastest rate in nine years, the central bank has reduced the deposit requirement for people looking to buy a second home from 25% to 15%, too.

Credit expansion, at least in the short term, should have a positive effect on financial markets and the price of commodities as investors expect a boost in demand for goods and services. And, following the slew of new measures, this is exactly what we have seen.

China’s main stock index surged by more than 4% within hours of the central bank’s announcement, enjoying its best single-day rally in 16 years. And this was followed by a more than 1% increase in the benchmark price of oil. Sentiment has remained positive since then, with Chinese shares rising by approx-

imately 20% over the five days following the announcement.

Expansionary policies do, however, also come with risks. China’s property market has been in crisis since 2021 when the government introduced restrictions on the amount developers could borrow, leading many to default on their debts. Making large cuts to borrowing costs could reignite a boom in sales and values, creating a new property bubble.

But it could be a while before China’s property market starts to overheat. House prices in China are falling fast and there’s lots of spare inventory. Goldman Sachs estimated in April that the government may need to spend more than 15 trillion yuan to fix the problems plaguing the sector – far more than the recent stimulus blitz can provide on its own.

Predicting the outcome of the central bank’s new economic package in the long-term is challenging. It will probably be a year or two

Janet Yellen US Treasury Secretary

before we start noticing any real effects. But, at least in theory, the expansion of domestic credit that will be triggered by the central bank’s lending rate cut, as well as the associated banking stimulus, should spread to the wider economy.

This should reactivate building and construction activities, improve consumer spending, and raise demand for capital goods. This could eventually help China move towards growth that is driven more by domestic demand than a reliance on exports.

China’s economic miracle has traditionally relied on the expansion of exports, which reached their peak at 36% of GDP in 2006. This ratio has come down considerably since then, falling to 19.7% in 2023, but it still remains high relative to comparable economies. In 2022, the export-to-GDP ratio in the US, for example, was 11.6%.

This has made China particularly exposed to volatility in demand in overseas markets and geopolitical shocks, such as the decision of the US in May to introduce new tariffs on imports of Chinese electric vehicles, solar equipment

and batteries.

The tariffs have dented demand for Chinese exports in the US market, but they have not altered China’s dominance in global supply chains. The demand particularly for Chinese electric vehicles in the US was, admittedly, already fairly low.

THE OUTLOOK IS NOT SO BLEAK

China’s economy is undergoing turbulence. But China has consistently outperformed the rest of the world on GDP growth since 1990, and its economic outlook remains relatively positive.

In fact, the 5% annual growth target China has set for itself is still significantly greater than in most other countries. In all G7 countries other than the US, growth is forecast to stay below an annual rate of 2%.

These countries account for a significant proportion of China’s exports, so the weak economic outlook will for now remain a drag on the Chinese economy. However, China will benefit increasingly from infrastructure pro-

jects led by the Eurasian Development Bank and the Belt and Road Initiative in the coming years.

These infrastructure projects are connecting China with resource-rich central Asian countries through roads, railways, gas pipelines and electricity networks. China signed a lucrative gas supply contract with Kazakhstan in 2023. And China now accounts for the majority of Mongolia’s mineral exports, which increased by approximately 3% between 2023 and 2024.

China will also benefit from trade with Russia, India, Saudi Arabia and other members of the Brics group of big emerging economies. Over recent years, China has developed closer trade ties with these countries, and has led efforts to admit six new members – Iran, Saudi Arabia, Egypt, Argentina, the UAE and Ethiopia – at the start of 2025.

We await to see what impact the central bank’s new measures will have. But a strong economic outlook for China would be a positive force for boosting consumer confidence and economic outlook for the rest of the world.

Laura Carvalho Associate Professor of Economics, Universidade de São Paulo (USP)

South Africa has taken over the G20 presidency from Brazil – what lessons can it learn?

South Africa has taken over the presidency of the world’s premier economic forum, the G20, from Brazil. The G20 presidency operates on a troika system made up of the current, previous and next holders. The three members cooperate with one another in preparing for an annual summit. This means that South Africa will be working with Brazil and the US (2026 presidency).

The G20 members – 19 countries plus the European Union and the African Union –account for about 80% of global GDP, 75% of global exports and 60% of the world’s population.

The Conversation Africa asked Laura Carvalho, a director of Economic and Climate Prosperity at Open Society Foundations and associate professor of economics at the University of São Paulo, what South Africa can learn from

Brazil’s experience.

HOW DID BRAZIL CONNECT ITS DOMESTIC POLICY DISCUSSIONS TO THE G20 AGENDA?

First, Brazil managed to connect the climate agenda to the inequality agenda in the G20 as a reflection of its own domestic challenges. According to the World Inequality Database it is one of the most unequal economies in the world when we consider the share of national income that goes to the top 1%. This is partially caused by a deeply unfair tax system.

The first and second administrations of Luiz Inácio Lula da Silva made substantial progress in reducing inequalities by increasing income at the bottom. This was done through cash transfers, minimum wage gains and job creation.

The third Lula government has used different measures to tackle an extremely high concentration of income and wealth at the top. The main one has been to reform the tax system.

Some proposals faced strong pressure by elite representatives in the Brazilian congress. But the government remained steadfast.

It also seized the opportunity of its G20 presidency to lead this agenda internationally.

For example, it proposed a minimum tax on billionaires. This led to an unprecedented commitment by all G20 countries to ensure that ultra-high-net-worth individuals are effectively taxed.

This is only a first step in a broader tax cooperation agenda that the United Nations and other multilateral forums should take up.

Meanwhile the Brazilian finance ministry is putting forward a proposal for a minimum tax on its own millionaires. We will see if they succeed in using global momentum to approve the proposal domestically. It would be an important step.

WHAT CAN SOUTH AFRICA LEARN FROM BRAZIL?

Brazil got strong social participation in the G20 process through engagement groups like think tanks, businesses and civil society organisations. This helped the process gain relevance throughout the year in domestic and international policy debates.

It also left an important domestic legacy. For the first time many Brazilian actors engaged on global climate and economic agendas. They now know more when adding their voices in multilateral spaces.

This strong social participation had a number of outcomes:

• it kept the inequality between and within countries at the core of the G20 process

• it contributed to securing commitments of rich countries to the Global Alliance for Fighting Hunger and helped the drive to tax super-wealthy individuals

• it created an ambitious roadmap to reform multilateral development banks.

But as we know, many developed countries

are facing their own political and fiscal constraints. Therefore, it’s not surprising that the 2024 G20 summit made little progress on some other important issues. These included increasing capital commitments to multilateral development banks. Another was reforming the international financial and debt architecture. These circumstances will not improve soon.

South Africa’s leadership can aim to better connect existing sources of development and climate finance to the real socioeconomic and climate challenges faced by global south governments and citizens.

WHAT SHOULD THE SOUTH AFRICAN PRESIDENCY DO DIFFERENTLY TO SECURE A BETTER CLIMATE FINANCING DEAL?

South Africa’s commitment to ambitious energy transition and green development plans and quality of finance can inform proposals to push for more coordination of international donors to finance government-led climate transition agendas.

Country platforms such as just energy transition partnerships – platforms through which developed nations assist developing ones with climate finance – offer the promise of making use of concessional finance and national planning to overcome countries’ political economy challenges. This makes it possible for governments to pursue ambitious projects while ensuring alignment with national needs and priorities.

But country platforms should not be seen only as ways to attract capital or de-risk private finance. They can also provide a clear plan to mobilise, direct and coordinate international and domestic finance, technical expertise and knowledge sharing.

Country platforms must demonstrate that climate transition goals can be achieved alongside economic growth, job creation and socio-economic equality. Maintaining the credibility and impact of this model requires better coordination from multilateral development banks and other international donors to deliver the appropriate level of concessional finance.

This is something that the South African leadership in the G20 could focus on.

South Africa is well positioned to demonstrate that these platforms can be more than a collection of projects to mobilise private capital to reduce emissions. They are also vehicles to provide more flexible, affordable and sustainable sources of international finance. This would allow developing country governments to deliver tangible benefits for their populations.

Ultimately, that’s what all governments need to show their constituents. Only if we manage to bring together the climate transition and economic development will we succeed in tackling the climate crisis. I am hopeful that under South Africa’s leadership and building on the work of the Brazilian G20 presidency, we will see progress.

Why Donald Trump’s election win fuelled a stock market surge

Daniele D’Alvia Lecturer in Banking and Finance Law, Queen Mary University of London

Following Donald Trump’s victory in the US presidential election, Bitcoin was one of the assets that surged in value. This was widely felt to be a response to Trump’s promise to establish a strategic Bitcoin reserve – essentially holding a large stock of the cryptocurrency as a security. On November 13, the week after Trump’s win, Bitcoin broke through the US$90,000 (£71,340) price threshold for the first time, and the value of the global crypto market topped US$3 trillion for the first time in three years.

US stock markets the Dow, S&P 500 and Nasdaq also hit record levels, with investors expecting to price in Trump’s promises of tax cuts and tariffs, fuelling the dollar and sparking a sell-off in US government bonds. Promises of corporate tax cuts and deregulation tend to encourage financial innovation, making markets more active.

These and others can be defined as “Trump trades” – financial market trends influenced by the president-elect’s win. These trends emerge as investors adjust their strategies based on the economic policies, regulatory changes and geopolitical impact associated

with a Trump presidency.

When Trump last became president in 2017, prices for consumer goods had risen almost 5% over the previous four years. By contrast, since January 2021 those same prices are up by around 20%. This is a dramatically different economic backdrop in which inflation has been a global phenomenon since the onset of the COVID pandemic in 2020.

Supply chain issues, shifting consumer spending patterns, the cost of living and other quirks related to COVID lockdowns collided with the 2021 American Rescue Plan Act (a US$1.9 trillion government package to support workers in the pandemic) to send costs shooting higher.

This combination of higher inflation and interest rates could make many of the ideas Trump talks about either riskier or more costly than before, especially as unemployment is very low. When more people are employed, increased consumer demand can lead to higher prices amid competition for goods and services.

But markets are in euphoria territory right now.

The word speculator comes from the Latin “speculum”, meaning mirror. Hence, investors and speculators in the US capital market today are simply mirroring Trump’s promises of economic growth and protectionism.

Trump is definitively market and economy-friendly – and this creates short-term surges in stock values. But stocks will stay high only if Trump follows through with a light-touch approach to regulation to scale back some of the reforms undertaken by President Biden’s administration.

Since 2021, the regulatory burden faced by the finance industry has increased. Agencies like Securities and Exchange Commission and Consumer Financial Protection Bureau have introduced enforcement campaigns against financial firms in order to protect consumers from bad practice. This challenged things like private equity deals and cryptocurrency trades.

Trump’s unpredictability and controversial character might seem like red flags for investors. Yet markets often take a pragmatic approach, focusing more on outcomes than personal traits. For example, Trump’s potential

trade war with China might spark market volatility. But investors will adapt as they see tariffs as part of a broader strategy to secure better terms for US businesses.

By contrast, even if markets become volatile or fall (as happened with the US bond market in the aftermath of Trump’s win), investors might still see it as an opportunity for profit. Active traders often thrive on sharp market moves, and many investors are selling their long-term treasury bonds ahead of any further rises in long-term rates (bond prices fall as interest rates rise).

IMPACT ON THE EU AND UK

The re-election of Trump could have significant implications for both the UK and the EU, touching on things like trade, geopolitics and global economic stability.

Trump’s “America first” policies may pose challenges for the UK and the EU in trade relations. The EU could face tariffs, particularly on sectors like automotive manufacturing. This protectionist approach could disrupt European exports and global trade flows.

And the UK, hoping for a US trade deal postBrexit, may find itself in a weaker negotiating position under a Trump administration that emphasises US dominance.

Under Biden, the US collaborated with the EU on green energy and technology policies. A Trump presidency, with its rollback of environmental regulations and scepticism of international agreements, could undermine these efforts.

For Europe, this might mean losing a key ally in global climate initiatives, forcing the bloc to recalibrate its strategies for addressing climate change and advancing technology.

It may also escalate tensions around tech regulations, especially if Trump’s policies align with figures like Tesla boss and Trump’s incoming efficiency lead Elon Musk, who often clashes with EU regulatory frameworks. In this sense, Musk can be seen as a financial risk factor.

Under a Trump administration, the combination of tariffs, climate policy rollbacks, and geopolitical dynamics could have significant implications for investors. Tariffs and sanctions often trigger sell-offs in affected sectors, but

can create opportunities for speculators, who often anticipate these moves.

For example, hedge funds in the US ahead of Trump’s victory began short selling energy and renewable stocks. They gained US$1.2 billion once the value of their shares fell sharply over concerns that tax credits for green energy will end.

Despite Trump’s rhetoric, markets are underpinned by uncertainty rather than undermined by it. Uncertainty is after all the main source for profit in our western model of capitalism.

It is also true that markets care about tangible actions, and Trump seems determined to deliver on his promises. But only time will tell whether his economic agenda is merely wishful thinking.

Trump has only four years as president and he is in a hurry to move forward with his economic agenda. The chances are that at least some of his economic policies will have a sugar-rush effect and cause markets to surge before their impact fades away once higher interest rates slow the economy.

The Evolving Role of CFOs: How Numarqe is Reshaping Financial Management in 2024

Numarqe’s CEO, James Bowler, shares his insights into how digital transformation and strategic cash flow management are helping CFOs drive growth and embrace innovation with Numarqe’s AI-driven solutions.

As we reflect on the past year, it’s clear that the role of the Chief Financial Officer (CFO) has undergone a significant transformation. At Numarqe, we’ve witnessed first-hand the shifting priorities of finance leaders in mid-market enterprises. The landscape of corporate finance is evolving rapidly, and CFOs are at the forefront of this change, embracing new strategies to drive growth and resilience.

Throughout 2024, we’ve observed a marked shift in focus among our clients. Cash flow management and digital transformation have emerged as the twin pillars of financial strat-

egy, superseding traditional concerns such as cost-cutting and risk aversion. This pivot isn’t merely a reaction to economic conditions; it’s a proactive stance towards building more agile and robust financial structures.

CASH FLOW IMPROVEMENT

The emphasis on cash flow improvement has been particularly striking. Our clients are no longer content with merely maintaining a healthy cash position; they’re leveraging it as a strategic tool for growth and innovation. Numarqe’s AI-driven credit decisioning system has been instrumental in this shift, offering credit lines up to ten times higher than tradi-

tional lenders. This unprecedented access to capital has been a game-changer for many of our large and mid-market clients.

Take, for instance, a rapidly growing professional services consultancy we work with. As their customer implementation projects are paid on milestones, cash inflows are sporadic and lumpy. By using Numarqe’s flexible credit solutions, they were able to pre-fund the software development for a large customer project, avoiding service interruptions without impacting their existing cash reserves. This kind of financial agility is becoming increasingly crucial in today’s fast-paced business environment.

Another client, a seasonal travel business, used our platform to manage inventory purchases for the holiday season without straining their working capital. By having access to flexible credit, they ensured they were well-stocked for peak demand periods, significantly boosting their revenue potential.

DIGITAL TRANSFORMATION

The second major trend we’ve observed is the accelerated push towards digital transformation. CFOs recognise that digitalisation isn’t just about keeping pace with technology; it’s about creating more efficient, data-driven financial operations. Numarqe’s unified platform has been at the forefront of this transformation, offering CFOs a comprehensive, real-time view of their company’s financial position.

A logistics client of ours recently shared how our AI-powered analytics uncovered a pattern of increasing fuel costs across their fleet. This insight allowed them to implement a fuel hedging strategy proactively, resulting in significant cost savings. It’s this kind of data-driven decision-making that’s becoming the hallmark of successful CFOs in 2024.

The shift towards digital has also manifested in the realm of payments. We’ve seen a growing interest in virtual payments and digital payment gateways among our clients. A global aviation firm we work with has leveraged our multi-currency capabilities to simplify their international operations, reducing foreign exchange costs and eliminating the need for complex currency hedging strategies.

However, the journey towards digital transformation isn’t without its challenges. Many of our clients have expressed concerns about cybersecurity and fraud prevention. In response, we’ve enhanced our platform’s security features, offering customisable spending controls, real-time transaction alerts, and instant card freezing capabilities. A facilities management company we work with recently praised these features, noting how they’ve significantly reduced unauthorised spending and improved overall financial governance.

WORKING CAPITAL OPTIMISATION

The focus on working capital optimisation has been another key theme this year. Numarqe’s embedded credit solutions have allowed companies to extend payment terms with suppliers without straining relationships.

An engineering firm we work with has been able to pay its suppliers promptly using our credit line while extending their own payment terms to 90 days, dramatically improving their cash conversion cycle.

COST MANAGEMENT

We’ve also observed a shift in how CFOs are approaching cost management. Rather than aggressive cost-cutting measures, there’s a growing focus on strategic investments in technology and new product development. Our AI-powered analytics have helped many clients identify cost-saving opportunities while

streamlining processes to reduce operational costs associated with financial management.

