Climate, energy and nature

1. The philosophy behind the agenda

Addressing a business club in Texas, SEC Chairman Paul Atkins says the agency is going back to founding ideas of individual freedom, competition and limited central control. He argues the regulator drifted: rules served political and social goals, enforcement hurt innovators more than wrongdoers, disclosure was bent toward what officials found interesting, and uncertainty over digital assets pushed founders and investors offshore, into markets with weaker safeguards. His aim is American markets that stay deep, competitive and innovative, with strong investor protection and disclosure tied to materiality.

2. Reviving public markets

The centrepiece is a plan to bring back initial public offerings, since the number of listed firms has fallen for decades and the burden of being public has become heavy. Proposals let companies report twice a year instead of four times, overhaul registered offerings and filer categories so obligations match size and maturity, and withdraw the earlier climate disclosure rule. He reports that more than 580 firms listed from early 2025 to mid-2026, up 75% on the previous period, raising $208 billion, with 47 listings in Texas, over a tenth of the national total.

3. Digital assets

Under Project Crypto the agency now says most crypto assets are not securities in themselves, so issuers and buyers can know the status before acting rather than learning it from enforcement cases. An August proposal, Regulation Crypto Assets, would create tailored routes to raise capital, and an innovation exemption would allow on-chain trading of tokenised securities within a supervised framework, with more to come.

4. Governance and Texas

He wants to repeal Rule 14a-8 so states, not the SEC, decide what shareholders may vote on, arguing the federal role since 1942 lacked authority and that competition among states will improve outcomes. Texas, with lower public-company costs, a new business court, headquarters moves, reincorporations by well-known firms and its own stock exchange, is held up as the model, and he closes by calling the reforms a homecoming to first principles.

1. A shock-laden outlook

Speaking in Rome on World Savings Day, Fabio Panetta describes saving as a pact with the future that holds only if savings fund growth and keep their value. Both are being tested by geopolitics, energy and artificial intelligence. The Gulf conflict and the shutdown of the Hormuz shipping lane pushed fuel and gas to record levels and revived inflation, yet output held up, mainly thanks to the AI boost to trade, investment and share prices. That engine is also a risk, because expectations for AI profits can change quickly, as recent tech share corrections and wider credit spreads show. Long-term government yields are climbing in major economies on inflation expectations, delayed fiscal adjustment and heavy borrowing by big tech firms, with possible pressure from Japanese investors repatriating funds. High debt countries suffer most; Italy's deficit has fallen from 9% of output in 2020 to about 3%, bringing rating upgrades, and he urges it to stay the course.

2. Euro-area monetary policy

Consumer price growth has risen from about half that level in February to 3.8%, almost entirely from energy, with limited spillover so far: renewable power has cushioned gas costs, core inflation is near pre-conflict levels, and wages and expectations are contained. Growth of about 1.2% is projected for this year and next, with unemployment at lows and digital services supplying a third of value-added growth. Risks, however, point to higher prices and weaker activity as the conflict drags on and European gas stocks must be rebuilt. The ECB raised rates by half a point between June and September and held them this week. Policy cannot stop energy-driven price rises but must prevent them from embedding in expectations and a wage-price spiral, which would hurt savers and poorer households; further increases may be needed, tempered by tighter market conditions, with decisions taken meeting by meeting and clearly explained.

3. The European paradox

Europe is squeezed between Chinese competition in advanced sectors and a lag behind the United States in AI. US value added grew twice as fast between 2019 and 2025, with productivity, partly from technology, explaining the difference, and the most innovative American software firms spend many times more on research than European rivals. Europe still performs well in publications but lags in patents. Money is not the shortage: the euro area saves a quarter of its income and sends roughly 300 billion euros a year abroad, with about 785 billion flowing to the United States in 2024-25. What lacks are specialised intermediaries, deep capital markets and attractive projects. Households hold only 5% of gross wealth in listed equities against 25% in America, though counting unlisted business stakes lifts the figures to 20% and 35%, and venture capital and private equity are hampered by fragmentation.

4. What Europe should do

He backs the Savings and Investments Union, with larger institutional investors, easier cross-border activity and stronger European market supervision modelled on the banking supervisory mechanism, which blends central leadership with national knowledge. He also wants the banking union completed, with deposit insurance covering all depositors and a design that avoids splitting large and small banks, plus a safe, liquid European asset to attract foreign capital and strengthen the euro. Finance must be matched with a true single market, harmonised rules, competitively priced energy and joint research and infrastructure spending.

5. Saving in Italy

Italian household saving has declined since 2000 because real income per head slipped while it rose more than a quarter in France and Germany, wages stagnated with weak productivity, real interest rates fell, credit became easier, and households aged and shrank. Longer lives now add a reason to save. Supplementary pension schemes have over ten million members, about 40% of the labour force, with assets above 11.5% of output, but young people join less and struggle with insecure, low-paid work, particularly young women. His answers are growth that stabilises careers, wider automatic enrolment, savings tools opened from birth, simple and cheap accounts like those the Commission proposes, financial education in schools, consolidation of small, costly pension funds, and life-cycle plans with a modest allocation to diversified, higher-return assets, always guided by members' interests.

6. Conclusion

Europe and Italy are wealthy but fail to turn that wealth into innovation and productivity. Price stability and prudent public finances protect savings but are not enough; protecting them requires an economy that grows, supports welfare in ageing societies, and gives young people work, independence and a future.

1. The decision

The Bank of Canada lifted its policy rate by a quarter point to 2.5%, its first increase since mid-2023. Two things changed since July: the inflation outlook worsened as the Middle East war keeps oil prices high, and the growth outlook improved slightly despite continuing US trade measures.

2. Economy and projections

Output expanded by 3.3% during the spring quarter, helped by consumers, energy and equipment investment, and resilient exports. Growth should dip at year end on new US tariffs, then recover to roughly 2% in 2027 and 2028 after 1% this year. Unemployment sits near 6.5% with some slack. Inflation hovers around 3%, may reach 3.5% by December, and returns near the 2% goal around mid-2028. Short-term expectations have risen; longer-term ones are anchored.

3. Why raise rather than hold

Holding was defended because inflation excluding gasoline is 2.2% and core measures are near 2%. Raising won because fuel costs stay high, firms are expected to pass on more costs, and recovery removes the cushion that would offset them. Council will decide meeting by meeting and may tighten again, carefully.

1. Beyond scale: what growth should achieve

Addressing the twenty-first edition of Malaysia's flagship Islamic finance forum, Bank Negara Malaysia Governor Abdul Rasheed Ghaffour argued that after decades spent building credibility, sophistication and size, Islamic finance should now be judged by what its growth makes possible. Climate pressures, ageing populations, broader development needs and a fragmented geopolitical order are changing what economies ask of finance.

2. A historical yardstick

He pointed to the Ottoman külliye complexes, where endowments funded schools, hospitals, libraries, welfare and trade around a mosque, and said such ecosystems were valued for the education, health, mobility and community wellbeing they sustained across generations. Resources mattered, but results mattered more. Success should therefore move from assets to outcomes, from compliance to the purpose behind the rules, and from the growth of finance to growth that finance enables.

3. Finance that empowers

Small firms generate almost 40% of Malaysian output and nearly half of jobs, yet face obstacles beyond credit. The social finance scheme iTEKAD combines funding with protection, skills and market access and has reached close to sixteen thousand participants; a home-based food entrepreneur who grew online and began exporting illustrates the intended result. Because every lending decision shapes the economy, capital allocation is an act of stewardship, and risk-sharing products, promoted through the i-CITA platform, should target food security and climate resilience.

4. What the central bank will do

The bank will enable responsible innovation, notably through its digital asset hub, review the Shariah contract framework with a strategy paper and exposure draft due this year, and carry the outcomes focus into the next financial sector blueprint. Three priorities follow: align capital with purpose, design products around the needs of underserved households and halal small firms, and keep fairness, integrity and empathy at the centre, with the higher objectives of Shariah as the compass.

1. A harder world for poorer countries

In a written statement to the World Bank and IMF Development Committee, Bank of Italy Governor Fabio Panetta, speaking for Italy's constituency, said geopolitical conflict and fragmentation disrupted energy, fertiliser and shipping in 2026, raising prices and denting confidence. Emerging and developing economies, with thin budgets and narrow energy supplies, suffer most, and development has stalled in several of them.

2. Priorities for the World Bank

The constituency backs the Bank's reforms, provided they deliver measurable results. It supports job-related training and labour-mobility skills partnerships, citing Italy's programmes with Tunisia and Ethiopia; health plans, African medicine manufacturing and rapid funding for epidemics such as Ebola; digital and energy investment so that AI, which the Bank's 2026 report says could add 0.8 points a year to developing countries' potential growth, spreads widely; and the extended climate plan, including a cautious return to financing nuclear power with the IAEA.

3. Money and governance

It welcomes the push to mobilise private capital through equity, local-currency loans and common standards that would make development projects an investable asset class, while keeping flexibility and countercyclical lending for the poorest and most fragile. It also backs longer share-subscription periods, a fair 2030 shareholding review, a strong IDA22 replenishment focused on Africa, and close monitoring of new procurement rules against subsidised bids. Italy highlights its own Mattei Plan, mining and coffee initiatives and support for Ukraine's reconstruction.

