Finance

The European Commission’s Capital Markets Union Action Plan, introduced three years ago, is intended to make capital more readily available to businesses and encourage economic and job growth within the EU. Substantial strides have been made, yet there is much more to do, especially as subsequent events such as Brexit have altered the landscape. How far has the CMU Action Plan progressed to date, and how much farther has it still to go?

Our world has never been more connected, thanks to the internet, and this is especially true in commerce. Via digital communication, the consumer can deal directly with multiple traders, from small to mammoth, of products and services without the assistance of an intermediary. The new network economy introduces opportunities for both cooperation and competition. What are the four main trends in today’s markets?

Relations are growing frostier globally, as political leaders become more nationalistic. And this change in climate is impacting economies, rendering them less cooperative. Two significant changes affecting the global business cycle include the US Fed’s tighter monetary policy, the impacts of which have rippled throughout the world, as well as the geographical shift of the centre of manufacturing production to the East, to the dismay of some Western leaders.

Money laundering and terrorism financing are serious issues that banks must address, especially as too many financial institutions are complicit in enabling the flow of unlawful funds. Unfortunately, the need to act decisively has also resulted in a disabling tightening of trade finance, sorely needed for economic growth. The new Asian Development Bank Scorecard seeks to ameliorate the inadvertent consequences of AML and CFT compliance.

Little is more valuable to financial-market participants than accurate predictions of future growth. With interest rates on the rise in the US, investors are anxiously looking for indications of an impending recession. But what are yield curves really telling us about future growth prospects—in the United States and also in Australia? Is dreaded recession in the cards, or is modest slowdown more likely?

Chinese president Xi Jinping calls it the “project of the century”.[1] Part of his roadmap to Chinese prosperity, the Belt and Road Initiative (BRI), presents opportunities not only for Corporate China but for financial institutions and corporates the world over.

At the end of August, leading ratings agency Moody’s downgraded 18 banks and two finance companies in Turkey. According to the agency, the downgrades “primarily reflect a substantial increase in the risk of a downside scenario, where a further negative shift in investor sentiment could lead to a curtailing of wholesale funding”.

The push on global trade to continue accelerating has not let up; but without sufficient trade finance, it will be restrained from keeping up the pace. With increasing appetite for purchasing pools of receivables—but a keen awareness of the associated risks—a growing number of banks are turning to Excess of Loss (XoL) trade credit insurance. How are banks leveraging this type of insurance to grow their trade-finance portfolios?

The decade following the financial crisis unleashed a torrent of regulatory requirements. Financial institutions have spent billions on technology and operations to achieve regulatory compliance; the frequency of new requirements is high. Despite all of this, regulators have not been satisfied with the quality of the data and level of transparency. How can banks and regulators strike a balance between the costs and the benefits of regulation?

Infrastructure that is up to code is vitally important to sustaining a country’s economy, but even developed countries are falling behind in their infrastructure investment. Effective infrastructure investment needs to be a combined effort of governments, multilateral development banks and private investors, but it lags behind in its appeal to private investors. What measures can be taken to draw more private-sector financing into this crucial foundation of economic growth?