MULTI-CURRENCY CAPABILITIES

For companies operating across borders, managing multiple currencies and navigating different financial regulations has been a persistent challenge. Numarqe’s multi-currency capabilities and compliance-focused features have simplified global financial operations for many of our clients. A UK-based company with operations in Germany and the US shared how they’ve been able to pay suppliers in EUR and USD from a single platform, eliminating the need for multiple foreign currency accounts.

USER-FRIENDLY TOOLS

As finance teams increasingly focus on strategic initiatives, we’ve seen a growing demand for user-friendly tools that empower professionals to focus on value-adding activities. A mid-sized manufacturing company reported increased job satisfaction and retention in their finance department after implementing Numarqe’s platform, as team members were freed from mundane tasks to focus on more strategic work.

Looking ahead, it’s clear that the role of the CFO will continue to evolve. At Numarqe, we’re committed to staying ahead of these

trends, constantly innovating our platform to meet the changing needs of finance leaders. Our CEO, James Bowler, who spent over a decade as a CFO himself, often says, “We’ve created the financial platform that I wished I had during my tenure as a CFO. It’s not just about managing finances; it’s about empowering businesses to thrive in today’s complex economic environment.”

As we move into 2025, the companies that will lead the pack are those that leverage cutting-edge financial technology to unlock the full potential of their working capital. With Numarqe, large and mid-market enterprises are not just managing their finances – they’re mastering them. They’re turning financial management from a necessary evil into a strategic advantage that propels their business forward.

In this new financial landscape, one thing is clear: the future belongs to those who can adapt, innovate, and leverage technology to their advantage. Numarqe stands ready to help CFOs navigate this exciting future, providing the tools needed to build more resilient, agile, and successful businesses.

As we continue to partner with forward-thinking finance leaders, we’re not just observing the evolution of the CFO role – we’re actively shaping it.

James Bowler CEO Numarqe

Brics+ countries are determined to trade in their own currencies – but can it work?

Brics+ countries are exploring how they can foster greater use of local currencies in their trade, instead of relying on a handful of major currencies, primarily the US dollar and the euro.

The forum for cooperation among nine leading emerging economies – Brazil, China, Egypt, Ethiopia, India, Iran, Russian Federation, South Africa, United Arab Emirates – emphasised this determination at their 16th summit in October 2024.

WHY DO BRICS+ COUNTRIES WANT TO TRADE IN LOCAL CURRENCIES?

There are economic and political reasons to use local currencies.

Using local currencies to trade among themselves will lower the transaction costs and reduce these countries’ dependence on foreign currencies.

Over the past few centuries, the world’s economy has developed in a way that makes certain currencies more valuable and widely trusted for international trade. These include the US dollar, the euro, the Japanese yen and the British pound. These currencies hold value around the world because they come from countries with strong economies and a long history of trading globally.

When people or countries trade using these currencies and end up collecting or holding them, they consider it “safe” because the value of these currencies remains stable and they can be easily used or exchanged anywhere in the world.

But for countries in the global south, like Ethiopia, whose currency (the birr) isn’t widely accepted outside its borders, trading is far more difficult. Yet these countries struggle to earn enough of the major currencies through exports to buy what they need on international markets and to repay their debts (which tend

to be in those currencies). In turn, the necessity of trading in major currencies, or the inability to trade in them, can create challenges that slow down economic growth and development.

Therefore, even some trade in local currencies between Brics+ members will support growth and development.

Oil exporter Russia is a unique case. Though there are fewer foreign currency constraints overall, Russia faces extensive financial sanctions for its war of aggression against Ukraine. Using a variety of currencies in its foreign transactions may make it easier to get around these sanctions.

Politically, the reasons for using other currencies primarily relates to freedom from sanctions.

One of the tools for making sanctions work is an international payments systems known as Swift (Society for Worldwide Interbank

Lauren Johnston Associate Professor, China Studies Centre, University of Sydney

Financial Telecommunication). Swift was founded in 1973 and is based in Belgium. It enables secure and standardised communication between financial institutions for international payments and transactions. And it’s almost the only way to do this.

It was first used to impose financial sanctions on Iran in 2012, and has since been used to impose sanctions on Russia and North Korea.

If a country is cut off from Swift, it faces disruptions in international trade and financial transactions, as banks struggle to process payments. This can lead to economic isolation and challenges in accessing global markets.

The reality, and possibility, of exclusion from Swift’s payments system is one of the factors galvanising momentum towards a new payments system that also relies less on the currencies of the countries that govern Swift – like the euro, Japanese yen, British pound and US dollar.

WHAT ARE THE LIKELY CHALLENGES THEY WILL FACE?

The Brics+ plan to use local currencies faces some hurdles.

The central problem is the lack of demand for most currencies internationally. And it’s hard to supplant the international role of existing major currencies.

If, for example, India accumulates Ethiopian birr, it can mainly only use them in trade with Ethiopia, and nowhere else. Or, if Russia allows India to buy oil in rupees, what will it do with those rupees?

Since most countries seeking alternatives to dollar dependence tend to sell more than they buy from other countries, or are lower-income importers, they must consider what currencies to accumulate via trade.

When it comes to payment systems, at least, alternatives are emerging.

Brics+ is creating its own, Brics+ Clear. Some 160 countries have signed up to using the system. China also has its own, Cross-border Inter-bank Payment System, which broadly works the same way as Swift.

There’s a risk, though, that these payment methods could merely fragment the system and make it even more costly and less efficient.

HAS TRADING IN LOCAL CURRENCIES BEEN DONE ELSEWHERE?

Not all trade is done in major western currencies.

For example, in southern Africa, within the Southern African Customs Union, the South African rand plays a relatively important role in cross-border trade and finance. Just as in south-east Asia the currencies of Singapore and Thailand compete to be the dominant currency in the sub-region.

China – the world’s biggest exporter and producer of industrialised goods – is also signing bilateral currency swap agreements with countries. The goal is greater use of the renminbi in the world.

As a means of circumventing sanctions, India and Russia recently trialled using the rupee to trade. Russia’s oil exports to and through India have risen strongly since the Ukraine war and some 90% of that bilateral trade takes place in the rupee and rouble. This leaves Russia with a challenge – what to do with all the rupees it has accumulated. These deposits are sitting in Indian banks and being invested in local shares and other assets.

Another example of efforts to side-step major international currencies is China’s model of “barter trade”. The model works like this: China exports, for instance, agricultural machinery to an African country and receives payment in that country’s currency. China then uses that currency to buy goods from the same country, which are then imported back to China. After these goods are sold in China, the Chinese trader is paid in renminbi.

Ghana is one country involved in this barter model. Challenges facing the model include the digitisation of payments and trade, and trust – high levels are needed to establish and maintain relationships between trading parties as individuals and as businesses. It also requires some level of centralisation and coordination, but lacks strong laws, regulations and industry standards. This means that different platforms and enterprises may not be compatible, which can add to transaction time and costs.

Another example is when Chinese investors in Ethiopia make profits in birr. They use these birr to buy Ethiopian goods, like coffee, and export

the goods to China. In China, when they sell these goods, they receive renminbi. So they transfer their profits from Ethiopia to China by increasing Ethiopia’s exports to China.

Anecdotal reports suggest this is feasible at a small scale but has relatively high coordination costs.

There could be other challenges. For example, if Chinese buyers pay Ethiopian coffee farmers in their local currency, instead of US dollars, it could lead to fewer dollars being available overall. Some international transactions still rely heavily on dollars.

HOW SHOULD BRICS+ NATIONS STRUCTURE THEIR ARRANGEMENT?

There is no simple, or easily scalable, solution to moving past the reliance on major international currencies or circumventing Swift.

A fast, digital payment system is needed. This system would calculate and balance currency demand efficiently. It must also be reliable, replace parts of the current system, and not create extra costs for countries that aren’t using it yet.

Although some Brics+ members, like Russia, may have more interest in fast-tracking change, this may be less in the interest of other Brics+ members. A move away from Swift, for instance, requires buy-in from local financial institutions, and those in African countries may not be under pressure to shift to a new lesser-known platform.

Given these challenges, I argue that Brics+ should progress incrementally. What can happen soon, though, is to conduct some trade in local currency.

Innovation in Capital Management: SG Consulting Group LLC and its Digital Vision for the Future

In a world of constant change, where digital transformation redefines each sector, SG Consulting Group LLC has positioned itself as a leader in capital management, integrating advanced technology, artificial intelligence and a strategic approach oriented to efficiency and customisation. This leadership has been supported by the recent recognition as “Capital Management Solutions Provider of the Year - Ecuador 2024”, a distinction that reflects its impact on the sector. The commitment goes beyond awards, we seek to transform the future of capital management, adapting to the changing needs of the global market.

A RECOGNITION THAT REAFFIRMS A COMMITMENT

“This award validates our commitment to excellence and our vision of innovation in capital management,” says Iván Suasti, CEO of SG Consulting Group LLC. This recognition is proof of its revolutionary approach in the use of data and digitalization to provide strategic solutions that drive the growth and competitiveness of its clients. “Digitisation is not just an advantage; it is essential to provide solutions that allow our clients to achieve their strategic objectives,” adds Iván, highlighting how the firm sets the standard in leveraging technology to build a safe and reliable financial future. “We want to expand our operations to new markets and strengthen our strategic alliances.” With this vision, the company not only

seeks to consolidate itself in its sector, but also to diversify its opportunities for growth and collaboration on a global level. The company is determined to continue advancing in innovation and in the development of solutions that adapt to the economic environments of each region, always maintaining excellence and commitment to results.

DIGITAL TRANSFORMATION: RESPONSE TO A CONSTANTLY EVOLVING MARKET

The speed with which markets change demands flexibility and adaptability. Faced with this situation, this forward-thinking company has responded with a comprehensive digital transformation that anticipates and responds to the demands of its clients, paving the way towards modern, technology-focused finan-

cial advice. “Our goal is to provide companies with financial tools that favour their strategic growth,” said Ivan. Using advanced platforms and detailed analytics, it optimises each solution to provide a differentiated service. “Our commitment is to continuously innovate and build a platform that improves decision-making efficiency,” he added, emphasising the added value that is offered through its technological vision and strategic approach.

TAILOR-MADE SOLUTIONS: PERSONALISATION AND ADVANCED ANALYTICS

The ability to offer tailored services is one of SG’s greatest strengths. Using artificial intelligence and advanced financial analysis tools, the firm identifies trends, projects results, and

Coralía López Beltrán Internal Communication Coordinator SG Consulting Group LLC

CEO Ivan Suasti & SG Consulting Group Operations Department Team

executes successful operations. This approach allows the firm to go beyond traditional advice, acting as an ally in the financial growth of its clients. “From the beginning, we thoroughly analyse the financial profile and objectives of each client. By incorporating real-time information and strategic alliances, such as with Bloomberg, we ensure that our management is based on reliable and complete data. In this way, it anticipates market movements to offer a truly personalised service.

DATA: THE PILLAR OF SG’S BUSINESS MODEL

Data is much more than just numbers; it is the foundation of a business model that focuses on delivering accuracy and added value. “We use data to better understand the market and anticipate key movements.” Through advanced big data and machine learning tools, the company turns information into a vital resource that not only optimises financial performance, but also provides deep insights that would be unattainable through traditional methods. This approach allows SG to provide tailored and proactive financial advice, turning data into practical knowledge that empowers its clients’ decision-making. “Our goal is to transform data into a strategic asset that strengthens each client’s position in their industry,” Ivan said. Thus, the firm’s commitment is not limited to being a financial services provider, but is established as a strategic partner committed to driving the success and sustainable growth of its clients in an increasingly competitive market.

Meeting the challenges of capital management with innovation and responsibility

The capital management industry faces challenges ranging from adapting to global economic changes to meeting transparency standards. SG Consulting Group LLC addresses these challenges not only with innovation, but also with a high sense of responsibility and ethics. Technology is essential, but equally important is the truthfulness and responsibility in capital management. Managing capital means not only generating sustainable value, but also minimising risk with rigorous strategic planning, including a thorough analysis of the client profile and the application of diversified strategies. This method, which combines technology with responsibility, is a key element of the firm’s strategy. By adhering to high international standards, it guarantees capital management based on transparency and the truthfulness of each decision. This balanced approach between advanced technology and ethical responsibility allows the firm to adapt to changing market demands and establish itself as a trusted benchmark in the industry.

INNOVATION CULTURE: THE BASIS FOR STAYING AHEAD

Innovation is not just a practice, it is a pillar of corporate culture. An environment is fostered where creativity and learning drive every key decision, collaborating with technology experts to design cutting-edge solutions. Portfolio construction is done after in-depth,

customised analysis, supported by advanced machine learning tools that allow exploring novel ideas and optimising strategies in real time. This technological and strategic approach is complemented by ongoing education, both for the team and for clients.

The commitment to constant training and collaboration with technology experts strengthens its ability to create adaptive, cutting-edge solutions. Client feedback is equally vital, allowing strategies to be adjusted and refined according to changing market demands. “Our goal is not only to implement effective strategies, but also to educate our clients at every stage of the process,” Ivan noted, highlighting the value of support that goes beyond simple advice.

TIPS FOR EFFICIENT CAPITAL MANAGEMENT

For companies looking to optimise their capital management, Ivan has a fundamental recommendation: “Do not underestimate the power of technology and data.” In an increasingly dynamic market, investment in digital solutions is key to maximising efficiency and improving profitability. He also suggests adopting an open mindset towards innovation and seeking strategic partners who understand the specific needs of each business. In this way, companies will be able to face current challenges with a solid foundation and guarantee sustainable growth over time.

SG Consulting Group Operations Department Team

Samuel A. Beatson Lecturer in Finance, Risk and Banking, University of Nottingham

Cryptocurrencies are making investors very rich – and making it harder to stop financial scammers

Fraudulent payments – where people are tricked into sending money to criminals – cost consumers £460 million in England and Wales last year. To give consumers more protection, the UK government now plans to give banks 72 hours to delay completion of potentially fraudulent transfers.

The growth of the decentralised finance sector – including cryptocurrencies and the platforms that facilitate their trade – offers an alternative to mainstream finance. But as well as new opportunities, the growth of DeFi (as it’s known) has brought serious risks of financial crime and scams.

On the one hand, the blockchain technology used in cryptocurrencies has been heralded as a means of increasing transparency and ef-

ficiency for banks and other corporations. On the other hand, DeFi presents a longstanding problem of criminal use – anonymising and masking illicit transactions and facilitating the global movement of crime proceeds.

The grooming processes that fraudsters use to gain the trust of victims can be sophisticated, with slick websites, pseudo-expertise, or promises of gain or a long-term relationship (whether romantic or business).

Once they’ve struck, the criminals convert traditional currencies into digital assets like cryptocurrencies. This enables large volumes of money to move quickly and undeclared across borders. The blockchain technologies that make this possible are celebrated as the cutting edge in financial technology, but they also pose risks by serving as avenues for

money laundering, scams and other illegal activities, from narcotics trafficking to funding terrorism.

The scale is difficult to gauge, but published figures vary from about 1% to 3% of global transactions, a range of US$24 billion (£19 billion) to US$72 billion – just Bitcoin – annually.

The speed and sophistication of the evolution of scams against businesses and consumers has made it difficult for regulators to keep pace. Phone calls and phishing emails have mutated into deepfaked boardroom meetings, with AI voiceovers, targeting those with financial sign-off powers and causing companies to fall victim too.

DeFi specialist lawyers can instigate proceedings and tracing if they are informed before

the money leaves their jurisdiction. However, the risk increases over time and in less robust legal systems. It very quickly becomes difficult to trace or retrieve funds thanks to crypto wallets, offshore accounts and cryptocurrencies that offer total anonymity, like Monero.

THE CRYPTO MILLIONAIRES

Despite the dark side of DeFi, the global demand remains high. For example, fintech firm Revolut (which was only established in 2015) was valued at US$45 billion in the latest funding round. This rivals traditional banks like Barclays (around US$47 billion), demonstrating their potential for rapid growth.

More than 172,000 crypto millionaires exist in a market worth US$2.3 trillion. This is 54 times more than the number of ISA millionaires (which are government-backed, tax efficient and generally safer).

In short, crypto millionaires have become rich fast. Bitcoin has rocketed to all-time highs since Donald Trump’s landslide victory in the US presidential election.

At US$88,000, just one Bitcoin is worth 33.8 times the price of an ounce of physical gold – US$2,600 – despite gold’s momentous rally over the past year. Around 85% of crypto asset owners are gen X, gen Z and millennials.

The news is not all bad. Scamming and stolen funds were actually down year-on-year and the planned UK legislation demonstrates a commitment to stopping the scams.

Challengers to traditional banking, like Binance, Coinbase, Kraken and Revolut have thrived. They offer digital wallets, lending and transactions into and out of blockchain products like cryptocurrencies.

The combination of technological advances, privacy, accessibility, innovation and long-term plans for adoption boost momentum among speculators. Ultimately, investors and the industry itself anticipate very long-term demand for their services.