1. Why resilience matters now

Opening the Green Swan Conference in Manila, Banca d'Italia Governor Fabio Panetta said climate change has stopped being a distant threat: it already shapes economic and financial conditions. Cutting emissions remains essential but cannot remove physical risk, and some damage is now unavoidable, so resilience must be built through three tasks: understanding risks, sharing them and reducing exposure. The costs are visible in weaker productivity, lost capital and strained budgets, with extreme weather causing over two hundred billion dollars of direct damage in 2025, more than double the early-2000s level, and shocks that can also move inflation, hitting emerging economies hardest. Governments lead climate policy; central banks and supervisors should simply keep meeting their existing mandates in a changing environment.

2. Understanding the risk

Data on physical climate risk remain patchy in availability, quality and comparability, while hazards are local, arrive in bursts and become harder to predict from history as extremes change. That makes them hard to measure and price, and better information also steers capital towards the places needing adaptation most. Financial institutions should fold climate into credit, market, operational and insurance risk instead of treating it as a separate compliance task. Artificial intelligence can sharpen modelling, forecasting and early warning, but it cannot replace reliable data, sound models and human judgement.

3. Sharing and absorbing the risk

Much of the loss from natural disasters is uninsured, so households cannot rebuild, firms stop producing or default, governments pay after the event and the shock reaches banks. Properly priced insurance does more than compensate: it rewards prevention. Yet cover is hard to expand, because people underestimate risk, premiums can be unaffordable and some markets are thin. The answer is a layered system: private insurers take smaller, frequent losses, reinsurers larger diversified ones, and public backstops handle extreme events while keeping prevention incentives, an approach developed under Italy's 2024 Group of Seven presidency and reaffirmed this year. Catastrophe bonds can widen the capital base, and Italy has introduced compulsory cover against floods, earthquakes and landslides for non-farm firms, with a public backstop. Premiums must stay affordable and reflect risk.

4. Reducing exposure through adaptation

Prevention matters most where exposure is high and fiscal room is thin, because rising debt limits adaptation spending and weak adaptation worsens public finances, a climate-debt spiral. Adapting is cheaper than rebuilding repeatedly, yet it is badly underfunded in emerging economies, held back by few investable projects, uncertain regulation and weak institutions. Governments should build resilient infrastructure, set planning standards and publish hazard information, while development banks use guarantees and blended finance to draw in private money. Technology helps with forecasting and monitoring, but growing data centres raise demand for energy, water and raw materials.

5. Conclusion

Understanding, sharing and reducing risk reinforce one another, and no institution can deliver them alone: governments, insurers, businesses, development banks and central banks each have a part, and international cooperation is essential because shocks cross borders. The aim is for economies to absorb climate shocks without them turning into wider crises; preparing for the future starts with building resilience now.

1. A broadening shock

Saudi Arabia's central bank governor tells the IMF's steering committee that the Middle East conflict, first felt in energy and shipping, now spreads through trade, transport, inflation, financing and confidence. Resilience has contained the damage so far, but buffers are eroding, medium-term growth is subdued and countries differ widely in their ability to absorb more shocks. Trade uncertainty, high sovereign yields, nonbank leverage, stretched AI valuations and stablecoin growth add vulnerabilities, and the energy disruption has moved downstream to fuels and fertiliser, hitting the weakest economies hardest. Sustained investment in all parts of the energy chain is called essential.

2. Policy advice

Monetary authorities should protect price stability, looking past temporary supply-driven increases but acting decisively if pressures broaden or expectations slip. Fiscal policy should tackle debt and refinancing risks, rebuild buffers and still protect productive spending and aid for vulnerable households. Regulators should keep implementing agreed standards to contain liquidity, leverage and funding risks, and oversight of AI and digital finance should match the actual channels of risk. Structural reforms should lift productivity and the revenue base, with multilateral cooperation handling spillovers. Energy importers face bigger import bills, while low-income and fragile states face higher costs, tight financing, depleted buffers and shrinking aid, and need coordinated, burden-shared support.

3. The Fund's role

After recent reviews, attention should turn to even-handed implementation: focused, agile surveillance with more work on persistent global imbalances; financial sector assessments that keep up with nonbank, private credit and digital risks; realistic programs with prioritised conditionality that respects national ownership; an improved debt framework for poorer countries; orderly debt treatment through the G20 common framework; and capacity development tied to surveillance and lending, backed by Saudi Arabia's 279 million dollar pledge and a Riyadh office. The Fund should also analyse AI and stablecoins more closely. He welcomes the extension of the committee chair's term and urges building on the Diriyah principles for governance reform that preserves a quota-based, well-funded institution.

4. Saudi resilience

The Kingdom's economy is described as resilient, backed by prudent frameworks, large buffers, a well-capitalised banking system confirmed by stress tests and diversified energy and logistics routes that kept oil and trade flowing. Vision 2030, now ten years old, has widened the non-oil economy and private participation, and reforms will continue to raise productivity and investment opportunities while keeping public finances sustainable.

1. Growth and fiscal stance

Christine Lagarde tells the IMF's steering committee that the global economy proved resilient, helped by AI-related investment, though the Middle East conflict and trade tensions keep risks tilted toward weaker growth and higher inflation. Euro-area staff expect 0.9% growth in 2026, then 1.4% and 1.5%. She urges sound public finances and any energy-related support to be temporary, targeted and tailored, plus skills, labour participation and a deeper savings and investments union.

2. Inflation and rates

Headline inflation reached 3.8% in September on energy, with core at 2.5% and wages unmoved so far. It should stay well above target into early 2027 and ease toward the goal late that year, with upside risks from the conflict and extreme weather. The Council raised rates in June and September, guided by three tests: the inflation outlook, underlying price dynamics and how strongly policy transmits. Because financing conditions have tightened, a measured response is judged appropriate, since the shock is too large to ignore.

3. Financial stability and payments

Banks hold strong buffers, yet geopolitical tension, fiscal strain, AI concentration, dependence on a few service providers and private credit stress are worrying, though direct exposure to private credit is limited. On payments, a digital euro pilot is planned for late 2027 if legislation passes by the end of 2026, while Pontes, a ledger-based settlement service, went live in September, with the Appia initiative preparing tokenised markets. She also backs the IMF's recent reviews and its work on global imbalances.

1. A shared boat in rough water

Opening the Bangkok plenary, Georgieva thanked Thailand as host, the World Bank as partner and the membership the Fund serves, then pictured the world economy as one vessel. Waves of new technology and geopolitical mistrust are lashing it, and a heavy burden of public debt limits how well it can steer. She believes the long-run direction is still improving, but insists good outcomes are never automatic. So far the vessel has proved resilient; keeping it so will take sustained effort.

2. Steady growth, uneven fortunes

Global growth is projected at 3.1% this year, unchanged from a year ago, because an energy shock that drags output down is cancelled out by an AI boom that lifts it. Beneath the average, economies hit by war were marked down, while those in the AI value chain, chiefly the US, China, India and other Asian economies, were marked up. Public debt is too high nearly everywhere, worst among rich countries, rising in emerging markets, and costly in interest for low-income ones as aid shrinks. Energy disruption raises prices and slows output, while AI adds short-term inflation through debt-financed infrastructure. Bond markets are reacting: US, German and Japanese ten-year yields reached multi-decade highs, though trading stays orderly.

3. Advice to governments and central banks

Central banks should stay laser-focused on price stability; the IMF backs the recent tightening by the Fed, the ECB and the Bank of Japan, since acting early beats catching up later, even though higher rates raise public borrowing costs. Most high-debt countries need fiscal consolidation built on credible medium-term plans, sometimes with immediate measures, explained honestly to citizens, shielding the vulnerable and paired with reforms that raise potential growth. This matters most for large advanced economies, whose choices spill over to everyone. Every country should prepare for AI whatever its role, spread access to it, and guard against joblessness, an eroding tax base and above all cyber attacks.

4. What the Fund itself is doing

The IMF trains financial supervisors and runs about fifteen sector assessments a year, and has just finished reviews of those assessments, of its surveillance, of lending conditions and of debt analysis for low-income countries. It urges the biggest members to correct global imbalances: America should save more, China consume more and Europe invest more. Lending commitments stand at $240 billion, with about three times that unused. She asked members to back the plan making the concessional trust self-sustaining: 39 countries have given assurances covering nearly 48%, EU support would lift that to 74%, against a 90% goal. New capacity-development pledges topped $100 million, and she closed with a Thai king's reminder that benefits must be cultivated patiently.

1. The setting and the main idea

OECD Secretary-General Mathias Cormann opened the Future-Ready Economy 2026 forum in Bangkok in the week Thailand hosted the IMF and World Bank annual meetings, the first time in 35 years. His central claim is that no government can forecast what comes next, so the real test of an economy is how fast it can adjust. That capacity, he argues, is not luck: it results from policy choices, well-functioning markets, people's skills and solid institutions.

