“We have only just overcome the liquidity phase of the crisis in countries that are now relaxing restrictions. In many others, the health crisis is still acute. And the epidemic could flare up again anywhere,” the general manager, Agustin Carstens, of Bank for International Settlements (BIS) acknowledged in late June whilst discussing the Bank’s 2020 “Annual Economic Report”.
It’s rare for a national leader to be able to claim that an economic system is named after him, but Shinzo Abe, former prime minister of Japan, can. Abenomics, introduced eight years ago, has been an ambitious economic agenda seeking to bring the country out of its doldrums, characterized by deflation and debt. Has Abenomics met its goals? Not entirely, but it has realized some gains and staved off disaster.
As COVID-19 continues to transform our daily lives in significant ways, traditional banking models have come under intense pressure. Technology is facilitating a rapidly evolving landscape for financial services, with the execution of financial transactions no longer solely under the stewardship of conventional financial institutions.
“For the first time since the pandemic began, there is now hope for a brighter future.” That was the assessment given by the OECD (Organisation for Economic Co-operation and Development) on December 1 following the news of progress being made with coronavirus vaccines.
Is the current cure, in the form of lockdowns, for the COVID-19 plague worse than the pernicious virus itself? This hotly debated question has vocal supporters on both sides, as the pandemic continues to attack lives and livelihoods worldwide. Many believe that preserving human health and economic health need not be at odds but can both be achieved in the short term until a permanent solution for the virus arrives.
The COVID-19 crisis has engulfed all continents, but Latin America and the Caribbean has suffered more than most, coping with the high toll of lost human life and bankrupt businesses that once thrived. Banks cannot escape the inevitable collateral damage to their balance sheets, especially when government supports end. To avoid a financial crisis and ensure a return to economic health, good policies are needed to promote financial stability and recovery.
Could COVID-19 contribute to economic growth? In the United States, the upsurge in new-business applications indicates that despite its devastating effects on many small businesses, the pandemic may result in new startups being launched due to various causes, including the isolation and extra time for reflection resulting from closures. Although only a percentage of business applications result in business formations, the data suggests robust US business creation for 2020 overall.
2020 has proved to be an eventful year for ISO 20022, with SWIFT (Society for Worldwide Interbank Financial Telecommunication) and other major market infrastructures opting to postpone the implementation of the new standard. Any assumptions that these delays will provide participants with a respite are unfounded; testing times still lie ahead, and internal project work should reflect this.
Trade, a crucial component of healthy economies on all ends, has flourished over the past 20 years, and trade finance is the essential ingredient that has enabled its growth. The ICC’s 2020 Global Survey of banks worldwide asked participants how they planned to broaden their trade-finance provisions, even in the midst of a pandemic. For most, further digitalisation is part of their plans alongside increased market participation and product offerings.
The UK will complete the Brexit journey that it began four years ago on December 31, the final day of the transition period. Its future trade relationship with the EU is not definite, and the British are wisely preparing for a hard landing. This time of transition should be regarded as an opportunity to build a united country, one that is in a mutually beneficial trade partnership with the world.