How can we explain the positive sentiment alongside such high volumes of scamming and crime? Behavioural finance speaks of irrational exuberance (where investors’ enthusiasm drives prices higher than they merit), over-optimism bias, fear of missing out, envy or greed and resultant “herding” behaviour, which can spark both speculative bubbles and volatility.

According to loss aversion theory, consumers tend to be more upset by losses than they are happy with equivalent gains. But on the other hand, the average consumer is overconfident of their financial knowledge and capability.

So criminals can use psychological vulnerabil-

ities combined with technology to persuade potential victims, winning their trust and compliance. Promoting financial literacy, as well as healthy scepticism of offers that seem too good to be true, are key to helping people avoid scams. The emotional and financial harms to vulnerable people of falling prey to scammers can be profound and long lasting.

If you experience fraud, you should report it immediately to the police’s Action Fraud service and the Financial Conduct Authority. Speedy reporting can make all the difference when it comes to recovering assets.

Regulation and consumer education will be crucial to mitigating risks and reducing DeFi’s potential for harm to consumers and companies. However, these are nuanced and difficult problems. For example, compensation schemes for fraud victims have themselves opened the door to fresh scams.

Governments should collaborate with industry and researchers on traceable blockchains and protocols that enable accounts to be frozen, while nudging individual and corporate users away from those that do not (so-called privacy coins).

This will mean a serious reckoning with the technological and economic benefits of decentralised finance and the malevolent forces that seek to exploit it.

Why has XM been named FX & CFD Broker of the Year for Europe and the Middle East 2024?

Pan Finance talks to XM CXO Simos Konis about the global broker’s remarkable success spanning the last 15 years. XM was named FX & CFD Broker of the Year for Europe and the Middle East 2024 by PAN Finance for its unwavering dedication to excellence in the trading industry - the 7th international award won by the global broker in 2024.

We asked XM’s Chief Experience Officer Simos Konis to reveal the secrets to this ongoing success he pointed to the company’s unwavering focus on its core values of being Big, Fair, and Human.

XM combines cutting-edge technology, client-centric innovation, and a personal touch to deliver exceptional service. This accolade and the many that have come before it reflects XM’s industry leadership, commitment to customer satisfaction, and ability to create meaningful connections with traders across diverse markets.

WHAT SETS XM APART IN THE FINANCIAL MARKETS?

XM stands out in the financial markets by offering a truly global and inclusive trading environment. With operations in over 190 countries and support in 30+ languages, XM has created a platform that caters to both novice and experienced traders.

The ability to provide access to a diverse range of trading instruments—such as forex, stocks, commodities, and indices—ensures clients have opportunities to diversify their portfolios. Moreover, XM’s emphasis on user-friendly platforms, including its advanced

MT4 and MT5 trading tools, empowers clients with cutting-edge technology while maintaining ease of use.

What truly sets XM apart is its personalized service model. Through client feedback, XM continually refines its offerings to meet local and global needs, ensuring that traders feel valued and supported at every step of their journey.

HOW DOES XM FOSTER INNOVATION AND LEADERSHIP?

Innovation and leadership at XM are deeply intertwined, driven by a culture that values

growth, adaptability, and connection. Simos Konis exemplifies this ethos with a career spanning over 11 years at XM. Starting as a coordinator, he has risen through the ranks to lead efforts in blending human connection with technology.

Simos’s leadership emphasizes fostering collaboration across departments to ensure that XM delivers seamless, data-driven solutions while retaining the personal touch that traders appreciate. By championing initiatives that encourage innovation, he ensures that XM not only stays ahead of industry trends but also remains a leader in delivering services that resonate with clients and employees alike.

HOW DOES XM UPHOLD ITS CORE VALUES OF BIG, FAIR, AND HUMAN?

XM’s commitment to being Big, Fair, and Human drives its operational philosophy:

Big: As a global market leader, XM offers access to over 1,400 financial instruments, enabling traders to explore diverse markets. Its worldwide reach is supported by localized services, ensuring clients from different regions receive tailored solutions.

Fair: XM champions transparency by offering competitive spreads, no hidden fees, and a no-requote policy, ensuring clients trade with confidence. This fair approach has earned the trust of millions globally.

Human: XM prioritizes human connections by actively engaging with clients through global events and personalized support. By listening to feedback and adapting services, XM creates trading experiences that feel intuitive, relatable, and client centered.

HOW DOES XM ENHANCE THE CUSTOMER EXPERIENCE?

XM’s Customer Experience team plays a pivotal role in shaping the company’s service excellence. Handling over a million client interactions monthly, the team uses advanced analytics to understand client behaviours and proactively address needs.

KEY STRATEGIES INCLUDE:

Data-Driven Insights: The team leverages client feedback to fine-tune services and develop innovative solutions tailored to specific requirements.

Proactive Communication: By simplifying complex information and providing accessible support, XM ensures clients fully understand their trading options and tools.

Safeguarded Operations: Through robust security measures and reliable infrastructure, XM offers a safe and seamless trading environment.

This holistic approach reinforces XM’s reputation as a market leader, setting a benchmark for exceptional client experiences.

WHAT MAKES XM AN EXCEPTIONAL EMPLOYER?

XM’s recognition as a Great Place to Work™ and its Investors in People Platinum accreditation showcase its dedication to employee well-being and development. The company creates an environment where employees can thrive through:

Comprehensive Training: New employees undergo tailored onboarding programs and ongoing learning through seminars, workshops, and skill development initiatives.

Supportive Culture: XM values inclusivity and collaboration, fostering a workplace where employees feel respected and empowered.

Recognition and Growth Opportunities: Performance-driven frameworks and open feedback channels ensure employees are recognized for their contributions and given opportunities for advancement.

These efforts not only boost employee morale and retention but also translate into superior service for XM’s clients, creating a virtuous cycle of excellence.

HOW DOES XM USE DATA TO IMPROVE ITS

SERVICES?

XM employs a sophisticated data-driven approach to continuously enhance its offerings. By analysing millions of client interactions, the company identifies patterns and preferences that guide its strategy.

Collaboration across departments ensures that insights are effectively translated into actionable improvements.

For example:

Localized Solutions: XM adapts its services to align with regional client preferences, ensuring relevance and accessibility.

Personalized Support: Data insights enable XM’s teams to provide tailored assistance, addressing individual client needs with precision.

Product Development: Feedback loops allow XM to refine its trading tools and platforms, maintaining its position as an industry innovator.

This dynamic use of data ensures XM remains responsive to client needs while staying ahead of market trends.

WHAT IS XM’S VISION FOR THE FUTURE?

XM envisions a future where cutting-edge technology and human expertise converge to deliver unparalleled service. As artificial intelligence (AI) becomes more prevalent, XM is poised to integrate these advancements into its operations, enhancing both client satisfaction and employee efficiency.

However, XM’s vision goes beyond automation. The company remains steadfast in its commitment to maintaining human connections. By blending AI-driven insights with personal interactions, XM aims to create a uniquely supportive trading environment that sets it apart from competitors.

With a focus on adaptability, innovation, and a client-first approach, XM is dedicated to leading the trading industry into a future defined by both technological progress and meaningful relationships.

Simos Konis XM CXO

Electric

vehicles in Africa: what’s needed to grow the sector

MJ (Thinus) Booysen Professor in Engineering, Stellenbosch University

Joubert Van Eeden Professor of Industrial Engineering, Stellenbosch University

In sub-Saharan Africa, high levels of particulate matter (PM2.5) pollution from vehicle tailpipe emissions cause poor health, developmental stunting, and even death. Vehicle emissions also contribute to global warming.

Electric vehicles could help solve these problems but they’ve been slow to take off in the region. Its biggest economy, South Africa, had only about 1,000 electric vehicles by 2022.

We are specialist transport engineers whose research has focused on electric vehicles and road freight transport in sub-Saharan Africa. In our work we look at how electric vehicles could contribute to reducing emissions in the region, and what is standing in the way of electrifying transport.

One of the reasons for low uptake is the high cost of electric vehicles. They also have limited range and their batteries are slow to charge: a problem for long distance or frequent driving.

The inability of countries to generate and distribute enough clean electricity is also a barrier to electrifying vehicles. Just over half of all electricity in the region comes from burning fossil fuels. Powering electric vehicles with electricity generated by burning fossil fuels wouldn’t necessarily reduce carbon emissions.

However, the rollout of electric motorcycles

and small public transport vehicles has already begun. If all vehicles could be made locally, using clean energy, there would be tremendous economic benefits for the region.

ELECTRIC MOBILITY IS SOME WAY OFF

Transitioning to electric mobility requires clean energy provision, which means investing in electricity infrastructure. Electric vehicle charging stations can be installed fast: South Africa already has a very high electric vehicle ratio of one charger for every five cars, compared to the UK at 1:20. But these charging stations must be able to deliver electricity when vehicles need it. They need reliable, renewable energy stored in large battery systems to do so – and these large battery systems are still being developed.

In sub-Saharan Africa informal public transport moves about 72% of the region’s passengers. Freight moves goods in the absence of adequate rail. Electrifying these sectors needs careful planning.

Informal “paratransit” or “popular transportation” is made up of minibuses (matatu, ndiaga ndiaye, danfo, trotro), three-wheelers (tuk-tuk) and motorbikes (boda boda, moto).

Planning for the eventual electrification of informal taxis is complicated by the sector’s unscheduled, decentralised, often chaotic and

demand-driven nature.

Freight transport is a leading indicator for economic growth, and for economies to grow, freight transport must grow. This means that national and local governments must plan and invest in high powered, fast charging stations along transport routes. These must be able to charge different sizes and kinds of trucks. The freight industry cannot absorb these costs alone.

NEED FOR RAPID CHANGE

The transport sector must make the transition to electric mobility faster than the breakneck speed at which smartphones were adopted if it is to meet Net Zero – an end to carbon emissions – by 2050. Costly electrical and civil infrastructure (roads, minibus termini, truck stops, electricity distribution networks) will be needed – and soon.

However, our results show that fleets will have to contain a mix of electric and combustion-based engines if countries want to continue to transport the same amount of goods and people they are currently transporting. This is because electric vehicles charge slowly. While a diesel minibus taxi takes only one minute to fill up with enough diesel to travel 750 kilometres, the fastest currently available electric minibus recharges at a mere 2km per minute with DC and 0.3km per minute

with AC. The electric taxi’s range is also only 21% of the diesel equivalent.

Filling stations in the region generally store the equivalent of up to 225,000km worth of fuel for a diesel minibus. The same size of stationary electric battery storage will store a mere 16,000km for an electric equivalent minibus. Range-extending and potentially swappable battery storage can be used (where a trailer acts as a mobile battery bank to the vehicle, and is charged from a solar charging station to reduce emissions). But this will increase the cost so much that it may not be financially viable for the freight industry at all.

BUILDING A LOCAL ELECTRIC VEHICLE INDUSTRY

Except for South Africa, the region has been a dumping ground for second hand vehicles from developed countries. The comparatively simple designs of electric vehicles provide an opportunity for sub-Saharan Africa to move away from accepting second hand vehicles and towards a new local electric vehicle industry.

Workers in hundreds of thousands of jobs making combustion engines could be reskilled to make electric vehicles. Africa already has the skills to design and produce the powertrain components, such as batteries and electric motors. Setting up local industries would also

spare sub-Saharan Africa from being flooded by cheap electric vehicle imports that don’t contribute to local employment.

Ethiopia has recently banned the import of combustion vehicles. Africa’s first all-electric mass rapid transit was set up in Dakar, Senegal in 2023. The Golden Arrow bus company in South Africa purchased 120 electric buses this year. Heavy haul electric trucks are also entering the South African market space.

Africa has already produced tens of thousands of electric two- and three-wheelers used for public transport and last-mile delivery. These include Ampersand in Rwanda, Roam Electric in Kenya, and Spiro in Benin. Batteries are usually provided through swapping and payment by mobile phone. In South Africa, Mellowvans produce a last-mile three-wheeler.

motorbike recently completed the 6000km journey from Nairobi to Stellenbosch using only the region’s abundant solar power. In Kenya, BasiGO assembled buses locally and now provides finance for electric buses. Roam Electric makes locally designed electric buses (and motorbikes). Meanwhile, a project owned by the South African National Energy Development Institute at Stellenbosch University in South Africa has converted a petrol minibus taxi and a 65-seater diesel bus to electric.

ELECTRIFICATION IS INEVITABLE

The shift to electric vehicles is inevitable. These steps are needed first:

- Review transport policy related to freight vehicles, such as axle weight and vehicle length, to ensure that imported electric vehicles can operate on African road networks.

- Ensure paratransit is safe, efficient and equitable.

- Carefully consider import duties and incentives. Rwanda scrapped customs tax on electric vehicles to make them cheaper, but this led to an influx of old hybrid vehicles with depleted batteries. South Africa has vehicle import duties to protect local production, but an additional luxury tax on electric vehicles makes these expensive to buy.

- Rethink the taxation model. In South Africa, for example, fuel levies make up a chunk of national revenue.

To make the most of the electric mobility revolution, sub-Saharan African countries need policies and incentives to localise production and invest in green energy, lest they miss the bus.

Creating value in healthcare projects using PPP models

Public Private Partnerships or PPPs have been used as vehicles to develop, maintain and operate healthcare assets for many years. Over time, these arrangements have become more complex and diverse.

Paxon Consulting Group has advised on over 80 PPP projects totalling more than US$130 billion. In this article we explore how different forms of PPPs deliver value in different ways – as well as the critical, definitional questions that need answering by both the public and private sector.

PPP AS AN UMBRELLA TERM, RATHER THAN A SINGLE MODEL

There are several types of PPP and each has a unique set of benefits and risks – but fundamentally they are about transferring risk. PPPs in the healthcare sector can create:

• New avenues for financing major assets –and the opportunity to achieve cost savings, during the construction phase, or longer term during the operating phase

Opportunities to transfer risk – whether that is operational, financial or clinical risk

• Access to private-sector skills and capacity for the delivery of clinical services

• A mechanism to manage an asset or service based on outcomes, not inputs

• The potential, through structuring, to move assets off the Government balance sheet

• Greater predictability – costs (for Government) and revenue (for the private sector).

The structure of a PPP is typically defined by which party will Design, Build, Finance, Operate and Maintain the asset or service.

Different types of PPPs are often described in short-hand that references these variables

– for example, ‘a DBFM model’ or ‘a DBFO model’. Despite their apparent similarity, these terms reflect models that are fundamentally different at their core. Different PPP structures are best conceptualised as mutually exclusive alternatives; rather than on a continuum of risk or functionality. Deciding which PPP model is most appropriate is a series of decision forks in the road.

WHO DOES WHAT DEFINES THE MODEL

Models that involve the private sector financing an asset (the ‘F’ models) involve a privately financed hospital being leased back to Government for a fixed term, often with Government purchasing the asset at end of contract. This reduces the up-front capex burden for Government, while minimising the financial risk for the private sector. It also provides a guaranteed, long-term, low-risk return

on the investment – typically in the order of 12 – 13% (Equity IRR).

Models that involve the private sector maintaining an asset (the ‘M’ models) allow government healthcare providers to focus on their core capabilities (i.e. delivering clinical care) while outsourcing facilities management to specialist FM providers. The FM providers get a guaranteed long-term contract, with Government outsourcing maintenance and FM services based on desired outcomes and KPIs.

Models that involve the private sector operating a hospital (the ‘O’ models) constitute a much higher level of risk transfer from public to private sector. In these models, the private sector is responsible for the delivery

of care and takes on significant clinical risk. A PPP involving clinical operations allows private healthcare providers to expand into new geographies with a shared risk around infrastructure investment. It also combines public and private activity on the same site, thereby hedging activity risk. The ‘O’ models allow Government to outsource the delivery of publicly funded care, thereby transferring workforce risk and management overhead to the private sector.

THE THREE MOST COMMON TYPES OF HEALTHCARE PPPS

DBFM – These models are primarily about transferring asset risk. Government transfers delivery risk and asset management risk, while

maintaining control of clinical services.

Private sector raises finance for the new build and oversees design and construction. Government leases the facility from the private sector for a fixed term (typically 20+ years) and a fixed fee and delivers clinical services from the facility. The private-sector party is responsible for the ongoing maintenance of facilities (typically soft and hard FM) throughout the contract.

DBFO – These models allow Government to leverage private-sector skills, expertise and capacity in the delivery of clinical services, and achieve cost efficiencies in service delivery.

Private sector raises finance for the new build

and oversees design and construction. The private sector party delivers publicly funded clinical services from the new facility, under a service contract with Government.

This allows public and private healthcare services from the same site, giving the private sector provider economies of scale and access to a large patient population.

DBO – These models are focused on clinical operations, rather than financing the asset. They allow Government to leverage private-sector expertise and service delivery capacity.

Private sector oversees the design and construction of a publicly funded, new-build facility (funded by Government outside of the PPP arrangement). Private-sector party delivers the publicly funded clinical services from the new facility, under a service contract with Government.