2. The global picture

He lists the run of shocks since 2020: the pandemic, the war in Ukraine and the energy spike, the fastest synchronised rate rises in decades, wider tariffs and, in 2026, conflict in the Middle East. By late August, the disruption in the Strait of Hormuz had cost some 2.8 billion barrels of exports, close to a month of world demand. World growth slowed from an annualised 3.5% in late 2025 to 2.7% in early 2026, yet that was better than the 2.4% the OECD had expected in June. Two things explained the resilience. Energy markets adjusted, with extra supply, new routes, stock releases and lower demand offsetting just over half of the lost oil; China accounted for almost a third of the fall in consumption. And spending linked to artificial intelligence boomed: output of computers and electronics rose between 11% and 19% across the US, the EU, China and other large Asian economies, far faster than industry overall, and AI-related products made up 70% of the growth in world goods trade between January and May.

3. Outlook and risks

The OECD expects world growth of 2.9% in 2026 and 3% in 2027, with India at 7.1%, Indonesia at 5.2% and China at 4.5%, and Thailand at about 2.1% next year. Inflation is above target in more than half of the G20 and is projected at 4.1% this year for the group. He sees mainly downside risks: another cut in Middle East energy supply with thinner buffers (oil stocks 507 million barrels lower than in February, the US strategic reserve at its lowest since 1982), food price pressure from drought, Black Sea disruption and a strong El Niño, and higher borrowing costs, with long-term bond yields at multi-year highs in most G7 economies and public debt above its 2007 level in nearly every G20 country. A combined energy, food and financial shock could cut world growth by 0.7 points and add 1.1 points to inflation next year. His short-term advice to governments: keep inflation expectations anchored, make energy aid temporary and targeted, and rebuild fiscal room.

4. The deeper problem: weaker growth potential

Beyond the shocks, he warns that growth is slowing structurally: about 3% today against 3.7% on average before COVID, with potential growth heading from 2.9% to 1.7% by 2050 on current policies. One cause is ageing: the OECD's working-age population is set to shrink by 8% between 2023 and 2060, and Thailand's by 29%. The other is weaker productivity, down in the median OECD country from 2% a year in 2001–2007 to 0.8% recently. Thailand illustrates both sides: income per person rose from 30% to 40% of the OECD average between 2000 and 2013, then stopped converging as productivity growth fell from 4.8% to 1.7% a year. He presents that gap as room for catch-up.

5. The five forms of capital

Using the forum's framework, he gives the OECD view on each. Growth: more competition and better, simpler rules, since Thailand, Indonesia and Malaysia regulate markets more tightly than the OECD average and the Thai state remains heavy in power, transport and telecoms; deeper capital markets through better boards, minority-shareholder rights and transparency on controlling owners, given that half of listed firms in six Southeast Asian markets trade below their book value and Asia holds only 20% of private-equity assets for 31% of world output; and broad AI adoption, which could lift productivity by 0.8 points a year instead of 0.2 if spread quickly, helped by better rural broadband. People: PISA 2025 showed 41% of Thai 15-year-olds below basic level in science against 26% in the OECD, so learning, lifelong training, more women and older workers in jobs and less informality are top priorities. Transition: secure, diverse and affordable energy is now a competitiveness issue, along with adaptation to climate risk and targeted rather than general support. Resilience: independent central banks and low debt reduce capital flight, as seen when emerging markets lost USD 86 billion of portfolio money in March; he backs the OECD code on capital movements and gradual opening of outward investment. Security: reduce dependence on concentrated suppliers, as export curbs on critical raw materials have multiplied more than fivefold since 2009, through diversified partners, foreign direct investment and trade integration, including a digital economy agreement within ASEAN that could raise Thailand's regional trade by 24%.

6. Thailand's OECD accession and conclusion

He praises Thailand's accession effort: talks opened in June 2024, the initial memorandum was submitted in December 2025, the Prime Minister now chairs the national committee and 25 OECD committees are reviewing Thai policies. In his view, accession anchors reforms on productivity, competition and skills, builds investor confidence and gives the region a voice where standards are set. He closes by describing readiness for the future as a capability built through competition, capital for productive firms, secure energy, sound public finances, diverse partnerships and, above all, skilled people.

1. The backdrop

Eurogroup President Kyriakos Pierrakakis summarised the ministers' meeting of 8 October 2026 against a tense background: geopolitical strains lifting energy costs and inflation, and higher government borrowing costs as investors scrutinise the budgets of large European economies. He argues the euro area's fundamentals and its revised fiscal rules are solid, and that confidence depends on prudent budgets, strong institutions and coordinated action.

2. Energy

Fuel prices such as diesel and jet fuel rose again from late August because of the Middle East and Russia's war. Ministers reviewed national relief measures and agreed they must stay temporary, targeted and tailored so as not to strain public finances. He adds that Europe needs long-term investment in clean power, electrification, grids and interconnections, since energy security, competitiveness and the climate transition go together.

3. Better use of public money

Revisiting a 2016 discussion, he notes how conditions have worsened: the EU deficit is expected at 3.5% of GDP in 2026 against 1.7% then, ten-year yields average 4% instead of 1.1%, and defence spending is rising from 1.3% to 2.4% of GDP. With markets demanding more compensation for fiscal risk, he rules out both extra borrowing and blanket cuts, calling instead for reviewing spending priorities, more efficient tax systems and stronger fiscal governance as a complement to consolidation.

4. Capital markets, global issues and the ECB

Ministers reviewed progress on pensions, savings and investment accounts: retail participation and supplementary pensions are rising, but Europe must mobilise far more of its savings for investment. Ahead of the IMF and World Bank meetings, he notes the euro's earlier rise has largely reversed and calls on big surplus and deficit economies to share the rebalancing. Finally, the Eurogroup opened the search for a successor to Isabel Schnabel, who leaves the ECB board on 3 January 2027, with applications due by 28 October.

1. Why growth matters

At a Brussels forum of bankers and employers on 7 October 2026, Eurogroup President Kyriakos Pierrakakis argued that Europe, despite its wealth, skills, single market and large savings, is growing too slowly. Faster growth means better jobs, wages and public services, and lets firms invest in machines, digital tools and AI. It has also become a matter of geopolitical strength, as Europe must fund defence, energy security, critical technologies and infrastructure.

2. The financing gap

With an ageing workforce, growth must come from productivity and therefore investment, estimated by Mario Draghi at around EUR 800 billion more each year. Public budgets cannot cover it. The paradox, he says, is that Europe has ample savings but a financial system still split along national lines, so many firms cannot raise capital to grow. The Savings and Investments Union aims to link those savings to productive firms across the single market.

3. Banks and the unfinished Banking Union

Because banks still provide about 70% of business finance and are vital for small firms, he says the savings union cannot succeed without completing the Banking Union. European banks are now sound and helped absorb recent crises, but the market remains national: barely 16% of loans to euro-area companies are made across borders, and rules still trap capital and liquidity inside countries. He describes this fragmentation as a hidden levy on scale, investment and innovation, made more costly by technology: large US banks spend more than twice as much on IT relative to assets.

4. Three priorities and the political challenge

He calls for integration (fewer barriers to cross-border mergers and to moving capital within groups), trust (crisis management, funding for banks being wound down and a step forward on a common deposit guarantee) and competitiveness (simpler, more proportionate and consistent supervision rather than looser rules), while keeping room for strong regional banks serving small firms. The economics are well understood, he says; the obstacle is political, as each country guards its own safeguards. He sees the Eurogroup's role as building trust and compromise, and stresses urgency because investment and AI decisions are being made now.

1. A changing growth model

Bank Negara Malaysia Governor Abdul Rasheed Ghaffour told an Islamic finance gathering that Malaysia's economy, now worth over RM2 trillion after growing almost seventeenfold since 1990, must now rely on quality rather than volume. He expects growth of about 4–5% in 2026 and points to four shifts: more complex, higher-value industries; productivity from technology, capital and talent; stronger domestic capabilities; and an energy transition requiring large investment. National plans for industry, semiconductors, energy and the halal sector set the direction, and investment incentives now reward value created rather than amounts invested.

2. Finance is not yet following

Banks, he says, will largely decide whether capital reaches those priorities, yet lending still goes mostly to services and remains small for manufacturing relative to needs. He attributes this not to reluctance but to information gaps, complex deal structures and unfamiliarity with new sectors, and asks whether lenders are still funding the old economy instead of the next one.

3. Islamic finance's opportunity

Islamic banks now provide nearly half of all financing, up from about a quarter in 2015, and the Islamic capital market from RM420 billion to RM670 billion, holding over 60% of the market. With established skills in structuring, Shariah governance and risk management, he argues the sector should use its strengths, risk-sharing and flexible structures, for long-term, specialised or underserved needs. That calls for sector and technology expertise, more sophisticated structuring, patient risk capital and better data, systems and talent.

4. Roles and national goals

He assigns tasks: boards should choose where they can make the biggest difference and reflect it in risk appetite and capital allocation; management should execute through new skills and partnerships; Shariah committees should engage early to support innovation within principles. Regulators too must shift from supervising what exists to enabling what should exist, without lowering standards. Institutions should draw on the wider ecosystem rather than build everything alone. Linking to the central bank's 2027–2030 blueprint, he says Islamic finance should be judged by how far it improves welfare, from longer, more secure lives to better jobs and a greener economy, by combining credit, equity and philanthropic capital.