NOT JUST A TRANSFER OF RISK, BUT A TRANSFER OF COMPLEXITY

The private sector party in a PPP often has a diverse set of roles – after all, soft FM is a different capability to constructing a hospital, and clinical operations distinctly different again. Because of this, the private-sector party is almost always a consortium of companies, led by a private healthcare provider, or by a dedicated Special Purpose Vehicle (SPV) – a ‘Project Co’, established specifically for the PPP.

This private-sector consortium typically includes: an architect, a contractor / builder, facilities manager, banks, equity finance, and a financial and transaction advisor. In a non-

PPP public hospital build, Government needs to manage each of these parties individually. In a PPP, Government can liaise solely with the ProjectCo. The public-to-private transfer of risk is also a transfer of complexity. This is one of the key reasons why PPPs are attractive to Government – they allow Government to deliver and maintain highly complex projects without the need to resource those capabilities internally.

However, this also leads to one of the key risks for Government. Managing a PPP from the Government perspective – not just in the design and construction phases but throughout the lifecycle of the PPP – requires commercial, financial and contract management expertise which are often not core government capabilities.

CRITICAL QUESTIONS

There are some fundamental questions that determine whether a PPP is the appropriate vehicle for a given investment – and, if it is, what kind of PPP.

What are you trying to achieve? What is the risk or issue that Government is seeking to address? Is it to access finance? Transfer design and construction risk? Access to private-sector capability in the delivery of clinical services?

Then, once you really understand these questions…

Can the private sector help achieve this? Does the private sector have capabilities to meet this need, and achieve efficient risk transfer? Can they do it better than Government, to achieve Government’s overall objectives?

A CASE STUDY: NORTHERN BEACHES HOSPITAL

Northern Beaches Hospital in New South Wales, Australia, is a greenfield US$1.3billion, 488 bed tertiary hospital delivered by a 25-year DBFMO PPP model. The operator-led integrated hospital facility combines public and private hospital services, taking advantage of synergies in facilities and operations.

The private sector consortium assumed responsibility for the design, build, financing and maintenance of the facility, as well as delivery of all public hospital services. This fully outsourced model achieved a 20% decrease in Government’s net cost of meeting healthcare demand in the catchment area. This equated to approximately US$1 billion in savings to Government over the life of the contract. Paxon was the financial and commercial advisor to Government.

Michael Palassis Managing Director, Paxon Consulting Group

How to reverse Britain’s chronic underinvestment in energy – and who needs to pay

The transition to a greener society will involve huge investments in wind farms, electric cars and trains, new ways to heat homes, and much more. Yet the UK government is sending mixed messages over whether it intends to finance such projects at anything like the rate required.

With her speech at the recent Labour Party conference, the chancellor, Rachel Reeves, sparked rumours she would change her approach to fiscal policy to enable more public spending. This came after months of the new UK government blaming a hole in the public finances for the need to make difficult decisions and spending cuts, so a shift in the opposite direction would be surprising.

Perhaps less surprisingly, the Guardian has since reported that ministers are being asked

to draw up “billions of pounds in cuts to infrastructure projects” over the next 18 months. We will have to wait until the new budget is announced at the end of October to know which vision wins out.

Investment was at the heart of Reeves’ conference speech, and was cited as the solution to create economic growth. But we need to understand what type of investment is necessary and who is expected to invest.

In the private sector (businesses), “capital investment” generally means acquiring land, factories, machinery, or equipment that will be used to produce goods and services for a relatively long time. (Businesses also need to pay for their shorter term operating costs, such as staff salaries, raw materials or electricity bills, but these are non-capital or “working capital” expenditures and are typically not considered

strictly an investment).

In the public sector, capital investment or expenditure, refers to the financing of big infrastructure projects such as roads or railways, or the building of facilities for public services such as schools and hospitals. The chancellor’s speech mentioned all these elements (schools, roads, hospitals). But while any changes to her fiscal rules will be aimed at increasing public investment, a big part of the discourse revolves around unlocking investment by business.

OVERWHELMING UNDERINVESTMENT

Investment hugely affects the plans for net zero and the green transition. The government’s official independent advisory body, the Climate Change Committee, has confirmed the UK is not on track to achieve its targets.

Rosa Fernandez Martin

Senior Lecturer in Economics and Finance, Keele University

Its latest report outlines a need to triple the annual installation of offshore wind, to double onshore wind installations, and to increase solar installations by five times. Other priority actions include installing heat pumps in 10% of UK homes, and a significant increase in the uptake of electric cars.

But one of the barriers to achieving these goals is the overwhelming underinvestment in the UK’s energy infrastructure. For instance, around £54 billion will be required for the national grid alone, in order to improve connectivity and adapt it to the intermittent generation of renewable electricity. (The grid was designed to support the continuous flow of fossil fuel or nuclear energy, but you cannot control when the sun will shine or wind will blow.)

The grid is only one of the many areas where investment is falling short. So even if the rejig of fiscal rules does actually happen and produces a projected £50 billion windfall, that would still be nowhere near the amounts that the green transition demands.

In fact, recent academic research suggests that £50 billion in green investments will be needed every year by 2030. That figure will be even more difficult to reach if we add the fact the UK’s Green Investment Bank was privatised and no longer operates in the country, and that since Brexit there is no longer access to European Investment Bank funding, which was key to finance climate-related projects.

INVESTMENT IN EDUCATION

The green transition will also require huge investment in education. The UK faces a considerable shortage in the skills needed by new green sectors – heat pump installation, forestry, electric car maintenance, and so on. Closing this gap will require investment not just in schools but in adult training, through apprenticeships, life-long learning or university.

Importantly, green skills training can contribute to softening the loss of jobs in the so-called “brown” sectors of the economy like the oil and gas industry. But once again, and as tends to happen with public goods, the private sector is lagging behind in the necessary

investments to train and reskill its workforce, and government intervention becomes complicated as different places and sectors have differing needs.

It is also difficult to estimate the funding required to close the green skills gap, with some figures suggesting an additional £13 billion per year by 2030, just in reskilling.

Bearing all that in mind, it is unlikely that any creative interpretation of the definition of a balanced budget at the end of October will produce a significant change. It won’t be enough to address the shortage in public financial resources to reach the investment needs of the green transition.

This makes it even more important to count on the private sector, which should be an active participant in large infrastructure projects and long-term investments. The need of private business investment has become a common institutional message internationally, but it increases the uncertainty of investment materialising and hence whether we can achieve our green transition goals.

Jean-Pierre Diris Coordinateur interministériel IRS ² et GOVSATCOM, Centre national d’études spatiales (CNES)

IRIS²: the new satellite constellation aimed at ensuring communications autonomy for the EU

The ongoing transition to a digital economy has already had one observable consequence: a sharp rise in the need for connectivity enabling rapid data transmission. In a global market where connectivity offers are evolving quickly, satellites are now achieving technical and economic performances close to those of terrestrial solutions. The enormous advantage is their steady deployment cost, whatever the geographical area, and particularly in “white” zones not covered by terrestrial infrastructures.

The European IRIS² satellite constellation (is part of this transition, which requires more and more data-sharing infrastructure – currently dominated by US players. A satellite constellation enables different users to be connected via multiple satellites, providing a continuous and complete coverage of the planet.

TELECOMMUNICATIONS: A STRATEGIC CHALLENGE FOR EUROPE

With several public (China, US) and private (Oneweb, Starlink and Kuiper) constellation initiatives being developed and put into service to meet data processing and connectivity needs, the telecommunications sector is more strategic than ever for France and Europe. The IRIS2 programme is designed to meet this challenge.

After some attempts in the early 2000s, constellations have finally emerged, and projects are now credible and largely financed by public and private funds. Several factors have contributed to this emergence: advances in electronic miniaturisation, the performance of integrated digital components, the drastic reduction in launch costs and the industrial capacity to produce satellites in small series at lower cost.

Faced with the development of satellite telecommunications in low earth orbit (an area of the earth’s orbit up to 2,000 kilometres above sea level), the European Commission has adopted an approach, involving both the public and private sectors, that aims to strengthen Europe’s position in the constellation race to benefit European citizens and their institutions

SOME 300 SATELLITES

The European Union’s secure connectivity satellite constellation programme was decided on in March 2023. IRIS2 (Infrastructure for Resilience, Interconnectivity and Security by Satellite) will be the first multi-orbital satellite network in Europe. Some 300 satellites will be designed, manufactured and deployed in the first phase.

The constellation will provide a secure communications infrastructure for EU government

bodies and agencies. The various communication links between users and the satellite command and control links will be protected, and the ground infrastructure will be secured.

The system will guarantee the EU’s strategic autonomy in the field of secure government communications. IRIS2 will also provide commercial services and seek to maximise synergies between government and commercial infrastructures. The constellation will strengthen the position of Europe, its industries and its operators in the world.

IRIS2 is associated with the EU’s existing GOVSATCOM programme, which provides secure government communications based on capacity from licensed operators or member states.

The EU funds IRIS2 with €2.4 billion under the Multiannual Financial Framework (MFF) 2021-2027; additional funding is being considered under the MFF 2028-2035. The funding is complemented by the European Space Agency (ESA) with €600 million (subscribed to in the ESA’s ministerial conference of November 2022), and by private commercial players under a concession contract.

Following validation of the EU’s regulation on the secure connectivity constellation programme in March 2023, the European Commission launched a call for tenders for the main IRIS2 development contract in May 2023. The tender was finalised by a consortium of three operators (Eutelsat, SES and Hispasat) associated with industrial subcontracting partners (Airbus, Thales, OHB, Deutsche Telekom and Orange) for a bid sub-

mission on September 2, 2024. The European Commission has examined the offer and just confirmed the contract award, with a view to sign the 12-year IRIS2 concession contract before the end of 2024.

AN ACCESSIBLE SERVICE

In summer 2023, the European Commission launched a call for tenders to host the constellation’s ground infrastructure, and in April 2024 selected France (Toulouse) Italy (Fucino) and Luxembourg (Bettembourg) to host the IRIS2 control centres.

France’s former prime minister Elisabeth Borne decided to set up a French interministerial coordination for IRIS2 and GOVSATCOM, for which I have been tasked as coordinator, with the participation of representatives from the various ministries and agencies. The main objectives are to coordinate all French activities contributing to the development and operation of these programmes, to ensure a continuous relationship with European contacts (EU, ESA and the European Union Agency for the Space Programme) and to lead the French community of users of the connectivity provided by these programmes.

The aim of IRIS2 is to provide an autonomous and sovereign digital service to every member state of the European Union. Nowadays, space connectivity is indispensable, as it is the most reliable option when terrestrial telecommunication systems do not exist or have been damaged by a conflict or natural disaster, for example.

The programme will provide a wide variety

of services to European governments and citizens. The system enables surveillance of borders and remote areas. The programme is indispensable for civil protection, particularly in the event of crises or natural disasters. It improves the delivery of humanitarian aid and the management of maritime emergencies, whether for search or rescue. Numerous smart connected networks – energy, finance, healthcare, data centres, etc. – will be monitored thanks to the connectivity provided by IRIS2. The system will also enable the management of various infrastructures: air, rail, road and vehicle traffic. Added to this are institutional telecoms services for embassies, for example, and new telemedicine services for intervention in isolated areas. Finally, IRIS2 will improve connectivity in areas of strategic interest for foreign security and defence policy: Europe, the Middle East, Africa, the Arctic, the Atlantic and Baltic regions, the Black Sea and the Mediterranean Sea.

The constellation’s satellites will be placed in two different orbits: low (up to 2,000 kilometres) and medium (between 2,000 and 35,786 km). By covering this range, IRIS2 will be able to provide low-latency communications services – i.e., ultra-fast information transmission comparable to the performance of terrestrial networks – and to complement other European space programmes.

IRIS2 is based on advanced technologies, with a relatively limited number of satellites compared with mega-constellations, which consist of many thousands. Its satellites will be designed to meet the environmental and regulatory standards of Europe’s future space law.

Tech bosses think nuclear fusion is the solution to AI’s energy demands – here’s what they’re missing

The artificial intelligence boom has already changed how we understand technology and the world. But developing and updating AI programs requires a lot of computing power. This relies heavily on servers in data centres, at a great cost in terms of carbon emissions and resource use.

One particularly energy intensive task is “training”, where generative AI systems are exposed to vast amounts of data so that they improve at what they do.

The development of AI-based systems has been blamed for a 48% increase in Google’s greenhouse gas emissions over five years. This will make it harder for the tech giant to achieve its goal of reaching net zero by 2030.

Some in the industry justify the extra energy expenditure from AI by pointing to benefits the technology could have for environmental

sustainability and climate action. Improving the efficiency of solar and wind power through predicting weather patterns, “smart” agriculture and more efficient, electric autonomous vehicles are among the purported benefits of AI for the Earth.

It’s against this background that tech companies have been looking to renewables and nuclear fission to supply electricity to their data centres.

Nuclear fission is the type of nuclear power that’s been in use around the world for decades. It releases energy by splitting a heavy chemical element to form lighter ones. Fission is one thing, but some in Silicon Valley feel a different technology will be needed to plug the gap: nuclear fusion.

Unlike fission, nuclear fusion produces energy by combining two light elements to make a heavier one. But fusion energy is an unproven

solution to the sustainability challenge of AI. And the enthusiasm of tech CEOs for this technology as an AI energy supply risks sidelining the potential benefits for the planet.

BEYOND THE CONVENTIONAL

Google recently announced that it had signed a deal to buy energy from small nuclear reactors. This is a technology, based on nuclear fission, that allows useful amounts of power to be produced from much smaller devices than the huge reactors in big nuclear power plants. Google plans to use these small reactors to generate the power needed for the rise in use of AI.

This year, Microsoft announced an agreement with the company Constellation Energy, which could pave the way to restart a reactor at Pennsylvania’s Three Mile Island nuclear power station, the site of the worst nuclear accident in US history.

Sophie Cogan PhD Candidate in Politics and Environment, University of York

However, nuclear power produces long-lived radioactive waste, which needs to be stored securely. Nuclear fuels, such as the element uranium (which needs to be mined), are finite, so the technology is not considered renewable. Renewable sources of energy, such as solar and wind power suffer from “intermittency”, meaning they do not consistently produce energy at all hours of the day.

These limitations have driven some to look to look to nuclear fusion as a solution. Most notably, Sam Altman of OpenAI has shown particular interest in Helion Energy, a fusion startup working on a relatively novel technological design.

In theory, nuclear fusion offers a “holy grail” energy source by generating a large output of energy from small quantities of fuel, with no greenhouse gas emissions from the process and comparatively little radioactive waste. Some forms of fusion rely on a fuel called deuterium, a form of hydrogen, which can be extracted from an abundant source: seawater.

In the eyes of its advocates, like Altman, these qualities make nuclear fusion well suited to

meet the challenges of growing energy demand in the face of the climate crisis –- and to meet the vast demands of AI development.

However, dig beneath the surface and the picture isn’t so rosy. Despite the hopes of its proponents, fusion technologies have yet to produce sustained net energy output (more energy than is put in to run the reactor), let alone produce energy at the scale required to meet the growing demands of AI. Fusion will require many more technological developments before it can fulfil its promise of delivering power to the grid.

Wealthy and powerful people, such as the CEOs of giant technology companies, can strongly influence how new technology is developed. For example, there are many different technological ways to perform nuclear fusion. But the particular route to fusion that is useful for meeting the energy demands of AI might not be the one that’s ideal for meeting people’s general energy needs.

THE OVERVALUATION OF INNOVATION

Innovators often take for granted that their

work will produce ideal social outcomes. If fusion can be made to work at scale, it could make a valuable contribution to decarbonising our energy supplies as the world seeks to tackle the climate crisis.

However, the humanitarian promises of both fusion and AI often seem to be sidelined in favour of scientific innovation and progress. Indeed, when looking at those invested in these technologies, it is worth asking who actually benefits from them.

Will investment in fusion for AI purposes enable its wider take-up as a clean technology to replace polluting fossil fuels? Or will a vision for the technology propagated by powerful tech companies restrict its use for other purposes?

It can sometimes feel as if innovation is itself the goal, with much less consideration of the wider impact. This vision has echoes of Meta CEO Mark Zuckerberg’s motto of “move fast and break things”, where short-term losses are accepted in pursuit of a future vision that will later justify the means.

The world is rushing to Africa to mine critical minerals like lithium –how the continent should deal with the demand

Global demand for critical minerals, particularly lithium, is growing rapidly to meet clean energy and de-carbonisation objectives.

Africa hosts substantial resources of critical minerals. As a result, foreign mining companies are rushing to invest in exploration and acquire mining licences.

According to the 2023 Critical Minerals Market Review by the International Energy Agency, demand for lithium, for example, tripled from 2017 to 2022. Similarly, the critical minerals market doubled in five years, reaching US$320 billion in 2022. The demand for these metals is projected to increase sharply, more than doubling by 2030 and quadrupling by

2050. Annual revenues are projected to reach US$400 billion.

In our recent research, we analysed African countries that produce minerals that the rest of the world has deemed “critical”. We focused on lithium projects in Namibia, Zimbabwe, the Democratic Republic of Congo (DRC) and Ghana. We discovered these countries do not yet have robust strategies for the critical minerals sector. Instead they are simply sucked into the global rush for these minerals.