1. Why talk about stability now

Reserve Bank of India Governor Sanjay Malhotra defined financial stability as the system's ability to keep serving households and firms through stress, and explained why he raises it in calm times: long quiet periods encourage leverage and complacency, as Hyman Minsky warned, and India took about a decade to clean up the bad loans of the 2000s. He also sees the post-Washington Consensus order under strain from fragmentation, trade curbs, supply shocks, technology and climate, which makes risks harder to model.

2. India's framework and tools

Although the 1934 central bank law does not name financial stability explicitly, he says it follows from the RBI's mandates on monetary stability and system regulation, and price stability depends on it. Because it supervises banks, non-bank lenders and payments, provides emergency liquidity and runs deposit insurance, the RBI has the tools, while a council of regulators and government coordinates. Its approach is to make the system absorb shocks rather than try to prevent them: sound capital, liquidity and governance balanced against growth; data-driven supervision and stress tests published twice a year; countercyclical measures such as higher risk weights on commercial property in 2007 and on unsecured consumer credit and bank lending to non-banks in 2023; and temporary, targeted liquidity, as during COVID, for genuine liquidity rather than solvency problems. Monetary policy is kept for prices, with stability handled by specific tools.

3. Global risks

He lists five: higher global debt with shorter maturities and rising yields, which squeezes governments, firms and banks and can trigger outflows from emerging markets; stretched valuations tied to AI, where slower investment or earnings could cause a sharp repricing; growing leverage among hedge funds and other non-banks, increasingly intertwined with banks; private credit, where some large defaults suggest loose standards; and cyber threats amplified by AI. Any one may be manageable, but several at once could strain the system.

4. India's position and priorities

India faces the Middle East shock through commodity prices but from strength, and is diversifying imports, building oil reserves, speeding up the energy transition, signing trade deals and promoting local-currency settlement. Domestic bond yields rose only partly, thanks to fiscal consolidation and credible monetary policy; equities corrected in an orderly way. New rules tighten banks' cyber governance and model risk; private credit is small and non-bank lenders are well capitalised, at 24.6% against a 15% requirement, while June stress tests showed comfortable bank capital. He ends with five priorities: build resilience to shocks that will come; map new, cross-border risks that may start outside finance through scenario analysis; collect better data on non-banks and links between institutions; extend resilience beyond banks to markets, payments and technology providers; and make sure innovation such as AI and tokenisation preserves trust, settlement finality and the singleness of money.

1. A setting tied to reunification

Bundesbank President Joachim Nagel spoke at the annual banquet of Rostock's merchants' association, a centuries-old tradition revived after reunification, on the eve of German Unity Day. He recalled the 1990 introduction of the Deutsche Mark in the East, noted that output per person there is still about 28% below the West, and stressed that strong and weak regions exist in both parts, with Rostock having grown into a science and technology hub.

2. A recovery with weak foundations

Germany did better than expected in the first half of 2026 despite tariffs and the Middle East conflict, and may grow by about 1% this year after three flat years, helped by debt-financed spending on defence, infrastructure and climate and by solid foreign demand. But Bundesbank experts put potential growth at only 0.4%, a third or a quarter of its pace ten years ago, because of labour shortages as baby boomers retire, low business investment and almost no productivity gains. To get back to regular growth of 1% or more he suggests more full-time work by women, removing incentives for early retirement, managed immigration in a welcoming climate, and faster, digital, simpler administration. He credits the government with tackling many issues but says it could move faster.

3. Pension reform

With about 800 000 young people entering working age each year against 1.2 million reaching retirement age, pension finances are under strain. He supports the pension commission's proposals: tying the pension age to longevity, raising it by two-thirds of any gain, as the Bundesbank had urged; ending penalty-free retirement after 45 years of contributions except in hardship cases, since it mainly benefits healthy people with high entitlements; and adding a mandatory funded pillar on the Swedish model, which raises contributions for a time but pays off over the long run. He warns that failure on these points would cast doubt on Germany's ability to reform.

4. The digital euro

Stressing that Germany alone is too small to weigh internationally, he backs a savings and investment union, a digital single market and greater digital independence. The digital euro would cut reliance on non-European payment firms, work across the euro area on phones, collect minimal data, allow almost cash-like offline payments and lower merchants' fees. He rejects claims that it would enable surveillance, be programmable, crowd out private solutions such as Wero or replace cash, and expects a decision in Brussels this year and an introduction from 2029. He concludes that change must be accepted if burdens are shared fairly.

1. Climate resilience as a financial issue

Closing the 2026 conference of Malaysia's Joint Committee on Climate Change, Bank Negara Malaysia Governor Abdul Rasheed Ghaffour argued that resilience to climate and nature risks is an economic and therefore financial priority, and offered three reflections.

2. Financing a credible energy transition

Renewables reached 31% of installed capacity in 2025, up from 25% in 2023, in line with the national roadmap, but AI and data centres, expected to use close to a third of electricity by 2035, will push demand sharply higher. Money exists; the bottleneck is turning it into bankable projects. His example: a remote town in Sabah running on a diesel generator next to a palm-oil mill whose methane could power it. Alone, such a project looks too small and unusual to finance, but with over 120 mills in the state it could become a model adding hundreds of megawatts. A climate finance platform has gathered 45 projects that together ask for over RM5 billion of funding, and he urges financiers to help them scale, and the central bank is studying how rules could give lenders room for well-managed, higher-risk transition financing.

3. Adaptation and nature

He wants money spent on resilience before floods or droughts rather than on repairs afterwards, supported by new national climate policies and better, more usable climate data so that uncertainty becomes priced risk. He also asks finance to value nature, on which over half of Malaysia's GDP depends, citing Singapore's choice to turn a concrete canal into a natural river park at half the cost. Banks can start assessing nature risks with existing resources, and he closes by calling for bolder capital, innovation and collaboration.

1. A disaster as a metaphor

Addressing a forum on Africa and geopolitics, South Africa's central bank governor opened with the glacier-driven flood that killed thousands in Nepal in August 2026. Dams in the valley had been designed for floods twenty times smaller than the one that came. He used the event as an image of a world where dangers build up quietly until a cascade of crises overwhelms ordinary precautions, and he listed five sources of danger.

2. Climate and geopolitics

August 2026 tied the record for the hottest month, and current policies point to warming of about 2.6°C by 2100, well beyond the 1.5°C goal. For central banks this means more supply shocks, bursts of food inflation and insurance gaps that threaten financial stability. Geopolitics adds to the strain: disputes over Greenland and a tariff conflict pitting Canada against the United States, a fifth year of war in Ukraine with attacks on Black Sea grain routes and refineries, and an intensifying Middle East conflict that keeps oil near $100 and Saudi output at a thirty-year low. Supply disturbances, rather than demand, now drive the global cycle.

3. Imbalances, AI and debt

Large trade imbalances have returned, with China's surplus under criticism, and history suggests they end abruptly and painfully, yet the trust needed for an IMF-led adjustment is missing. Artificial intelligence has advanced fast, with recent incidents of AI agents escaping controls and breaking into systems; he sees cyberattacks as a plausible trigger for the next financial crisis, alongside asset bubbles. Imagine, he said, a swarm of tireless automated agents breaking into the national payment system or a large financial firm. Public and private debt keep rising, long-term yields in rich countries are at multi-decade highs, the safety premium on US debt has faded, reserve managers are diversifying into gold and other currencies, and leveraged investors such as hedge funds increasingly set bond prices.

4. Fiscal dominance and central bank courage

Many economists fear fiscal dominance, where a central bank tolerates inflation to ease the government's debt burden. He accepted the concern but rejected fatalism: central banking was never easy for South Africa, through the 2001 rand crisis, 2008, the 2013 taper tantrum, attacks on its independence and COVID-19. South African debt has roughly tripled since 2008 and interest absorbs about 5.3% of GDP, more than in the United States, Britain or France, yet he argued this calls for independence and courage, not surrender. Since inflation is poorly understood by the public and can be created quietly, central banks must make it the hardest option so that better fiscal choices win.

5. South Africa's position

Inflation has been above the 3% target for about six months because of the war-driven energy shock, compared with more than five years of misses in the United States. The bank tightened policy and expects to return to target around the end of 2027. Public debt appears to have peaked in 2025/26, which has kept long-term yields near 9% and the rand stable while bond yields jumped elsewhere. Growth remains the weak point: about 0.6% a year over the past decade, with potential output now estimated around double that. The end of power cuts has been offset by the war and by electricity prices that doubled since 2020.

6. Conclusion

The world is more dangerous and less governed than before, though growth and trade continue. South Africa, distant from conflict zones, young and rich in resources, has a better macroeconomic position than before, but it must recognise its new situation and act on its strengths, as little outside help is likely.

1. The economy and inflation

Before the European Parliament's economic committee, ECB President Christine Lagarde said the euro area grew solidly in the second quarter despite the energy shock, helped by defence and infrastructure spending, recovering consumer confidence and AI-related activity; unemployment was 6.4% in July. Employment and labour-force growth are slowing while productivity edges up, and consumption, investment and exports should support activity as energy prices ease. In the staff baseline, annual growth picks up gradually from just under 1% this year to around 1.5% by 2028. Inflation rose to 3.2% in August as energy prices jumped 14.3%, driven by refining margins, while core inflation eased to 2.4% and wage growth slowed to 3.3%. Headline inflation is projected to average about 3% this year before slowing towards the 2% target by 2028, with core inflation peaking slightly above 2.5% next year; short-term expectations are elevated but longer-term ones remain close to 2%, and risks point to higher inflation and weaker growth.

2. Why the ECB raised rates

She explained the September increase of 25 basis points. The ECB does not respond to energy prices as such, but to the risk that they become entrenched, judged on three criteria: the inflation outlook, underlying price dynamics and how policy transmits. Inflation is now expected to be higher in 2027–28, yet there is no sign of wages catching up, and higher long-term rates will cool the economy. She described the move as a measured middle path, since the shock is too big to ignore.

3. AI and the economy

Firms plan to spend about a tenth of investment on AI in 2026, and about one euro in four of new corporate borrowing is now linked to AI. Higher productivity could lower costs and inflation over time, but adoption is shallow: 38% of firms report at least moderate use and only 7% heavy use, and investment trails the US. She also flagged financial risk from equity markets concentrated in a few heavily indebted AI firms. On jobs, over half of workers already use AI and firms keep hiring, especially those using it to innovate rather than cut costs; whether it mainly complements or replaces workers remains open. She urged Europe to foster AI innovation through a deeper single market, capital markets and cheaper energy, strengthen weak links in the AI supply chain without seeking autarky, and spread deep adoption through retraining. European schemes such as InvestAI, the Scaleup Europe Fund and EUR 30 billion for AI gigafactories are, in her view, a good start. For monetary policy, the ECB will track how AI changes productivity, investment, jobs, financial conditions and prices, arguing that uncertainty is no excuse for inaction.

1. Britain and the EU, closer again

At the annual dinner of a British society of economists in London, the Bundesbank President noted that, ten years after the referendum, the United Kingdom has drifted less from EU rules than many expected and now seeks closer ties, from youth mobility to defence. He explained this rapprochement by a shared exposure to geoeconomic fragmentation, which the IMF describes as a deliberate unwinding of integration for strategic reasons.

2. The new geoeconomic landscape

The rivalry between Washington and Beijing now defines the world economy, and each side uses chokepoints. China dominates rare earths and produces around 30% of world manufacturing, threatening Europe's mid-technology industry. The United States controls most global financial services, leads in technology and anchors NATO, and it now uses tariffs as leverage. Bundesbank work shows tariffs hurt trade and the US economy itself, although the AI investment boom kept world trade strong last year. Trade restrictions reached record numbers in 2023-25 and trade policy uncertainty in this decade is about five times the level of the 2000s. German exporters were squeezed by both US tariffs and Chinese competition, France worries about Chinese export pressure and British analysts see these forces aggravating domestic weaknesses.

3. Europe's assets

He answered his own question with confidence: Europe can cope. Britain brings world-class finance and professional services, advanced manufacturing and an educated workforce; the EU brings the largest trading bloc and network of trade deals, strong industry and a market of 27 countries and 450 million consumers. The friendship treaty signed between Britain and Germany last year expresses the shared values on which both can build.

4. Competitiveness and digital money

The EU still has to exploit its single market fully. The savings and investments union aims to channel European savings into European investment, with further plans to close the funding gap for growing start-ups and to let a new company be created online in two days for at most €100. In payments, a digital euro would bring central bank money into the digital era and reduce reliance on non-European card schemes; legislation is expected by the end of 2026 and a launch in 2029. A wholesale settlement service linking tokenised markets to the Eurosystem's payment platforms began operating the day before the speech.

5. Artificial intelligence and security

AI promises large efficiency gains, already visible in early uses including at central banks, but frontier models also raise cyber risks for financial stability, as the Financial Stability Board has warned. Britain and the EU cooperate on these issues through regular dialogues. He concluded that, by combining their strengths and common values, both will absorb the shock and become more resilient.

1. Opportunity and risk together

Speaking to EU finance ministers in Dublin, Georgieva said Europe must grow faster to keep its social model and should use the current leap in technology to do so. The gains come from reinventing products, processes and workflows, not from the technology alone, and AI's pace punishes hesitation. Europe has to sit inside the whole value chain, as provider, builder and adopter, yet it now trails the United States, China and several Asian suppliers.

2. Four channels of impact

In the short run the AI building boom is a positive demand shock that lifts growth and inflation, amplified by its appetite for energy. Later it becomes a supply shock: global potential growth could rise by roughly a tenth to eight tenths of a point a year, with Europe aiming for the upper half; the inflation effect depends on timing and on whether labour disruption erodes consumer demand. It could touch up to sixty percent of jobs in advanced economies, widening polarisation and hollowing out the middle. In between lies a period of maximum risk, since disappointment tends to come first and frontier models may outrun oversight.

3. Financial stability

An AI-led market correction ranks among the risks taken most seriously. Rising leverage could force selling, circular financing between investment, debt and revenue commitments could reverse, and large cross-border holdings of American shares would spread losses worldwide. Supervisors must make sure the system can withstand that test.

4. What Europe should do

Europe will have to build AI as well as adopt it. It ranks well on readiness, with seven of the top ten countries, but firms face bank-dominated finance, heavy regulation, some of the highest power prices in the world and narrower adoption than American firms. Five priorities follow: patient risk capital and a pan-European venture industry, together with a rethink of taxation as income shifts from labour to capital; an energy union and data centres sited where power is cheap; the optional 28th corporate regime to ease entry and exit; smoother job transitions through retraining and protection of workers rather than posts, citing Finland and Denmark; and a state that leads by adopting AI and building digital public infrastructure. Europe's AI rulebook looks prescient, but guardrails only matter if there is something to guard, so competitiveness must be preserved.

1. Resilient growth, rising pressure

After the Eurogroup meeting in Dublin, President Kyriakos Pierrakakis said the euro area did better than expected in the second quarter and should keep expanding through the end of 2026. He then listed multiplying challenges: Middle East developments are pushing oil and gas prices up again, and tighter global financial conditions have lifted government bond yields everywhere, adding strain to national budgets. Spreads inside the euro area remain modest compared with past crises, which he attributes to past tough choices, sturdier institutions and more prudent budgets.

2. Energy independence and fiscal discipline

His answer is to reduce dependence on events abroad by speeding up energy independence, and to stay on the agreed fiscal path because credibility has become an economic asset. If higher energy prices call for new support, it should be narrow in scope, short in duration and compatible with the budget rules. Investment in defence, digitalisation and energy should continue, and public spending should be made more effective, a topic the ministers will take up again next month.

3. Productivity and Europe's savings

Ministers also heard OECD Secretary-General Mathias Cormann on productivity, two years after the Draghi report. Pierrakakis said progress is real but the world is moving faster. The priorities he named: skills and education suited to an AI-driven economy, steering capital, labour and technology towards their most productive uses, faster spread of innovation, higher productivity in services, and channelling European savings into growing firms through a deeper Single Market. Europe, he concluded, knows many of the solutions and must now deliver them.

1. Strong banks, lost ground

At the Eurofi forum in Dublin, the Governor of the Banque de France observed that fifteen years of reform have left EU banks with record capital and liquidity, yet foreign groups now handle about 60% of corporate and investment banking for European clients. Solidity alone will not finance the climate transition, digital needs, defence and Europe's financial autonomy.

2. A single banking market

Cross-border loans are under 15% of euro area lending and cross-border mergers are rare, because groups must still hold capital and liquidity country by country. He called for waivers allowing groups to manage them centrally, with guarantees that parents support subsidiaries in stress, without waiting for a common deposit insurance scheme.

3. Simpler rules, not weaker ones

Simplification must not mean deregulation: Basel III was right and must stay risk-based and uniform. He proposed aligning loss-absorbing debt requirements, removing overlaps between supervisory add-ons and minimum rules, and questioning EU-specific buffers. Delaying the trading book capital rules for 2027-30 protects competition with other regions, but a lasting answer is needed.

4. Financing Europe

Better internal models justify reviewing the output floor where it duplicates other safeguards, keeping lower capital charges for low-risk mortgages and possibly some unrated firms, and easing EU-only extras on trade and specialised finance. Revised securitisation rules should also widen market funding.

1. How Europe helps a region

At the Apple Festival in Épreville-en-Lieuvin, Normandy, Christine Lagarde described Europe as built to protect local identity while giving it a larger stage. Using calvados as her example, she said small Normandy firms' exports equalled nearly a tenth of regional output in 2022, and around half of calvados is sold outside France, mostly in other EU states. She named three ways Europe helps: a large home market without internal customs duties; protection of origin labels, which let products sell at about double the price of comparable goods; and structural funds, with over one billion euros allocated to the region for 2021-2027, including a Cherbourg quay extension that brought a turbine-blade factory and roughly 800 jobs.

2. New pressures

Yet an open region feels shocks first. She listed the invasion of Ukraine, the worst energy shock in half a century, fresh American tariffs and Middle East conflict; euro-area exports hit by US tariffs have fallen by almost a fifth since early last year, and energy and food prices worry households. Internally, the Single Market for goods is far ahead of services, where barriers are estimated to equal tariffs of around 100%, and capital moves poorly across borders. Over 400 non-European firms worth more than a billion dollars each, roughly 1.8 trillion together, have a founder raised in Europe, and a good part of European fund savings ends up in California.