We recommend that the African Union should expedite the development of an African critical minerals strategy that will guide member countries in negotiating mining contracts and agreements. The strategy should draw from leading mining practices around the world. We

also recommend that countries should revise their mining policies and regulations to reflect the opportunities and challenges posed by the increasing global demand for critical minerals.

Otherwise, African countries that are rich in critical minerals will not benefit from the current boom in demand.

WHAT ARE CRITICAL MINERALS?

There is no universal consensus on what critical minerals are. Various regions and institutions have different lists of critical minerals, and the contents of these lists keep changing. For instance, Australia has classified 47 minerals as critical. The European Union has identified a list of 34 critical raw materials that are important to the EU economy and face a

James Boafo Lecturer in Sustainable Development, Murdoch University

Eric Stemn Lecturer, Safety and Engineering, University of Mines and Technology

Jacob Obodai Postdoctoral Research Assistant, Edge Hill University

Philip Nti Nkrumah Researcher, Sustainable Minerals Institute, The University of Queensland

risk of disruption. The US critical minerals list contains 50 elements, 45 of which are also considered strategic minerals.

Each country or region has reasons why these minerals are classified as critical. For most western countries, minerals are critical if they

• are essential for a low carbon economy or for national security

• have no substitutes

• are vulnerable to supply chain disruption.

LITHIUM PROJECTS IN AFRICA

At the time of our research there were 18 lithium projects at various stages, from early-stage exploration to production, across Africa. We focused on those in Namibia, Zimbabwe, the DRC and Ghana.

Our research revealed that conversations on Africa’s critical minerals had largely been shaped by geostrategic and economic opportunities arising from demand from western countries and China. Less attention was paid to the supply chains African countries should secure for current and future industrial applications.

We realised that these countries contributed

little to global carbon emissions and their economies were not driven by industrialisation. The current inadequate infrastructure and policies to deal with the repercussions of lithium mining, for example, underscored the lack of a clear agenda. Lithium mining has impacts on communities, biodiversity, water sources and energy usage.

We also discovered that with over 30% of the world’s critical minerals deposits, African countries could become major global suppliers. They could also trade among themselves to avoid potential supply chain disruption or even monopoly by countries outside Africa.

Our research also highlights that emerging lithium mining in Zimbabwe, the DRC and Namibia is reinforcing and breeding new forms of corruption and illegality in the resources sector. Ghana is still in the early stage of setting up its lithium sector.

WHAT IS THE WAY FORWARD?

Africa needs stronger resources governance: regulations, accountability and transparency. Mining policies and regulations must reflect the opportunities and challenges of meeting global demand for critical minerals. Mining companies operating in African countries should adhere to leading mining practices and national regulations to minimise the environ-

mental and social impacts of their operations.

The claim that it is urgent to acquire critical minerals must not be an excuse for African governments and foreign mining companies to bypass mining and environmental regulations. Rather, the urgency claims should give African governments greater power to make mining deals that will benefit people and the environment.

For these countries to use the economic opportunities arising, there must be incentives for local companies to mine and process lithium before exporting it. Processing of lithium in the country of origin would increase local returns, create jobs, and drive the growth of other sectors of the economy.

There is a need for coordinated efforts in Africa to build local capacity along the mining chain, from exploration to the market. There’s an opportunity also to build industries to support the global de-carbonisation agenda. An example would be manufacturing electronic vehicle batteries. In this way, Africa would not only be a source of raw materials, but a competitive source of low carbon products.

These are some key lessons for African countries.

Do we need a European DARPA to cope with technological challenges in Europe?

W.

David

Versailles Professor, strategic management and innovation management, co-director of PSB’s newPIC chair, PSB Paris School of Business

Valérie Mérindol

Enseignant chercheur en management de l’innovation et de la créativité, PSB Paris School of Business

The US Defense Advanced Research Projects Agency (DARPA) is often held as a model for driving technology advances. For decades, it has contributed to military and economic dominance by bridging the gap between military and civilian applications. European policymakers frequently reference DARPA in discussions, as outlined in the 2024 Draghi Report, but an EU equivalent has yet to materialise. To create such an agency, the governance and management of European innovation programmes would need drastic changes.

DARPA SUPPORTS DISRUPTIVE INNOVATION

Founded in 1958, DARPA operates under the US Department of Defense (DoD) with a straightforward mission: to fund high-risk technological programmes that could lead to radical innovation. DARPA provides support throughout the innovation process, focusing on environments where new uses for technology must be invented or adapted. Although part of the DoD, DARPA funds projects that promise technological and economic superiority whether they align with current military priorities or not. DARPA has backed projects

like ARPANET, the precursor to the internet, and the GPS. Today, DARPA shows interest in autonomous vehicles for urban areas and new missile technologies.

As part of its core mission, DARPA accepts high financial risks on exploration projects and makes long-term commitments to these projects. Many emblematic successes explain why DARPA is a reference agency. However, the list of failed projects is even longer. Both failures and successes feed the exploration process in emerging industrial sectors. They represent opportunities to learn together and build collective strategies in innovation ecosystems.

FIVE KEY PRINCIPLES OF DARPA

DARPA’s success stems not just from its stability but from adhering to five organisational principles that allow it to explore deep tech in an open innovation context:

- Independence: DARPA operates independently from other military services, research & development centres and federal agencies, allowing it to explore options outside dominant research paradigms. While cooperation is possible, its decisions and di-

rections are not influenced by other parts of the federal administration.

- Agility: The agency’s flat organisational structure minimises bureaucracy. Its independent decision-making processes and streamlined contracting allow it to pivot quickly, test new concepts and collaborate with academic or private sector partners. Agility also enables DARPA to test new exploration or experimentation methods that are often based on user-centric approaches. Potential military or civilian end-users are involved very early in innovation projects to discuss potential uses and applications. This approach has recently led DARPA to absorb the Strategic Capabilities Office (SCO), where officers from the different military services (Army, Air Force, Navy and Marines) and all military ranks test new technological solutions (from different maturity levels), fostering co-creation processes with military innovators and expanding the agency’s impact.

- Sponsorship: High-ranking executives within the DoD and other federal administrations (NASA, Department of Energy) endorse, but do not commission, DARPA’s projects. This sponsorship model increases a project’s potential impact and allows for swift adaptation

if a project fails.

- Community building: DARPA creates innovation communities with a mix of diverse expertise. By bringing different perspectives together, it fosters collective strategies essential for disruptive innovation.

- Diverse leadership: Project managers come from a range of backgrounds, including civilian experts, military officers and private-sector professionals. All have demonstrated scientific and technological expertise and a solid capability to bridge dreams and foresight with reality. All have a perfect command of risk and complexity management. Managers serve three- to four-year terms focused on driving technological disruption and building new innovation ecosystems. Their diverse expertise sets DARPA apart from other federal agencies.

THE CHALLENGE OF A EUROPEAN DARPA

The Draghi Report on European competitiveness suggests that a European DARPA could help bridge technological gaps, reduce dependencies and accelerate the green transition. However, implementing this model would require a seismic shift in how European

agencies operate. Creating a new agency would be ineffective without ensuring that all principles underlying the success of DARPA are implemented in Europe.

Even if Europe actively promotes deep tech and devotes significant budgets to it, European public policies and ways of working prevailing in national and European agencies are hardly consistent with the DARPA model. European agencies do not have much autonomy in their decisions about the exploration of new ventures or human resource management. They clearly demonstrate an outcome-focused orientation inconsistent with DARPA’s approach to risk.

TWO MAIN CHALLENGES

European agencies often lack the stable missions, scope and ambition seen at DARPA. The European Space Agency (ESA), the European Defence Agency (EDA) and Eurocontrol highlight the difficulties in developing cohesive, cross-border innovation ecosystems. A European DARPA would require a unified ambition among EU member states, a challenging feat given the institutional and geopolitical divides within Europe. The debates around the European Defence Fund illustrate how

complex it is to reach consensus on shared objectives and funding.

Adopting DARPA’s five organisational principles would represent a cultural revolution for European agencies in relation to EU bureaucratic norms and the budgetary controls of individual member states. Implementing these changes would also disrupt the existing power balance between countries. The DARPA model is inconsistent with the European “fair returns” model that refers to proportionality rules between funding, research operations and then industrial repartition during the production phase between member states in each project. The DARPA model would only focus on existing competencies, excellence, risk-taking approaches and entrepreneurial mindsets.

Establishing a European DARPA would require a fundamental rethinking of public policy management in Europe. Its success would depend on whether European stakeholders are willing to adopt DARPA’s core principles, including its independence, agility and willingness to accept failure. Creating an agency is one thing; ensuring it adheres to the structures that make DARPA effective is another. The question remains: Is Europe ready for this transformation?

Jongkil Jay Jeong Senior Research Fellow in the School of Computing and Information System, The University of Melbourne

Human error is the weakest link in the cyber security chain.

Here are 3 ways to fix it

Despite huge advances in cyber security, one weakness continues to overshadow all others: human error.

Research has consistently shown human error is responsible for an overwhelming majority of successful cyber attacks. A recent report puts the figure at 68%.

No matter how advanced our technological defences become, the human element is likely to remain the weakest link in the cyber security chain. This weakness affects everyone using digital devices, yet traditional cyber education and awareness programs – and even new, forward-looking laws – fail to adequately address it.

So, how can we deal with human-centric cyber security related challenges?

UNDERSTANDING HUMAN ERROR

There are two types of human error in the context of cyber security.

The first is skills-based errors. These occur when people are doing routine things – especially when their attention is diverted.

For example, you might forget to back up desktop data from your computer. You know you should do it and know how to do it (because you have done it before). But because you need to get home early, forgot when you did it last or had lots of emails to respond to, you don’t. This may make you more exposed to a hacker’s demands in the event of a cyber attack, as there are no alternatives to retrieve the original data.

The second type is knowledge-based errors. These occur when someone with less experi-

ence makes cyber security mistakes because they lack important knowledge or don’t follow specific rules.

For example, you might click on a link in an email from an unknown contact, even if you don’t know what will happen. This could lead to you being hacked and losing your money and data, as the link might contain dangerous malware.

TRADITIONAL APPROACHES FALL SHORT

Organisations and governments have invested heavily in cyber security education programs to address human error. However, these programs have had mixed results at best.

This is partly because many programs take a technology-centric, one-size-fits-all approach. They often focus on specific technical aspects,

such as improving password hygiene or implementing multi-factor authentication. Yet, they don’t address the underlying psychological and behavioural issues that influence people’s actions.

The reality is that changing human behaviour is far more complex than simply providing information or mandating certain practices. This is especially true in the context of cyber security.

Public health campaigns such as the “Slip, Slop, Slap” sun safety initiative in Australia and New Zealand illustrate what works.

Since this campaign started four decades ago, melanoma cases in both countries have fallen significantly. Behavioural change requires ongoing investment into promoting awareness.

The same principle applies to cyber security education. Just because people know best practices doesn’t mean they will consistently apply them – especially when faced with competing priorities or time pressures.

NEW LAWS FALL SHORT

The Australian government’s proposed cyber security law focuses on several key areas, including:

• combating ransomware attacks

• enhancing information sharing between businesses and government agencies

• strengthening data protection in critical infrastructure sectors, such as energy, transport and communications

• expanding investigative powers for cyber incidents

• introducing minimum security standards for smart devices.

These measures are crucial. However, like traditional cyber security education programs, they primarily address technical and procedural aspects of cyber security.

The United States is taking a different approach. Its Federal Cybersecurity Research and Development Strategic Plan includes “human-centred cybersecurity” as its first and most important priority.

THE PLAN SAYS

A greater emphasis is needed on human-centered approaches to cybersecurity where people’s needs, motivations, behaviours, and abilities are at the forefront of determining the design, operation, and security of information technology systems.

3 RULES FOR HUMAN-CENTRIC CYBER SECURITY

So, how can we adequately address the issue of human error in cyber security? Here are three key strategies based on the latest research.

1. Minimise cognitive load. Cyber security practices should be designed to be as intuitive and effortless as possible. Training programs should focus on simplifying complex concepts and integrating security practices seamlessly into daily workflows.

2. Foster a positive cyber security attitude. Instead of relying on fear tactics, education should emphasise the positive outcomes of good cyber security practices. This approach can help motivate people to improve their cyber security behaviours.

3. Adopt a long-term perspective. Changing attitudes and behaviours is not a single event but a continuous process. Cyber security education should be ongoing, with regular updates to address evolving threats.

Ultimately, creating a truly secure digital environment requires a holistic approach. It needs to combine robust technology, sound policies, and, most importantly, ensuring people are well-educated and security conscious.

If we can better understand what’s behind human error, we can design more effective training programs and security practices that work with, rather than against, human nature.

Revolutionizing Digital Risk Management: Resecurity’s Competitive Edge in Cybersecurity

As cyber threats become increasingly complex, organizations worldwide are grappling with the challenges of protecting digital identities and mitigating risks tied to growing online activity. Resecurity has emerged as a trailblazer in digital risk management, delivering cutting-edge solutions that proactively address threats, empower businesses, and ensure user confidence in an interconnected digital world.

THE GROWING CHALLENGE OF DIGITAL RISKS

The rise of e-commerce, financial technology, and remote work has created an environment ripe for cybercrime. Digital risks such as identity theft, phishing attacks, fraud, and data breaches are surging, costing organizations billions annually. According to the FBI’s Internet Crime Report, global losses due to cybercrime reached over $12.5 billion in 2023, highlighting the critical need for effective digital risk management solutions.

In this high-stakes environment, traditional security tools often fall short. Organizations require solutions that go beyond reactive measures, focusing on real-time monitoring, advanced analytics, and preemptive detection of risks before they cause damage.

WHAT SETS RESECURITY APART

Resecurity’s competitive edge lies in its advanced Digital Risk Monitoring (DRM) and Identity Protection (IDP) solutions. These technologies combine artificial intelligence (AI), behavioral analytics, and proprietary threat intelligence to deliver robust cybersecurity measures tailored to modern needs.

1. PROACTIVE THREAT DETECTION

Resecurity’s solutions leverage AI-driven threat intelligence to monitor digital ecosystems in real time. From detecting leaked credentials on the dark web to identifying fraudulent transactions, the platform enables organizations to stay ahead of adversaries. Its fraud protection module is particularly notable for its ability to pinpoint malicious activities

across web portals, mobile applications, and digital touchpoints.

2. CROSS-PLATFORM BEHAVIORAL ANALYSIS

A key differentiator is Resecurity’s ability to collect and analyze behavioral metrics from multiple platforms. Embedded technologies like Web Snippets and Mobile SDKs enable organizations to monitor user behavior across digital channels, detect anomalies, and flag potential compromises.

For instance, by identifying patterns like unusual login behaviors, session hijacking attempts, or device tampering, Resecurity’s tools can help thwart cross-channel attacks that target weak points such as e-commerce platforms or online banking systems.

3. UNMATCHED DEVICE IDENTIFICATION ACCURACY

Resecurity’s proprietary device fingerprinting technology provides unparalleled accuracy in identifying devices and users. The solution associates historical behavioral and biometric data with users, ensuring a longer identification lifetime and enabling organizations to differentiate between legitimate users and sophisticated fraudsters.

4. GLOBAL SCALABILITY AND INTEGRATION

One of Resecurity’s standout features is its platform-agnostic design. The Mobile SDK seamlessly integrates with fintech, banking, and e-commerce platforms across all major operating systems and web browsers. This ensures global scalability and interoperability, allowing organizations to deploy Resecurity’s solutions without overhauling existing systems.

5. AI-POWERED RISK INTELLIGENCE

Resecurity’s Cyber Financial Intelligence (CyFI) portal brings together anti-money laundering (AML) and fraud compliance functions. By analyzing high-dimensional payment datasets with cognitive AI and machine learning, CyFI identifies anomalies, tracks fraudulent merchants, and mitigates risks tied to transaction laundering.

DRIVING INNOVATION IN IDENTITY PROTECTION

Resecurity’s IDP platform addresses a critical gap in cybersecurity: protecting individuals and businesses from digital identity theft. With

identity theft being a gateway for more complex attacks like account takeovers and corporate espionage, organizations need a robust defense mechanism.

The IDP platform actively monitors stolen data, including passwords, and identification documents. Users receive real-time alerts about potential threats, empowering them to take immediate action and safeguard their personal or corporate data.

This proactive approach has been particularly effective in countering threats such as credential stuffing and synthetic identity fraud, which have become increasingly prevalent in recent years.

REDEFINING CUSTOMER EXPERIENCE AND COMPLIANCE

Resecurity not only focuses on mitigating risks but also enhances user experiences. Its solutions streamline identity verification processes, allowing trusted users to bypass cumbersome two-factor authentication steps.

Additionally, Resecurity aligns its tools with regulatory requirements, making it an ideal partner for industries like banking, e-commerce, and telecommunications. By integrating fraud prevention and AML functions, the platform supports organizations in meeting compliance standards while reducing operational costs.