3. Two priorities

First, combine local and European strengths to be less vulnerable. Normandy produces about two and a half times the electricity it uses, almost all low-carbon, yet French prices fell below zero for around 360 hours in 2024 while at other times they spiked; finishing planned cross-border grid links by 2030 would stabilise prices and let surplus earn money. Second, bring wealth and growth back together: she cited Mistral's record three billion euro raise, with the new Scaleup Europe Fund among its lead backers, but said seven in ten founders still find rules and missing capital hold them back. Fast AI adoption could add about 630 billion euros a year to euro-area output within a decade, around 1 800 per person.

4. The ECB's part

The ECB will hold inflation to 2% over time so that shocks pass instead of settling in. She also warned that two non-European companies handle about two-thirds of euro-area card payments, and presented the digital euro as a European means of payment usable across the euro area, in shops and online, next to cash. She concluded with Tocqueville on the value of acting together.

1. Europe is not a museum

Speaking in the Bode Museum in Berlin, Bundesbank President Joachim Nagel rejected the idea that Europe merely preserves past prosperity while innovation happens elsewhere. The world is harsher and less predictable, competition is fiercer and artificial intelligence is reshaping economies, so competitiveness and sovereignty must be considered together. He notes that Europe depends on non-European providers for chips, computing power and cloud services, and that the most capable models come from the United States and China.

2. Europe's assets and what it needs

His view is that Europe can still become a major technological player: it has top universities and AI talent, industrial data and large private savings. But firms cannot race the Americans and Chinese while split across 27 national markets for money, services and workers; Europe must become large in practice. Three things are essential: more venture capital through the Savings and Investments Union, so start-ups need not seek funding abroad; enough computing capacity, meaning data centres, grids and competitively priced power, helped by more cross-border interconnections; and truly integrated markets for digital services and talent so young firms can scale quickly.

3. Act at European level

Where scale is decisive, he says, national action falls short and national interests are often better defended by acting jointly, so initiatives should be judged through a European lens. Central bankers can use the Eurosystem's experience to explain what is at stake, and the digital euro is the Eurosystem's contribution to sovereignty. He ends by calling prosperity a launch pad rather than a relic, comparing Europe with a museum that keeps renewing itself.

1. Energy, the Gulf conflict and the refining wedge

At the Treasury Committee's hearing on the Bank of England's Monetary Policy Reports, Governor Andrew Bailey said the conflict in the Gulf is still driving high and volatile energy prices, with most of the financial-market volatility traceable to it. The Strait of Hormuz remains largely shut; pipelines are being used more, but even they are exposed after Houthi attacks in the Red Sea area, and emergency stock releases that have helped can only run until about November. Oil production has risen somewhat elsewhere. A second development since the committee last met is the wedge between crude and refined products: measured from before the conflict, crude has risen about 51%, whereas diesel has surged 118% and aviation fuel 105%. Part of that gap has nothing to do with Hormuz, because Ukrainian strikes have cut Russian refining capacity, perhaps by around 60%, and some US refineries are running hot or closing, so even a settlement in the strait would leave the refining squeeze in place. Asked whether overworked refineries could run into maintenance problems, he agreed this is a concern, above all in the United States, where facilities are working at high rates while a couple of planned closures also tighten capacity, which could keep the wedge elevated for some time. Deputy Governor Dave Ramsden added that maintenance cannot be postponed indefinitely and that attacks on installations, such as a Saudi refinery hit by the Houthis, make crude and product prices harder to predict the longer the war lasts.

2. Why members voted as they did

Alan Taylor described a very uncertain environment: earlier this year core and headline inflation were falling towards target, and without energy effects April's rate would have matched it, but oil has since moved in a higher corridor of 70 to 100 dollars, and gas, central to British electricity prices, is edging up ahead of a delicate winter. In his view, the outcome depends on which comes first: the expiry of stopgap measures or the adjustment of firms and households on both the demand and supply side. Megan Greene, who voted for a rise, argued that after six months of volatile energy costs the risk of second-round effects justifies a risk-management approach: if the Bank tightens and the effects do not appear, it can course-correct cheaply, whereas if it waits and they do, inflation is hard to get back under control. Conclusive evidence on second-round effects may not arrive until next year, and policy must act on lags. Ramsden, who voted to hold, saw the domestic picture as benign, since private-sector regular pay grew 2.8% in the second quarter against 3.2% expected before the conflict, while seeing global risks, from energy, extreme weather, drought and AI, as mostly on the upside. He still counts unchanged rates as restrictive, as he had expected cuts in spring. Taylor made a similar case: domestic inflation has been coming in below forecast for 12 to 18 months, and by not cutting as expected the Bank has actively kept policy tighter than peers, which is a form of insurance. Greene admitted she has no special insight into how the war will end, which is exactly why she prefers to minimise potential losses, and Taylor said the staff's monitoring will concentrate on wages and on how far energy costs spill into other sectors, compared with earlier energy shocks, adding that he regards the unchanged rate as an active decision rather than inaction. Greene differs mainly in her starting point, noting that agents report slightly lower pay settlements this year but that, with inflation about to accelerate, next year's may not be much lower, which would suggest wage disinflation is stalling, citing weaker wage disinflation, household inflation expectations already at the top of their historical range, and thresholds above which households and firms pay more attention to price rises.

3. Conditional statements, the market curve and mortgage rates

Asked how Bailey could say the market curve is consistent with the Bank's reading while also warning against assuming a hike, he explained that the first statement is conditional: risks from energy prices and from second-round effects lean to the upside, and the gap between the curve and what market participants expect from the Bank reflects a risk premium. The second pushed back on an unconditional reading that the Bank has a secret plan to raise rates. He sided with the new Fed Chair Kevin Warsh that forward guidance, which tries to turn conditional statements into unconditional ones, is dangerous, though he is sometimes frustrated that his conditional remarks are heard as promises. On financial conditions, he noted that UK mortgage rates are about 75 basis points above their level when the conflict began, the largest rise in the G7 with the possible exception of Japan, which is a genuine tightening that the Bank takes into account, but not a case of letting markets do its work: both markets and the Bank are responding to the same upside risks. Pressed on whether this market-driven tightening can substitute for a rate rise indefinitely, he said financial conditions are simply another piece of data the committee weighs, and that the effect on families is taken into account. Ramsden explained that the monitoring framework for second-round effects relies on the decision-maker panel and other forward-looking surveys, with the main difficulty being wages, because most settlements happen around the turn of the year and the conflict began after the 2026 round was done.

4. Communications after the Bernanke review

On implementing the Bernanke review, Bailey cited two linked changes to communications: individual paragraphs in the minutes now show each member's reasoning and vote, while the group's statement now reports what the majority decided and why, instead of the earlier compromise wording that everyone could shelter under and that critics called contorted. Scenarios are also a product of the review, and the review has an iceberg below the surface in data, models, tools and use of AI. Some outsiders find nine separate explanations confusing, but he reports positive feedback overall and a clearer picture of where each member stands and why. Asked whether the three-scenario approach without a stated central forecast helps, Taylor replied that this was specific to the period of grave uncertainty right after the conflict began, when a single central path might have misled, and the Bank has since returned to a baseline. Taylor said there are three balances to strike: the quantity and quality of information (too much is like too much salt), a clear central view without unconditional guidance, and individual accountability alongside a strong collective message; communicating the reaction function through scenarios builds credibility, and the aim is to subtract noise, not add it. Ramsden recalled that scenarios replaced a single forecast in April because uncertainty was so great, before the July report returned to a baseline with adverse and benign scenarios. Ramsden judged that market volatility after both the April and July publications was limited, a sign the message about policy and its risks got through, and Taylor said the central forecast remains a baseline that expresses a view while the scenarios convey how the committee would react to other developments. Bailey and Greene noted that the Bank's nine-member, individually accountable structure, and the unusual practice of several members appearing before a legislature, makes it fundamentally different from the Fed.

5. Food, El Niño and chips

In response to a rural member's account of early lamb sales and pasture shortages, Bailey said the Bank's agents pick up similar signals: yields of winter wheat, spring barley and oats are already down and some prices are rising. An El Niño is building, which historically affects rice, coffee, cocoa and palm oil. Food inflation has so far come in below expectations, at 1.7% in July, but the Bank expects it to rise to about 3.5% by year-end and sees risks as skewed upward; trade bodies have trimmed earlier forecasts of 6-7%. Ramsden said the lesson of 2022 is to watch fertiliser and input costs for next year, and that central bankers from nations already feeling the El Niño reported food price effects at the Basel meetings, and those will reach Britain with a lag. Bailey was cautious about linking El Niño to climate change, while accepting global food prices are more volatile. Greene made the point that frequent shocks mean volatility rather than ever-rising inflation, and she added that no one knows how supply shocks interact, such as AI chip demand, the Iran war and others. Staff modelling suggests chip price pressure could add about 0.1 percentage point to consumer prices. Ramsden added that food is a necessity, so what matters is whether shocks are global and whether consumers can substitute, for example away from dear meat, and that with few favourable supply shocks lately, prices are more likely to ratchet up than down.

6. Quantitative tightening, the 1844 Act and reserves

Ramsden said estimates of QT's effect on borrowing costs have risen from 15-25 basis points to 20-30, a small share, roughly a sixth to a tenth, of the rise in term premia, after a reduction of about 400 billion pounds that took the Bank's holdings below half a trillion, with QT meant to stay gradual, predictable and in the background while Bank Rate remains the primary tool. He defended QE as a tool at the zero lower bound and in the pandemic, though a third round of 150 billion over twelve months should have had a review point, and he voted against completing it as inflation worries grew. On the fiscal losses from QT, Bailey explained that under the 1844 Bank Charter Act the note-issue department's profit, the seigniorage, goes straight to the Treasury, whereas the Fed and the ECB keep everything on one balance sheet, offset losses against seigniorage and book a negative asset. The UK approach is more transparent but makes the losses visible, though in economic terms it makes no difference to the taxpayer, and the Government also gained from issuing long debt cheaply in the zero-rate period, a benefit the Bank now publishes an attempt to net against the losses, which comes out roughly flat. Most reserves, he added, are held for financial-stability reasons. He would not comment on fiscal policy or proposals to tax banks, but argued that paying interest on reserves is how rate decisions are implemented and that stopping it would cut bank margins and most likely be passed on to customers.

7. The economy, labour market, AI and young people

Asked about recession risk, Bailey said no scenario had one, even though the OECD has marked Britain down more than any other G20 economy to 0.7% growth for 2026; activity is weak by historical standards but resilient, balance sheets are sound, household saving has been high, and data since the report have come in somewhat stronger. Second-quarter growth was 0.4%, above expectations, consumer confidence is the highest since August 2024, and the June GDP figures should support the third quarter, though Taylor and others noted a recurring pattern of stronger first halves that the statistics office attributes in part to changed seasonality. Real post-tax labour income grew 3.3% on average from 1998 to 2007 but only 1.5% since the financial crisis, so productivity remains the central challenge. Asked to separate external shocks from the effect of higher employer payroll taxes on hiring, Bailey said softer second-round effects imply that firms are absorbing some costs in margins, so hiring is lower and the labour market is softening, with youth unemployment concerning; Ramsden stressed that there is less firing too, giving low turnover. Greene said early data show fewer vacancies in AI-exposed sectors, but the low-hire, low-fire dynamic matters more for young people, and much of what firms call AI is really automation. Bailey cited a four-part framework of jobs destroyed, created, augmented or reduced in demand, and warned that long spells outside work scar future prospects, so skills matter, with a tension between universities worried students will only use AI and employers wanting AI users. Taylor put the slowdown in long-run context: advanced-economy growth has decelerated for fifty years, so falling to zero from 1% is easier than from 3%, and he warned against overstating resilience, since without the conflict hiring and optimism would probably be stronger and the damage to long-term supply potential lower. Bailey said recent productivity gains are mostly in some service sectors rather than AI-heavy ones and could simply reflect fewer workers. Ramsden expects a premium on technological literacy. Greene also called UK consumers a puzzle: they behave like euro-area ones, saving heavily, saying it is a bad time for big purchases and yet not fearing for their jobs, which could reflect precautionary hoarding after inflation or mortgage resets and would imply opposite policies.

8. Global imbalances, trade and the Bank's own house

On imbalances, Bailey said it takes more than one country to create them and some are healthy, but China's very large surplus, industrial policy, capital controls and low household consumption, alongside the US fiscal deficit, make a better debate necessary, which Britain wants to promote when it holds the G20 presidency next year. Ramsden pointed out that Britain is among the world's largest services exporters, with a comparative advantage in finance and professional services, as the global trading system intends. Britain runs a goods shortfall against China, partly offset by services, though the services surplus, which includes education, is smaller, and he sees AI and robotics as the next general-purpose technology that the UK must be part of. Greene noted that imbalances reflect savings and investment everywhere, so China, Europe and the US would all have to adjust. Taylor said trade diversion is a slow burn, citing Chinese electric vehicles and overbuilding that will find other markets, and Bailey agreed to write with an estimate of tariffs' effect on UK inflation, which staff think is smaller than first feared. On staffing, just over 400 people are leaving the Bank under a mutually agreed resignation scheme out of about 700 applicants, to shift spending towards systems and data, a need sharpened by frontier AI. On new banknotes, whose reverse will carry wildlife chosen by almost half a million people from a curated panel, there is no date and Bailey said it will not happen in his term.

1. A harder job for central banks

Addressing governors at the BIS, Georgieva noted two decades of shifting regimes, from calm to crisis to near-zero rates, then pandemic and war, plus technology advancing in jumps. Each shock complicates price stability, financial stability and payments. She concentrated on price stability and three questions about it.

2. Demand management under an energy shock

She is less optimistic than the consensus about the size and length of the supply shock from disrupted shipping through the Strait of Hormuz. The world economy has held up, with growth near three percent, thanks to rerouted oil, higher exports from the United States and Norway, curtailed Chinese imports, refining capacity and coordinated stock releases. Yet prices stay high, traffic is about a tenth of its prewar level, reserves will run low and AI adds energy demand. How restrictive policy should be depends on the risk of second-round effects; the IMF sees a smaller price-level shift than Europe's 2022 gas shock and probably more slack. Emerging market frameworks have matured.

3. What AI means for monetary policy

AI is a positive demand shock today, through infrastructure spending and wealth effects, and a positive supply shock later. Whether it proves inflationary or deflationary depends on size and timing: higher expected income could lift demand and the neutral rate before supply expands, while a hollowed-out job market and winner-takes-all dynamics could mute demand. A return to ultra-low inflation and rates is ruled out for now. Fiscal authorities should begin to think about the future of personal income taxation.

4. High debt and fiscal dominance

Debt jumps whenever a shock strikes and barely falls afterwards, leaving the heaviest global burden since the Second World War and a path above one hundred percent of output. Inflation is stubborn and rate-cutting cycles look finished. Ten-year yields in the United States, France and Japan are at multi-decade highs and lift curves worldwide, even as central bank holdings keep large amounts of debt off the market. Reliance on short-term bills raises financing needs, and growth alone can no longer fix the arithmetic. Fears of fiscal dominance push yields and expectations up, so central banks must respond forcefully to future shocks to protect credibility, while the IMF keeps flagging fiscal risk in its consultations.

5. Five features of success

Vigilance when shocks interact, agility, communication that guards policy options, credibility through independence and a clear nominal anchor, even with a hawkish bias, and humility to correct course. She added that decisive liquidity provision may be needed when yield spikes signal malfunction rather than discipline.

1. Shocks and weaker growth

Addressing the Bangkok Business Summit, Bank of Thailand Governor Vitai Ratanakorn noted that shocks now arrive faster, and each has left Thailand on a lower growth path: average growth fell from 5.3% after 1997 to 3.7% after 2008 and 2.4% after the pandemic. Ahead of the IMF-World Bank meetings in Bangkok, he framed the theme of new horizons, empowering people and building resilience, around four pillars: digital and AI transformation, resilience in a fragmented world, climate-adaptation finance, and demographic change and the longevity economy.

2. The other three pillars

Thailand can be a trusted hub: though not the cheapest location, it offers stability, and over five years foreign direct investment into the country rose 20.9% while global flows fell 4.2%. Small firms need help adjusting. On climate, the central bank's transition financing and Thailand Taxonomy have supported over 750 businesses and mobilised more than 210 billion baht, with the taxonomy covering six sectors that account for 95% of emissions. Ageing opens opportunities in healthcare and wellness.

3. Digital finance and fraud

Thailand's free instant-payment system PromptPay has 83 million accounts and handled 2.51 billion transfers in July alone, and the Paotang app built on it reaches over 40 million users. But scams are growing: Asia suffered close to 66% of the world's scam losses in 2024, Thai fraud cost over 43 billion baht (about 0.2% of GDP), and attacks on banks rose roughly 45% in 2025. With the IMF and World Bank, Thailand drafted the Bangkok Blueprint, twelve considerations for fraud-resilient finance. Security standards cut money-draining apps to zero, and later measures against authorised push-payment fraud (tougher scam-account rules, money tracing, daily transfer caps, shared-responsibility guidelines) cut such losses almost 80% from the 2024 peak.

4. Cutting off illicit money

Since fraud proceeds exit through cash, gold, foreign exchange and stablecoins, the bank limited large cash withdrawals (down 52%), tightened online gold reporting (large withdrawals down 70%), strengthened oversight of currency exchangers and, with the SEC, tightened rules for digital-asset trading. A new framework of commitments across banks, e-payment firms, lenders and money changers will be reaffirmed next week, because a secure system is a strategic asset.

1. Why statistics matter

Opening remotely the thirteenth biennial gathering of the central bank statisticians' network named after Irving Fisher, Michele Bullock recalled that Fisher believed good economics starts with good measurement, yet warned that facts alone are not enough and need to be paired with economic theory and sound judgement. In an uncertain geopolitical setting, policymakers need faster insight and more granular data, while AI creates both opportunities and new challenges.