PROVEN IMPACT ACROSS INDUSTRIES

Resecurity’s solutions have been widely adopted by leading enterprises across finance, government, energy, and telecommunications. Notable success stories include:

• E-Commerce: Protecting online merchants from targeted attacks, brand impersonation, and account takeover (ATO).

• Financial Institutions: Enhancing fraud detection mechanisms to prevent unauthorized transactions (cyber fraud).

• Government Agencies: Securing citizen data against identity theft and data breaches.

• Technology Companies: Ongoing monitoring of supply chain and third-party cyber risk.

The company’s contributions have not gone unnoticed. Resecurity was recognized by Frost & Sullivan as a leader in cyber threat intelligence and received the prestigious Middle East Technology Excellence Award for its advancements in identity protection.

A VISION FOR THE FUTURE

Resecurity’s commitment to innovation ensures that its solutions will remain at the forefront of cybersecurity. By integrating emerging technologies like AI, blockchain, and biometrics, the company aims to further enhance its capabilities and adapt to evolving threats.

The global digital risk landscape is changing rapidly, and Resecurity is leading the charge in providing proactive, scalable, and effective solutions. For organizations and individuals alike, Resecurity represents a trusted partner in navigating the challenges of the digital age.

For more information, visit www.resecurity.com

What is AI superintelligence? Could it destroy humanity? And is it really almost here?

In 2014, the British philosopher Nick Bostrom published a book about the future of artificial intelligence (AI) with the ominous title Superintelligence: Paths, Dangers, Strategies. It proved highly influential in promoting the idea that advanced AI systems – “superintelligences” more capable than humans – might one day take over the world and destroy humanity.

A decade later, OpenAI boss Sam Altman says superintelligence may only be “a few thousand days” away. A year ago, Altman’s OpenAI cofounder Ilya Sutskever set up a team within the company to focus on “safe superintelligence”, but he and his team have now raised a billion dollars to create a startup of their own to pursue this goal.

What exactly are they talking about? Broadly speaking, superintelligence is anything more intelligent than humans. But unpacking what that might mean in practice can get a bit tricky.

DIFFERENT KINDS OF AI

In my view the most useful way to think about different levels and kinds of intelligence in AI was developed by US computer scientist Meredith Ringel Morris and her colleagues at Google.

Their framework lists six levels of AI performance: no AI, emerging, competent, expert, virtuoso and superhuman. It also makes an important distinction between narrow systems, which can carry out a small range of tasks, and more general systems.

A narrow, no-AI system is something like a calculator. It carries out various mathematical tasks according to a set of explicitly programmed rules.

There are already plenty of very successful narrow AI systems. Morris gives the Deep Blue chess program that famously defeated world

champion Garry Kasparov way back in 1997 as an example of a virtuoso-level narrow AI system.

Some narrow systems even have superhuman capabilities. One example is Alphafold, which uses machine learning to predict the structure of protein molecules, and whose creators won the Nobel Prize in Chemistry this year.

What about general systems? This is software that can tackle a much wider range of tasks, including things like learning new skills.

A general no-AI system might be something like Amazon’s Mechanical Turk: it can do a wide range of things, but it does them by asking real people.

Overall, general AI systems are far less advanced than their narrow cousins. According to Morris, the state-of-the-art language models behind chatbots such as ChatGPT are general

Flora Salim Professor, School of Computer Science and Engineering, inaugural Cisco Chair of Digital Transport & AI, UNSW Sydney

AI – but they are so far at the “emerging” level (meaning they are “equal to or somewhat better than an unskilled human”), and yet to reach “competent” (as good as 50% of skilled adults).

So by this reckoning, we are still some distance from general superintelligence.

HOW INTELLIGENT IS AI RIGHT NOW?

As Morris points out, precisely determining where any given system sits would depend on having reliable tests or benchmarks.

Depending on our benchmarks, an image-generating system such as DALL-E might be at virtuoso level (because it can produce images 99% of humans could not draw or paint), or it might be emerging (because it produces errors no human would, such as mutant hands and impossible objects).

There is significant debate even about the capabilities of current systems. One notable 2023 paper argued GPT-4 showed “sparks of artificial general intelligence”.

OpenAI says its latest language model, o1, can “perform complex reasoning” and “rivals the performance of human experts” on many benchmarks.

However, a recent paper from Apple researchers found o1 and many other language models have significant trouble solving genuine mathematical reasoning problems. Their experiments show the outputs of these

models seem to resemble sophisticated pattern-matching rather than true advanced reasoning. This indicates superintelligence is not as imminent as many have suggested.

WILL AI KEEP GETTING SMARTER?

Some people think the rapid pace of AI progress over the past few years will continue or even accelerate. Tech companies are investing hundreds of billions of dollars in AI hardware and capabilities, so this doesn’t seem impossible.

If this happens, we may indeed see general superintelligence within the “few thousand days” proposed by Sam Altman (that’s a decade or so in less scifi terms). Sutskever and his team mentioned a similar timeframe in their superalignment article.

Many recent successes in AI have come from the application of a technique called “deep learning”, which, in simplistic terms, finds associative patterns in gigantic collections of data. Indeed, this year’s Nobel Prize in Physics has been awarded to John Hopfield and also the “Godfather of AI” Geoffrey Hinton, for their invention of Hopfield Networks and Boltzmann machine, which are the foundation for many powerful deep learning models used today.

General systems such as ChatGPT have relied on data generated by humans, much of it in the form of text from books and websites. Improvements in their capabilities have largely come from increasing the scale of the systems

and the amount of data on which they are trained.

However, there may not be enough human-generated data to take this process much further (although efforts to use data more efficiently, generate synthetic data, and improve transfer of skills between different domains may bring improvements). Even if there were enough data, some researchers say language models such as ChatGPT are fundamentally incapable of reaching what Morris would call general competence.

One recent paper has suggested an essential feature of superintelligence would be open-endedness, at least from a human perspective. It would need to be able to continuously generate outputs that a human observer would regard as novel and be able to learn from.

Existing foundation models are not trained in an open-ended way, and existing openended systems are quite narrow. This paper also highlights how either novelty or learnability alone is not enough. A new type of open-ended foundation model is needed to achieve superintelligence.

WHAT ARE THE RISKS?

So what does all this mean for the risks of AI? In the short term, at least, we don’t need to worry about superintelligent AI taking over the world.

But that’s not to say AI doesn’t present risks. Again, Morris and co have thought this through: as AI systems gain great capability, they may also gain greater autonomy. Different levels of capability and autonomy present different risks.

For example, when AI systems have little autonomy and people use them as a kind of consultant – when we ask ChatGPT to summarise documents, say, or let the YouTube algorithm shape our viewing habits – we might face a risk of over-trusting or over-relying on them.

In the meantime, Morris points out other risks to watch out for as AI systems become more capable, ranging from people forming parasocial relationships with AI systems to mass job displacement and society-wide ennui.

WHAT’S NEXT?

Let’s suppose we do one day have superintelligent, fully autonomous AI agents. Will we then face the risk they could concentrate power or act against human interests?

Not necessarily. Autonomy and control can go hand in hand. A system can be highly automated, yet provide a high level of human control.

Like many in the AI research community, I believe safe superintelligence is feasible. However, building it will be a complex and multidisciplinary task, and researchers will have to tread unbeaten paths to get there.

Welfare payments are going digital in Africa – but this isn’t helping those without internet access or smartphones

If you have ever received financial support from the state because you were unable to work due to pregnancy, disability, sickness or old age, you’ve benefited from what is known as social protection.

Social protection is a basic human right. It’s fundamental to ensuring health and dignity. It’s also seen as increasingly important for poverty alleviation and social development around the world.

Social protection systems are often funded by deducting contributions from workers’ pay or general taxation to build an insurance fund that individuals can draw upon when they’re unable to work.

In 2010, only five African countries – Ethiopia, Ghana, Malawi, Rwanda and South Africa –had social protection policies. This had risen

to 35 out of 54 countries by 2019.

Social protection systems in some African countries are being rapidly digitised. This makes it possible to apply for and receive payments online or directly to your phone.

This overcomes the inefficiencies of travelling long distances to and queuing at government offices or banks. It addresses the endless forms and long waits for payments. Digital social protection systems offer benefits of 24/7 access that can be quicker and more convenient for many.

But what about the millions of people without access to the internet or a smartphone? Or the digital literacy necessary to use online forms or websites?

According to mobile industry figures in sub-Saharan Africa, only 51% of the population owns

a smartphone. Less than a third have internet access.

I study the use of mobile and internet technologies in international development and social justice. To understand the impact of the digitalisation of social protection, I worked with a network of labour organisations. We researched seven African countries with some of the most marginalised informal sector workers who were trying to access social insurance schemes. These schemes are a type of social protection that workers pay into from their wages and draw upon when they cannot work or when they retire.

Our findings show that the barriers created by the digitalisation of social protection make it more difficult for many informal sector and marginalised workers to access the support they’re entitled to. These barriers included:

Tony Roberts Digital Research Fellow, Institute of Development Studies

• not owning a smartphone

• not having an internet connection

• living with disabilities not catered for by the technology.

THE STUDY

We conducted the largest study of its kind in 2023 through surveys and focus groups with domestic, disabled, migrant and home-based workers in Ghana, Kenya, Nigeria, South Africa, Tanzania, Uganda and Zambia.

The project brought together organisations championing African workers’ rights, disability rights and digital rights. Using a shared list of questions addressing agreed core issues, six partner organisations translated the questions into local languages for use in interviews, focus groups and surveys. Collectively, 276 marginalised workers were surveyed and 36 key informant interviews were conducted. A total of 421 workers participated in focus group discussions.

In speaking to workers’ leaders, civil society groups and government agencies administering social insurance systems, it became clear that the workers (the intended beneficiaries of the schemes) hadn’t asked for systems to be made digital and moved online. They had not been consulted and had not participated in the design or development of digital protection systems.

We found that the drivers of digitalisation were senior managers looking to increase cost efficiencies and controls, coupled with the

enthusiasm of development donors. These donors include the World Bank and Mastercard (who fund digital social protection schemes), as well as IT and financial service companies.

The foreign companies, development agencies and corporations driving the digitalisation of social protection state that their aims are to: secure cost efficiencies, curtail corruption and link social protection to other digital governance systems.

THE FINDINGS

Overall, our findings can be summarised under the six As of access to social protection. These are availability, affordability, awareness, abilities, accessibility and accountability.

Availability: In the seven countries we studied, millions of workers live in areas outside of the 4G cellular network that supports mobile access to digital social protection systems. This makes it impossible for these workers to register or receive payments online.

Affordability: Poor internet coverage, power cuts and signal problems were a big issue. But for many, the costs of smartphones and data were the biggest barrier. As one domestic worker in Zambia put it:

Most of us, we don’t have big phones with internet.

Awareness: Some workers aren’t aware of their rights or how to get what they are entitled to. Another domestic worker in Zambia had a phone but didn’t know how to use it to register for social insurance:

…I’m appealing for an awareness campaign for domestic workers, so that we understand this digital social protection.

Abilities: Some workers didn’t have the range of language, digital and financial literacy abilities necessary to use social protection schemes.

Accessibility: All the online registration forms we studied in the seven countries were in English rather than vernacular languages. Adaptive technology for blind users was lacking, and ATMs were inaccessible for wheelchair users.

Accountability: Accountability mechanisms can be lost when social protection systems go digital. This is because there is no human being to help explain or fix an error. Workers also raised important concerns about whether their personal data was protected and stored safely. We heard repeatedly that workers wanted to better understand their rights to see their own data records, verify the details, and correct any errors or omissions.

WAY FORWARD

It’s vital to raise awareness about digital rights and retain non-digital mechanisms for informal workers to access social protection. It’s also important to involve marginalised workers and their representatives in the design, implementation, governance and evaluation of digital social protection systems. This helps ensure that no one is left behind.

Extreme weather has already cost vulnerable island nations US$141 billion – or about US$2,000 per person

The creation of a new fund for responding to loss and damage was agreed after a hard-fought diplomatic effort, spearheaded by a group of small island developing states (sometimes known as the Sids). The fund would provide much needed support for climate-vulnerable nations faced with a spiralling human and financial toll from sea-level rise, extreme temperatures, droughts, wildfires, and intensifying floods and storms.

Yet two years on, the world’s wealthiest nations – also the largest carbon emitters – are still dragging their feet. They’ve not followed up their pledges with anywhere near the finance required.

Some nations, particularly the 39 Sids, which include places like Barbados, Grenada, Fiji and Vanuatu, are uniquely vulnerable to climate change and are already paying the price.

Sky-high ocean temperatures created the conditions for Hurricane Beryl to develop in July this year, as the earliest-forming Category

5 hurricane on record in the Caribbean. As oceans warm up, climate science tells us that this rapid intensification is becoming more common.

The island nation of Fiji, best known as a tropical paradise, has experienced a frightening series of storms over recent years, linked to climate change. Cyclone Winston in 2016, one of the most intense on record, caused widespread flooding and lead to the loss of 44 lives.

This episode reduced Fiji’s GDP growth by 1.4 percentage points. According to the Asian Development Bank, ongoing losses from climate change could reach 4% of Fiji’s annual GDP by 2100, as higher temperatures and more extreme weather hold back growth.

This isn’t an isolated problem. Tropical cyclones and hurricanes have long battered small islands, but what is new is how often the most extreme storms and floods are happening, as well as our improved ability to measure their economic effects.

DIRECT AND INDIRECT IMPACTS

Our latest research looked at extreme weather events affecting 35 small island developing nations. We first collected information about the direct consequences of these extreme weather events: the damaged homes, the injured people, and the bridges that must be rebuilt.

We then looked at how these events have affected GDP growth and public finances. These changes are not felt immediately, but rather as the economy stalls, tourism dries up, and expensive recovery plans inhibit spending in other areas.

In all, from 2000 to 2020, these direct and indirect impacts may have cost small island states a total of US$141 billion. That works out to around US$2,000 per person on average, although this figure underplays just how bad things can get in some places. Hurricane Maria in 2017 caused damage to the Caribbean island of Dominica worth more than double its entire GDP. That amounted to around

US$20,000 per person, overnight. Almost a decade later, the country is still struggling with one of the largest debt burdens on earth at over 150% of GDP.

Of these huge aggregate losses across all the small island development states, around 38% are attributable to climate change. That’s according to calculations we made based on “extreme event attribution” studies, which estimate the degree to which greenhouse gas emissions influenced extreme weather events.

What is clear is that small island economies are among the worst affected by severe weather. These island states have three to five times more climate-related loss and damage than other states, as a percentage of government revenues. That’s true even for wealthier small island states, like the Bahamas and Barbados, where loss and damage is four times greater than other high-income countries.

For all small island nations, the economic impacts will increase, with “attributable” losses from extreme weather reaching US$75 billion by 2050 if global temperatures hit 2°C above

pre-industrial levels.

Our research helps us to see how far short the richer nations driving climate change are falling in their efforts to both curb emissions and to compensate the nations harmed by their failure to prevent climate change.

DEVELOPED COUNTRIES NEED TO PAY UP

One of the key discussions at the forthcoming COP29 climate summit in Baku, Azerbaijan, will be the “new collective quantified goal”. This is the technical name to describe how much money wealthy countries will need to contribute to help vulnerable nations to mitigate and adapt to climate change.

That overall goal must also include a target to finance small islands and other vulnerable countries, with billions more needed per year in the new loss and damage fund. Given the extent of actual and likely losses, nothing less than ambition on the scale of a “modern Marshall Plan” for these states will do.

In addition to this extra financing, the fund will need to work effectively to support the most climate vulnerable nations and populations when severe weather occurs. This can be done in a few ways.

The fund could create a budget support mechanism that can help small island states and other vulnerable countries deal with loss of income and the negative effects on growth. It could make sure loss and damage funds can be released quickly, and ensure support is channelled to those who need it the most. It could also make more concessional finance available for recovery, especially for the most adversely affected sectors like agriculture and tourism.

The world has a troubling history of missing self-imposed targets on climate finance and emissions reduction. But the stakes are ever higher now, and any target for loss and damage finance will need to be sufficient to deal with the challenges posed already by climate change, and in the years to come.

The Importance of CSR Activities in the Corporate Environment

Embracing effective Corporate Social Responsibility (CSR) strategies is not just about adhering to ethical standards but also about seizing opportunities to innovate, collaborate, and lead. We spoke with Elena Yiangou, an award-winning Events and Marketing Growth Specialist with over a decade of experience in the corporate field, about the influence of CSR in a modern corporate environment.

WHAT DOES CORPORATE SOCIAL RESPONSIBILITY CSR MEAN IN TODAY’S BUSINESS LANDSCAPE?

Elena: CSR refers to a company’s commitment to conducting business ethically and contributing to economic development while improving the quality of life for employees, their families, the local community, and society at large. CSR has evolved from a mere trend to a fundamental business practice in today’s landscape.

WHY DO YOU BELIEVE CSR ACTIVITIES ARE IMPORTANT FOR COMPANIES?

Elena: CSR activities are vital for a number of reasons but predominantly, they enhance a company’s reputation. Today’s consumers are more informed and value transparency and ethical practices. Companies that prioritise CSR, often enjoy greater brand loyalty and trust.

CONSIDERING THIS INFORMED CONSUMER, HOW DOES CSR INFLUENCE CUSTOMER BEHAVIOUR?

Elena: Today’s customers increasingly prefer to support businesses that align with their values. CSR initiatives, such as sustainability efforts and community outreach, can significantly influence purchasing decisions. Companies that actively demonstrate their commitment to social and environmental issues often attract a loyal customer base.

DO CSR ACTIVITIES ALSO IMPACT EMPLOYEE ENGAGEMENT?

Elena: When employees see their company engaging in meaningful CSR initiatives, it boosts morale and fosters a sense of pride. They feel part of something larger than just their job, which can lead to increased productivity and lower turnover rates.

WHAT ROLE DOES CSR PLAY IN RISK MANAGEMENT?

Elena: In brief, engaging in CSR helps companies identify and mitigate risks related to social and environmental factors. By proactively addressing issues like climate change or labour practices, businesses can avoid regulatory penalties and negative publicity.

WITH ALL OF THESE BENEFITS IT’S NOT HARD TO IMAGINE THAT CSR CAN BE BENEFICIAL FOR A COMPANY’S BOTTOM LINE AS WELL.

Elena: Definitely! While the primary goal of CSR is to create a positive social impact, it also leads to tangible business benefits. Companies that invest in CSR often see increased sales, improved operational efficiencies, and greater investor interest, all of which contribute to long-term profitability.

QUOTE BOX “Overall, integrating CSR into corporate strategy is not just about doing good… it’s a smart business decision that can lead to sustainable success and a positive impact on society. It fosters trust, enhances brand recognition, helps penetrate new markets and builds lasting relationships!” Elena Yiangou

A PROGRESSIVE APPROACH TO CSR CLEARLY HAS MANY BENEFITS BUT WHAT ABOUT BUSINESSES WITH LIMITED RESOURCES? FOR EXAMPLE, SHOULD STARTUPS PUT ANY FOCUS ON DILIGENT CSR STRATEGIES?

Elena: In a startup environment with limited resources and restricted financial capacity, allocating a portion of profits towards corporate social responsibility (CSR) can seem challenging. However, as social concerns continue to grow, developing a CSR strategy has become essential for startups to build credibility with the public and investors. Socially conscious startups have taken the initiative by creating budgets and designating a fixed amount of money for social causes. They understand that this commitment is crucial for scaling their business, enhancing their brand reputation, and establishing a positive public image.

FOR A COMPANY LOOKING TO IMPLEMENT EFFECTIVE CSR STRATEGIES, WHERE SHOULD THEY BEGIN?

Elena: Start by understanding the needs of your stakeholders—employees, customers, and the community. Develop initiatives that align with your core values and business goals. Transparency is key; regularly communicate your efforts and progress. Finally, be prepared

to adapt and grow your CSR initiatives based on feedback and changing societal needs. Then start thinking of the countries of interest and start rolling out the CSR strategy with a localisation approach always in mind.

ANY FINAL THOUGHTS ON THE FUTURE OF CSR IN THE CORPORATE WORLD?

Elena: The future of CSR looks promising. As societal expectations evolve, businesses will need to integrate CSR into their core strategies more than ever. Companies that embrace this shift will not only contribute to a better world but also position themselves for longterm success. Today, CSR is not just a trend; it’s a way of life and a necessity for every reputable company.

TOP 10 REASONS WHY CSR PLAYS A CRUCIAL ROLE

1. Reputation Management: Companies engaged in CSR often enjoy a better public image. Positive social and environmental initiatives can enhance brand loyalty and consumer trust.

2. Competitive Advantage: CSR can differentiate a company from its competitors. Businesses that actively promote their sustainability efforts may attract customers who prioritise ethical consumption.

3. Risk Mitigation: By addressing social and environmental issues, companies can reduce risks related to regulatory penalties, public backlash, and negative publicity.

4. Employee Engagement: A strong commitment to CSR can improve employee morale

and retention. Employees are often more motivated when they feel their employer is making a positive impact.

5. Attracting Investment: Investors are increasingly looking for companies with strong CSR practices. Sustainable and responsible investments are gaining popularity, and businesses that demonstrate CSR can attract more funding.

6. Long-term Viability: Companies focusing on sustainable practices are better positioned for long-term success. By taking into account the social and environmental impacts of their operations, businesses can build more resilient and sustainable models.

7. Stakeholder Relationships: CSR fosters better relationships with stakeholders, including customers, suppliers, and the community. Engaging with these groups can lead to more collaborative and mutually beneficial partnerships.

8. Innovation and Growth: CSR can drive innovation as companies seek new ways to meet social and environmental challenges. This can open up new markets and opportunities for growth.

9. Regulatory Compliance: Engaging in CSR helps companies stay ahead of regulatory requirements, ensuring compliance and reducing the likelihood of legal issues.

10. Global Impact: As businesses expand globally, CSR initiatives can help address worldwide challenges like climate change, inequality, and poverty, positioning companies as responsible global citizens.

Ganna Pogrebna Executive Director, AI and Cyber Futures Institute, Charles Sturt University

AI is a multi-billion dollar industry. It’s underpinned by an invisible and exploited workforce

In dusty factories, cramped internet cafes and makeshift home offices around the world, millions of people sit at computers tediously labelling data.

These workers are the lifeblood of the burgeoning artificial intelligence (AI) industry. Without them, products such as ChatGPT simply would not exist. That’s because the data they label helps AI systems “learn”.

But despite the vital contribution this workforce makes to an industry which is expected to be worth US$407 billion by 2027, the people who comprise it are largely invisible and frequently exploited. Earlier this year nearly 100 data labellers and AI workers from Kenya who do work for companies like Facebook, Scale AI and OpenAI published an open letter to United States President Joe Biden in which they said:

“Our working conditions amount to modern day slavery.”

To ensure AI supply chains are ethical, industry and governments must urgently address this problem. But the key question is: how?

WHAT IS DATA LABELLING?

Data labelling is the process of annotating raw data — such as images, video or text — so that AI systems can recognise patterns and make predictions.

Self-driving cars, for example, rely on labelled video footage to distinguish pedestrians from road signs. Large language models such as ChatGPT rely on labelled text to understand human language.

These labelled datasets are the lifeblood of AI models. Without them, AI systems would be

unable to function effectively.

Tech giants like Meta, Google, OpenAI and Microsoft outsource much of this work to data labelling factories in countries such as the Philippines, Kenya, India, Pakistan, Venezuela and Colombia.

China is also becoming another global hub for data labelling.

Outsourcing companies that facilitate this work include Scale AI, iMerit, and Samasource. These are very large companies in their own right. For example, Scale AI, which is headquartered in California, is now worth US$14 billion.

CUTTING CORNERS

Major tech firms like Alphabet (the parent company of Google), Amazon, Microsoft,

Nvidia and Meta have poured billions into AI infrastructure, from computational power and data storage to emerging computational technologies.

Large-scale AI models can cost tens of millions of dollars to train. Once deployed, maintaining these models requires continuous investment in data labelling, refinement and real-world testing.

But while AI investment is significant, revenues have not always met expectations. Many industries continue to view AI projects as experimental with unclear profitability paths.

In response, many companies are cutting costs which affect those at the very bottom of the AI supply chain who are often highly vulnerable: data labellers.

LOW WAGES, DANGEROUS WORKING CONDITIONS

One way companies involved in the AI supply chain try to reduce costs is by employing large numbers of data labellers in countries in the Global South such as the Philippines, Venezuela, Kenya and India. Workers in these countries face stagnating or shrinking wages.

For example, an hourly rate for AI data labellers in Venezuela ranges from between 90 cents and US$2. In comparison, in the United States, this rate is between US$10 to US$25 per hour.

In the Philippines, workers labelling data for multi-billion dollar companies such as Scale AI often earn far below the minimum wage.

Some labelling providers even resort to child labour for labelling purposes.

But there are many other labour issues within the AI supply chain.

Many data labellers work in overcrowded and dusty environments which pose a serious risk to their health. They also often work as independent contractors, lacking access to protections such as health care or compensation.

The mental toll of data labelling work is also significant, with repetitive tasks, strict deadlines and rigid quality controls. Data labellers are also sometimes asked to read and label hate speech or other abusive language or material, which has been proven to have negative psychological effects.

Errors can lead to pay cuts or job losses. But labellers often experience lack of transparency on how their work is evaluated. They are often denied access to performance data, hindering their ability to improve or contest decisions.

MAKING AI SUPPLY CHAINS ETHICAL

As AI development becomes more complex and companies strive to maximise profits, the need for ethical AI supply chains is urgent.

One way companies can help ensure this is by applying a human right-centreed design, deliberation and oversight approach to the entire AI supply chain. They must adopt fair wage policies, ensuring data labellers receive living wages that reflect the value of their contributions.

By embedding human rights into the supply chain, AI companies can foster a more ethical, sustainable industry, ensuring that both workers’ rights and corporate responsibility align with long-term success.

Governments should also create new regulation which mandates these practices, encouraging fairness and transparency. This includes transparency in performance evaluation and personal data processing, allowing workers to understand how they are assessed and to contest any inaccuracies.

Clear payment systems and recourse mechanisms will ensure workers are treated fairly. Instead of busting unions, as Scale AI did in Kenya in 2024, companies should also support the formation of digital labour unions or cooperatives. This will give workers a voice to advocate for better working conditions.

As users of AI products, we all can advocate for ethical practices by supporting companies that are transparent about their AI supply chains and commit to fair treatment of workers.

Just as we reward green and fair trade producers of physical goods, we can push for change by choosing digital services or apps on our smartphones that adhere to human rights standards, promoting ethical brands through social media, and voting with our dollars for accountability from tech giants on a daily basis.

By making informed choices, we all can contribute to more ethical practices across the AI industry.

Could the EU’s Green Deal provide security benefits?

The European Green Deal proposed by the European Commission, aims to make the European Union climate neutral by 2050. Launched in 2020, it focuses on reducing greenhouse gas emissions through a transition to clean energy sources. Its proponents credit it with numerous benefits, as noted by economist Claudia Kemfert:

“A Green Deal for Europe […] not only create economic opportunities but also reduce geopolitical disputes, thus securing peace within and outside Europe.”

This statement, made in Intereconomics, a leading forum for research-based discussions of major European economic policy issues, probably reflects the view of many European decision-makers to the effect that curbing trade in fossil fuels would secure peace in Europe. Unfortunately, the claim of a causal link between the European Green Deal and European security has never been explicitly and critically examined. In a recent paper published in Energy Economics we assess this

claim, particularly addressing whether curbing energy imports from Russia could enhance the EU’s security.

THE GEOPOLITICAL PROMISES OF A EUROPEAN GREEN DEAL

At first glance, reducing dependence on Russian fossil fuels appears to offer security benefits for Europe. That claim rests on two key arguments:

First, Russia’s economic policy seems to be largely subordinated to military objectives. Furthermore, the Stockholm International Peace Research Institute reports a correlation between the energy prices and the level of Russia’s military budget: Russian military expenditure experienced a decline between 2016 and 2019 as a result of low energy prices (combined with sanctions in response to Russia’s annexation of Crimea in 2014); in 2021, however, thanks to high oil and gas revenues, Russia could increase its military expenditure by 2.9% and raise its military spending to 4.1% of GDP. The argument follows that if Europe buys less fossil fuel from Russia, the resulting

decrease in revenue would reduce Russia’s ability to fund its military.

Second, the gas markets are undergoing several structural changes, such as the development of a global LNG market, which are likely to lead to lower gas prices over the long run. And that potential lowering of prices is seen by many authors as an opportunity to increase the bargaining power of European countries and of the EU in its diplomatic and security relations with Russia, and this despite an initially very substantial dependence of Europe on Russian gas.

A MICROECONOMIC ANALYSIS

Despite their appeal, these arguments falter under economic scrutiny, particularly in terms of market power and incentives.

First, the notion that Europe could gain leverage over Russia assumes that Europe operates as a monopsony (a market with only one buyer). However, this is increasingly inaccurate as Russia continues to build new pipelines and export facilities to Asia. While these devel-

Fabian Battaglini Professeur assistant en économie, EDC Paris Business School

opments might not entirely compensate for Russia’s loss of European markets, they diminish the EU’s potential bargaining power.

Second, reduced energy revenues do not necessarily change Russia’s prioritisation of military spending. Indeed, given the vital importance the Kremlin attaches to its war effort, it will not touch this item of expenditure even in the event of a significant drop in its energy revenues, preferring to cut other expenses.

Moreover, the cost of implementing the European Green Deal could strain EU countries’ budgets, potentially reducing their already underfunded military investments. Russia’s military threat largely stems from its nuclear arsenal, which to a large extent involves sunk costs, and from relatively inexpensive hybrid warfare tools, such as cyber operations and subversive activities. A reduction in its revenues may not have a significant impact on its ability to threaten Europe militarily.

Finally, money does not necessarily mean efficiency. And if the European defence industry makes weapons of a better quality than their Russian counterparts, Europe could keep consuming relatively cheap Russian energy and spend the money saved on its military industry to keep an edge over Russia’s military capabilities.

Therefore, a basic economic analysis suggests that the European Green Deal could well have a moderate or no positive impact on its security and diplomatic relations with Russia. Yet in our paper, we suggest that the assessment of the deal’s impact must go beyond a pure cost-benefit analysis. And that it should integrate a strategic analysis of the way the different agents at stake will react to the con-

sequent drop in revenue over the long run.

A STRATEGIC ANALYSIS

Using game theory, our paper identifies one key political economy variable likely to mediate the relationship between the Deal’s implementation and military relations between Europe and Russia. Namely, the way the different Russian elite groups currently vying for power will react to it.

Russian political sociology literature indicates two main elite groups: a smaller, pro-Putin, military-focused group, and a larger, pro-business faction open to Western trade.

In game theory, the size of a group is a very important variable when the expected benefit of an action must be divided among the members of the group. The action in question here is vying for power to control energy revenue. Given that the pro-Putin group is smaller in size, even reduced energy revenue can still be profitably shared among its members, which is not the case for the larger, pro-business group. As a result, under the deal, vying for power still makes sense for the smaller group, but less so for the larger one.

Furthermore, given that with the pro-Putin group, the expected benefit from energy export is likely to be spent on weapons, military operations, and to support the ruling elite domestically, Europe’s security is far from being guaranteed as a result of the Green Deal’s implementation.

Interestingly, increasing Russia’s energy revenue would not necessarily lead to a proportionate increase in military efforts by the smaller group. According to the law of diminishing marginal utility of wealth, as per capita

income rises, agents gain a correspondingly smaller increase in satisfaction, resulting in lower incentives to vie for gaining political power over the economic resources.

POLICY IMPLICATIONS

If the EU aims to base its policies on this strategic model, it should consider the unintended consequences of reducing Russian energy revenues. Lowering energy revenue could depress the efforts of the larger, pro-business group that might advocate for peaceful relations with the EU.

A simple solution could involve sending credible signals to Russia’s pro-business elite that increased trade with the EU is possible if they gain power and pursue peaceful relations with its neighbours – an approach that is compatible with the full implementation of the Green Deal.

Indeed, renewable-energy sources inherently create interdependence between countries due to their intermittent nature, requiring smart electricity grids capable of balancing supply and demand. Consequently, there are strong economic incentives to expand grid interconnections, including between the EU and Russia. Additionally, Russia’s dependence on imported renewable energy technologies, alongside its mineral wealth necessary for constructing them, could foster a healthy interdependence between the technologically more advanced EU and Russia.

Finally, the Green Deal includes a hydrogen strategy that could be leveraged to promote economic diversification in Russia. The EU could engage Russia in developing green hydrogen that could be exported to Europe using the existing pipeline infrastructure.

How finance can be part of the solution to the world’s biodiversity crisis

More than half of the world’s total GDP is at least moderately dependent on nature. Yet arguably, there is no economy (or life) without nature. A quarter of animal and planet species are now threatened, and 14 out of 18 key ecosystem services – including fertile soils to grow food, flood and disease control and regulation of air and water pollution – are in decline.

These ecosystem services are essential and have no easy substitutes. Despite this, almost US$7 trillion (£5.4 trillion) per year is spent by governments and the private sector on subsidies and economic activities that have a negative impact on nature – including intensive agriculture and fossil-fuel subsidies. This compares to only US$200 billion that is spent on nature-based solutions (just a third of what is estimated to be needed).

Although the biodiversity crisis has often been overshadowed by climate change on the global stage, the tide is turning. In 2022, the Kunming-Montreal global biodiversity framework was adopted with its overarching goal to halt and reverse biodiversity loss by 2030.

At the end of October 2024, the signatories of the framework will again come together at the UN’s Cop16 biodiversity conference in Cali, Colombia, to negotiate the implementation of their targets. To make progress towards these goals, Cop16 aims to align finance with the framework; effectively ensuring finance is part of the solution rather than the problem.

To do this, the flow of finance will need to be redirected. A central lever in this is the pricing of risk. Financial institutions face significant risk, both from the degradation of ecosystem services (physical risks) and the social responses to degradation, including regulation

and changing consumer demand (transition risks). Yet these risks are not fully priced into financial decisions.

On top of this, corporations do not disclose their nature-related risks, dependencies and impacts, making it difficult for financial institutions to understand the implications of their investments. Together, this means that finance continues to flow unhindered into riskier activities.

Central banks are now starting to highlight risks from nature to financial institutions and to explore the areas where these risks manifest in the financial system.

THE FINANCIAL RISKS ARE REAL

Earlier this year, we published the first study of the seriousness of nature-related financial risks.

Emma O’Donnell Research Assistant, Environmental Change Institute and PhD Candidate, Nature-based Solutions Initiative, University of Oxford

Jimena Alvarez Lead, Greening Finance for Nature, Global Finance and Economy Group, Environmental Change Institute, University of Oxford

Nicola Ranger Director and Senior Research Fellow, Global Finance Group, Environmental Change Institute, University of Oxford

We found that, for the UK, nature-related shocks could cause a 6% decline in GDP by 2030 under scenarios such as soil health decline or water scarcity putting pressure on global supply chains. And there could be a drop in GDP of more than 12% in the scenario of an antimicrobial resistance or pandemic shock, driven by increased human-wildlife interaction due to habitat loss and deforestation.

These results are equal to or even greater than the UK’s 6% decrease in GDP after the 2008 financial crisis and 9.7% during the 2020 COVID lockdowns.

We also found that nature-related financial risks were of a similar scale to climate-related risks. Nature loss and climate change occur in parallel, amplify and compound each other. As such, it is essential that solutions look to solve both challenges simultaneously. After all, what is the point of having a cooler planet that is no longer livable?

Of its 23 targets for 2030, the GBF includes two goals that specifically address finance. Target 18 aims to reduce incentives for financial flows that damage nature by at least US$500 billion per year and scale up incentives for nature-positive financial flows. And target 19 aims to mobilise US$200 billion per year for restoring and protecting nature, including at least US$30 billion from international finance flowing from developed to developing countries. A further target, target 15, calls for the disclosure of nature-related risks, dependencies and impacts by firms.

So, what do we need from Cop16 to pull the financial risk lever?

First, there must be international recognition that the long-term, widespread and often irreversible risks of the biodiversity crisis are not being priced by the financial system, despite progress on the integration of climate risks. This can cause a buildup of systemic risks

and lead to financial instability; as such, there must be a global consensus that central banks play a key role in taking proactive measures to manage this.

Second, at the individual, corporate and financial institution level, firms must manage and disclose their nature-related financial risks, alongside their climate risks.

Third, similar to transition finance for net zero, financial institutions must begin to engage actively with clients to explore opportunities to support their transition towards more nature-positive activities and reflect this within their transition plans.

Securing financial resilience and nature and climate goals are synonymous; and all are essential for securing economic growth and sustainable development globally.

Jet zero? Why net zero in aviation can’t get off the ground

The airline industry is on course to miss its 2050 net zero target for aviation. Passenger numbers continue to soar, while alternatives to fossil fuels remain underdeveloped. Missing this target matters because aviation contributes significantly to climate change. UK aviation emits about 5% of global aviation emissions.

In response, the UK and Australia established “jet zero” councils in 2020 and 2023 respectively. They comprise of industry, academic and government figures, to spearhead the necessary changes.

Last week, the UK government announced it was revamping its jet zero council. It promised that the new jet zero taskforce “will serve as the driving force to make flying a cleaner, greener experience”.

But the configuration of these organisations is suited to incremental innovation, not the radical innovation needed to address rapidly

increasing carbon emissions in the aviation industry. This business as usual approach is destined to miss the abatement targets.

Air passenger numbers are projected to increase from around 4 billion to over 10 billion by 2050. This growth could double carbon emissions over the same period.

Addressing aviation’s climate effects requires a herculean effort across five main areas: reducing passenger numbers, improving aircraft efficiency, adopting sustainable aviation fuels, developing hydrogen or battery-powered planes, and capturing carbon from the atmosphere.

Not all of these levers are equally attractive to the industry. For example, reducing passenger numbers is unpopular as it cuts into revenue, while developing hydrogen planes is expensive and technologically challenging. Sustainable aviation fuels, however, are a favoured solution because they can be used in existing aircraft without requiring engine

modifications.

But not all sustainable aviation fuels are created equal. Some produce significantly more CO2 emissions than others.

Governments are well placed to support carbon-cutting efforts. Around 150 countries have adopted net zero pledges, yet many leave it to individual sectors to drive change.

Jet zero organisations aim to bridge this gap. While some progress – like efficiency improvements – can be industry-led, more ambitious changes, such as hydrogen-fuelled planes, demand radical innovation.

This involves replacing current fleets with new models that have yet to be developed and overhauling existing business models. Such innovation requires significant investment and disrupts established practices, making it a bitter pill for the industry to swallow. Jet zero organisations have the potential to manage and compel this change, but success

Mark Toon Senior Lecturer in Marketing and Strategy, Cardiff University

hinges on their membership and how they collaborate.

THE LIMITS OF JET ZERO

An analysis of who makes up jet zero councils or taskforces reveals critical shortcomings. Membership is heavily weighted towards people from the airline industry – 61% for the recent UK jet zero council and 67% for the Australian council.

The new UK taskforce barely moves the dial on broader membership or collaboration. The airline industry is now represented by 59% of overall membership. Around 80% of the former industry representatives remain on the new taskforce. While the addition of a climate representative is a good step forward, specific goals in respect of zero emissions have been dropped. So, despite the capacity for change, motivations may be limited.

Airlines must balance net zero commitments with obligations to shareholders, lenders and customers, who often favour the status quo. Supporting net zero in principle doesn’t always translate into meaningful action.

Continuing with existing practices could still bring benefits. Improved fossil-fuel aircraft designs may reduce emissions by up to 40%

by 2050. Some estimates suggest the gains may be closer to 15% to 20%, though. But incremental improvements alone won’t achieve net zero.

The other major flaw is the under representation of other types of experts. Engineers make up 24% of the new UK taskforce and 33% of the Australian council. But climate scientists, particularly those outside aviation, are conspicuously absent with just one appearing in the UK’s taskforce. Given the uncertainties around the effectiveness of different strategies, input from independent climate experts is essential to guide decisions and assess carbon abatement measures.

Collaboration is also critical. The UK’s former jet zero council introduced measures to promote knowledge sharing. In fact, four of its 36 members were specifically tasked with this. In the new taskforce, that number drops from four to three. And the objective to “challenge existing approaches by involving disruptors and innovators in the dialogue” has been removed. The Australian council, meanwhile, lacks knowledge-sharing initiatives.

Both councils risk failing to meet their objectives, which are zero-emissions flights for the UK and net zero emissions for Australia.

Achieving the necessary transformation requires broader membership and deeper engagement with climate science. A clearer understanding of the carbon effects of different measures are needed on an ongoing basis.

Governments must craft smart legislation that balances environmental goals with the economic reality. While the costs to the industry are substantial, they can be managed intelligently over the next 25 years. Applying environmental rules fairly across countries is also one of the keys to keeping markets balanced.

The journey to net zero aviation is undeniably daunting. Even with political will and collaborative efforts, airlines face enormous costs and a departure from established practices. But early adopters of different types of zero-emissions technology could gain a competitive edge, winning market share and improving their reputations.

Offering guilt-free, zero-emissions flights would be transformative. Whatever the market dynamics, the urgency of the climate crisis is clear. Jet zero organisations hold the key to unlocking the type of change needed to make aviation sustainable – but only if they rise to the challenge.

PAN FINANCE AWARD WINNERS

Established to be a true indicator of excellence, the Pan Finance Awards identifies organisations and individuals who have excelled in their fields. Our awards directory serves to shine a spotlight on and also applaud these leading examples of best practice.

ESG INNOVATOR OF THE YEAR - MAURITIUS 2024MOST INNOVATIVE DIGITAL BANKING SERVICES - MAURITIUS 2024 -

Absa Bank (Mauritius) Limited is part of Absa Group Limited which is listed on the Johannesburg Stock Exchange and is one of Africa’s largest diversified financial services groups. Absa Group offers an integrated set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance.

Absa Group owns majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania (Absa Bank Tanzania and National Bank of Commerce), Uganda and Zambia and has insurance operations in Botswana, Kenya, Mozambique, SouthAfrica and Zambia. Absa also has representative offices in Namibia, Nigeria and the United States, as well as securities entities in the United Kingdom and the United States, along with technology support colleagues in the Czech Republic.

Nook is the Philippines’ first digital mortgage broker, leading the way in revolutionizing how Filipinos access home loans.

Established to simplify the Philippines’ complex and time-consuming application process, Nook has formed partnerships with the country’s biggest banks with the goal of making home loans simple.

Combining cutting-edge technology with world class customer service, Nook offers a modern approach to an industry rooted in legacy processes, providing homebuyers with a seamless, transparent, and ef-

ficient way to secure the best housing loan for their needs. More than just a mortgage broker, Nook is a trusted partner in the journey to homeownership. Its mission is to help 1,000,000 Filipino families achieve their dream of owning a home.

As the pioneer in the field, Nook is setting the standard for mortgage broking in the Philippines, modernizing the industry and making homeownership more accessible than ever. By putting the needs of customers first and leveraging the latest innovations, Nook is paving the way for a brighter future for Filipino homebuyers.

Numarqe stands at the forefront of financial innovation with our revolutionary embedded credit and financial management platform tailored for large and mid-market corporates. We address modern CFOs’ evolving priorities, focusing on improved cash flow management and digital transformation. Even cash-rich corporations find our utility unparalleled.

Our AI-driven credit engine offers exceptional financial flexibility with collateral-free, multi-currency credit lines that adapt to changing cash flow needs. This empowers corporates to seize growth opportunities and navigate economic uncertainties confidently.

Our unified platform streamlines operations, providing real-time spend controls and visibility across entities and corporate groups. Advanced

features include AI-powered supplier financing, virtual cards for secure transactions, and insightful data analytics. Together, these tools facilitate the optimisation of cash flow, strengthen supplier relationships, and help maintain budgetary discipline.

Numarqe isn’t just a service provider; we’re a strategic partner in financial transformation. By combining flexible credit solutions with cutting-edge digital tools, we’re redefining financial management for the modern era. We help businesses build resilience, drive growth, and stay ahead in an ever-changing economic landscape. With Numarqe, CFOs master finances, not just manage them. Visit our official website to unlock your company’s true financial potential.

Olé Life is the first fully digital life insurance provider in Latin America, revolutionizing how individuals and families secure financial protection. With customers in over 30 countries and a network of more than 4,000 distribution partners, Olé combines innovative technology and scalability to make comprehensive protection accessible to all.

Its USD-denominated term life insurance policies offer competitive pricing with no increase in the base premium, ensuring long-term financial stability. Olé Life’s solutions provide robust protection, including living benefits for health expenses, savings safeguards, and income continuity in cases of disability or terminal illness. Additionally, Olé offers a member app that allows clients to manage their policies and access protection

anytime, anywhere.

Supported by AI, Olé’s underwriting process results in a fast and friendly application experience, taking less than 10 minutes and often waiving medical exams for policies up to $1,000,000. The AI-powered Olé Advisor App helps agents rank quotes by probability, ensuring more focused and successful sales while optimizing portfolio management.

By prioritizing protection and leveraging cutting-edge technology, Olé Life delivers peace of mind and financial security to its growing customer base, leading the transformation of the insurance industry across Latin America.

FINANCIAL ADVISORY OF THE YEAR - ASIA PACIFIC 2024 -

Paxon is a leading financial advisory firm in the infrastructure and projects sector. Established over 30 years ago, we specialise in innovative financial and commercial solutions for major infrastructure and PPP projects. Paxon is headquartered in Australia, with offices and clients across Asia Pacific and the Middle East.

Our strength is in financial, transaction and PPP (public private partnerships) advisory for social and economic infrastructure projects. Over the last 20 years, we have advised on over US$130 billion of projects.

Paxon supports organisations and leaders to make critical decisions about how infrastructure transactions and projects are delivered. This includes:

Developing financing, funding and commercial models for projects;

Feasibility and business case development; Privatization and PPP assessment; Outsourcing assessments and transaction advice; Financial and commercial advice for projects and transactions; Transaction management; Finance structuring and arrangement.

Paxon has market-leading expertise in infrastructure sectors including:

Health and hospitals; Education; Affordable housing; Real estate and urban precincts; Sport and recreation; Transport and logistics (airports, road, rail and ports); Local public transport (bus, metro); Corrections and justice; Water, waste and utilities, and Other infrastructure PPPs.

For more information, please visit our website at www.paxongroup.com. au or email infra@paxongroup.com.au.

Resecurity® is a cybersecurity company that delivers a unified platform for endpoint protection, fraud prevention, risk management, and cyber threat intelligence. Known for providing best-of-breed data-driven intelligence solutions, Resecurity’s services and platforms focus on early-warning identification of data breaches and comprehensive protection against cybersecurity risks. Founded in 2016, it has been globally recognized as one of the world’s most innovative cybersecurity companies with the sole mission of enabling organizations to combat cyber threats regardless of how sophisticated they are. Most recently, Resecurity

was named as one of the Top 10 fastest-growing private cybersecurity companies in Los Angeles, California by Inc. Magazine. An Official Partner of the Cybercrime Atlas by the World Economic Forum (WEF), Member of InfraGard National Members Alliance (INMA), AFCEA, NDIA, SIA, FS-ISAC and the American Chamber of Commerce in Saudi Arabia (AmChamKSA), Singapore (AmChamSG), Korea (AmChamKorea), Mexico (AmChamMX), Thailand (AmChamThailand), and UAE (AmChamDubai). To learn more about Resecurity, visit https://resecurity.com.

SG Consulting Group has been recognized for its excellence in financial advisory and personal finance management. With a strategic vision and a highly skilled team, we have positioned our firm as a leader in the financial services sector, providing tailored solutions to our clients. Our focus on innovation and efficiency has enabled us to optimize investment portfolios and achieve outstanding results. This recognition is a reflection to our commitment to excellence and the sustainable growth of our clients.

SG Consulting Group ha sido reconocida por su excelencia en la asesoría financiera y administración de finanzas personales, con una visión estratégica y un equipo altamente capacitado, hemos posicionado a nuestra empresa como líder en el sector de servicios financieros, brindando soluciones personalizadas a nuestros clientes. Nuestro enfoque en la innovación y la eficiencia nos ha permitido optimizar los portafolios de inversión y alcanzar resultados sobresalientes. Este reconocimiento es un testimonio de nuestro compromiso con la excelencia y con el crecimiento sostenible de nuestros clientes.

MOST INNOVATIVE FINANCIAL PROTECTION SOLUTIONS - USA 2024EXCELLENCE IN FINANCIAL INCLUSION - USA 2024 -

Wysh, an AM Best A- rated insurance carrier and subsidiary of Northwestern Mutual, offers innovative financial protection solutions through two distinct channels. For individuals, Wysh provides term life insurance policies offering up to $2.5 million in protection. For financial institutions, Wysh pioneers embedded micro-life insurance that seamlessly integrates into existing deposit accounts.

This dual approach allows Wysh to serve both direct consumer needs and help financial institutions transform their banking products into powerful tools for customer value and retention. The embedded insurance solution eliminates traditional barriers to access - including medical exams, underwriting, and opt-in requirements - making protection accessible to historically underserved communities.

The impact is significant: partner institutions report 40% increases in deposits and 20% lower customer acquisition costs. These results demonstrate how embedded protection creates ‘sticky savings’ while generating new revenue streams through affiliate programs when customers transition to comprehensive coverage.

Through technological innovation and strategic partnerships, Wysh is fulfilling its mission of making financial protection more accessible to all. Their success, recognized through multiple industry awards, demonstrates how thoughtful innovation in protection products can address both business objectives and social needs.

PIM Capital was launched in 2014 in Mauritius as a global fund services and investment product infrastructure provider, with a particular focus on Africa. The group was founded a decade earlier in 2005 as a fund administrator in South Africa and has since evolved to employ over 60 staff across their offices in Johannesburg, Cape Town and Gabarone whilst 40 staff are spread across 2 offices in Mauritius, supporting clients globally across diverse products, funds and mandates. The group operates in Mauritius, Guernsey, South Africa, Botswana and Namibia

with the intention to meet clients where they are through a global presence, serviced locally. PIM Capital provides end to end regulatory infrastructure, investment support and administration services to traditional and alternative funds, investment advisors and clients. Serviced asset classes encompass the entire spectrum from alternatives through to listed instruments in mandates structured as either open ended, hybrid or closed ended funds.