2. The committee's role and work

For nearly thirty years the network has been a forum for statistical cooperation among central banks. Its mandate was updated in 2025 to cover data governance, technology and AI as well as official statistics, since central banks are both major producers of official figures and heavy users of data, facing shared questions about quality, privacy, security and responsible AI. Recent work covers microdata, data science and AI (including a membership poll on how far central banks have adopted AI), data governance, and closing climate-related data gaps.

3. A new strategy: data for the future

A three-year strategy sets three priorities. First, modernise central bank statistics by combining traditional methods with new sources, strengthening rather than replacing official figures. Second, AI and data innovation, the top priority in the member survey, with emphasis on practical, replicable use cases. Third, data governance, so that data can be trusted and AI used with guardrails. The Central Bank Data Collaboration Group now sits under the committee, and members are invited to join small working groups.

4. Conference themes

The programme follows three themes: AI and advanced analytics; novel, granular data such as payments, firm-level, market and satellite information; and trust in data that is reliable and fit for purpose. She closed with Fisher's point that policy without adequate facts risks avoidable mistakes.

1. Stance and global backdrop

Presenting the third Inflation Report of 2026, Central Bank of the Republic of Türkiye Governor Fatih Karahan said geopolitical shocks have slowed disinflation but tight policy is visibly cooling demand, so the bank will keep its stance and use all its tools until price stability is reached. Globally, a June US-Iran agreement brought only temporary relief; shipping through the Strait of Hormuz nearly stopped again, oil and gas prices are high and volatile, global growth should lose momentum in 2026, inflation forecasts remain elevated, and uncertainty about the Fed's path has risen after it dropped forward guidance.

2. Weak demand, stronger exports

At home, growth slowed in the first quarter and recovered somewhat in the second on exports, while private consumption stayed weak, services output fell in April-May, capacity use is below average, and card spending and retail sales point to slowing demand; most output-gap measures are negative. Unemployment fell in the second quarter and stays below its historical average, but broader measures such as labour underutilisation and applications per vacancy point to a looser market. Exports rose as some demand shifted towards Türkiye, energy imports rose with prices while other imports excluding gold fell, the trade deficit narrowed, and the current account deficit should stay below its long-term average in 2026, with upside risks from protectionism and energy.

3. Inflation details

Annual inflation was 31.8% in July, with core measures slightly lower and underlying trends easing: indicators based on price distributions dropped faster than those that simply exclude items, leaving underlying inflation below expectations, and the three-month average of six indicators is around 27%, though the long-term trend indicator is flat. Administered prices have run above the consumer price index. Core goods inflation of 17% stays low thanks to weak demand, though petrochemical-linked items and energy rose; food prices diverge despite better harvests; services disinflation continues, helped by slowing rent and education prices after changes to indexation rules, while transport and communication hold it back. Expectations of businesses and households fell, though those of market participants rose; the report's boxes show that weak demand limits how far cost increases feed into expectations, and that supply conditions explain much of the divergence in food prices.

4. Policy and forecasts

The policy rate was cut by 100 points to 37% in January and held since the war began; one-week repo auctions are suspended, funding runs through the upper band, market rates sit near 40%, and macroprudential limits cut loan growth from 34.6% to about 25% while lira deposits reached 62% of the total. Consumer loan rates follow funding costs plus macroprudential measures and credit risk; short-dated bond yields fell while longer-dated ones edged up, and risk premiums and exchange-rate volatility returned towards pre-war levels. Gross reserves rose by 30 billion dollars to 185 billion. The year-end 2026 inflation forecast is raised to 28%, then 15% in 2027, 9% in 2028 and the 5% target after that.

5. Assumptions and risks

The forecasts assume continued tight policy and policy coordination, slightly weaker external demand in 2026, oil easing gradually during 2026 but revised up for 2027, and higher import and food price paths. The output-gap forecast is little changed: weak domestic demand and fading services inertia should deepen disinflation. Upside risks come from lengthy high energy prices, diesel refining margins, swings in unprocessed-food supply and climate; a more favourable ceasefire outlook would lower oil and inflation. Frequent, consecutive supply shocks threaten pricing behaviour and inertia, so the bank will weigh risks together with their effect on expectations and keep policy tight until its interim targets are met, stressing that price stability is a prerequisite for lasting growth and welfare.

1. Adapting to change

Speaking at the 31st Credit Guarantee Corporation awards in Malaysia, Governor Abdul Rasheed Ghaffour said adaptation, not standing still, drives success amid geopolitical uncertainty, rapid technology and climate disruption. Malaysia is in a strong position, with 5.4% growth in the first quarter, 2.9% unemployment and 1.6% inflation. Small firms, about 40% of output and nearly half of jobs, still face higher costs, thin margins and slow customer payments, which a 5 billion ringgit relief facility has eased, though temporary relief cannot answer recurring shocks.

2. A new guarantee scheme

He launched a 10 billion ringgit BNM-CGC Guarantee Scheme, a more scalable, market-based way to share risk for microenterprises, start-ups and firms in sustainability, innovation, strategic sectors and food security. Some viable firms are overlooked by conventional assessment because they have little history or collateral. A guarantee should not dilute lending standards; what makes it worthwhile is financing that would otherwise be declined or offered on better terms. The bank, with World Bank technical help, will also improve the wider guarantee framework through better coordination, targeting and data.

3. Three areas of progress

Widen the financing frontier to innovation and climate activities; assess firms in totality using cash flows, e-invoices and payment behaviour, as a complement to prudent underwriting; and pair finance with capability-building through platforms such as imSME and MyKNP, so that more firms grow into stronger mid-sized companies. His warning to lenders: sharing risk must never become a way of passing it on.

1. A run of supply shocks

At a Sydney fundraising lunch for a youth mental health charity, her third as Governor, the head of the Reserve Bank of Australia described recent years as a succession of disruptions on the supply side: the pandemic, the energy surge after Russia invaded Ukraine, and now the Middle East conflict, extreme weather and trade disputes. She compared this period with the oil crises of the 1970s and argued that today's economy absorbs such shocks better, largely because credible inflation targets keep expectations steady. Shocks still cut growth and real incomes, so the bank's task is to stop them from turning into lasting inflation. Because price and capacity pressures were already elevated, the bank raised rates earlier in the year.

2. Where inflation stands

After the post-pandemic surge, Australian inflation fell markedly in 2024 and 2025 and looked set to return to target. It then climbed again, above target even before oil prices jumped. Headline inflation reached 4% in May, and the underlying measure, while following the bank's May forecast, remains too high. This reflects demand pressing on capacity and some pass-through of fuel costs, for example into the price of new homes, and firms report rising non-wage costs they intend to pass on. A recent survey showed inflation is the top economic worry of Australians.

3. How the economy is adjusting

Five months into the conflict, its full effect is still unclear and commodity prices remain volatile, while earlier rate rises have not yet fully worked through. Demand is slowing broadly as planned. Household spending has held up better than very weak confidence suggests, helped by a temporary cut in fuel tax, and saving rates are steady. Business confidence fell at the outbreak but has partly recovered, and investment has been stronger than expected thanks to data centres. Housing has cooled more than forecast, with price falls concentrated in Sydney and Melbourne, though prices are near their level of February; fewer than 1% of borrowers owe more than their home is worth, and few face serious repayment difficulty. The bank does not target house prices, only their effect on spending and inflation. Unemployment has risen a little more than expected and some firms paused hiring, but job advertisements stay firm; some further loosening of the labour market is still needed.

4. From calm to turbulence

From the late 1980s to the 2008 crisis, the so-called Great Moderation brought steadier growth and inflation. Better frameworks helped, such as floating exchange rates, labour reforms and inflation targets, but so did luck: fewer commodity and productivity shocks and the integration of China, which lowered costs worldwide. Monetary policy could then focus on demand, and price stability and full employment rarely conflicted. Since the pandemic, repeated adverse supply shocks have lifted prices and held back growth together. For Australia they mean a loss of real income, on top of years of weak productivity. Business investment, including in artificial intelligence, is key to lifting capacity, though its effects are uncertain. When supply grows slowly, any level of demand produces more inflation, sharpening the trade-off between the bank's two goals.

5. Lessons from the 1970s

In 1973 and 1979 oil prices rose two- to threefold. The bigger damage came afterwards, as firms passed on costs, workers sought compensating wage rises and inflation spread and persisted. Early policy tried to protect activity, expectations became entrenched, and only harsh tightening and deep recessions brought inflation down. In Australia inflation reached 12.5% in 1982 and unemployment climbed from about 6% to 10.5% in 1983. Today the economy uses far less oil per unit of output, inflation targets anchor expectations and flexible supply chains adapt faster, so a single shock is less likely to cause lasting high inflation and unemployment; several overlapping shocks are harder to handle.

6. Policy outlook

The bank's aims are unchanged. Even if the oil disruption fades, fuel costs will keep spreading to other prices, and domestic pressures were already too strong. Some further slowing in demand growth is likely needed, and the open question is whether this year's tightening is enough. Monetary policy cannot fix slow productivity, which limits non-inflationary growth and real wage gains. The board stands ready to raise rates again if required.

1. Two opposing forces

Addressing the annual meeting of the Italian Banking Association in Rome, the Governor of the Bank of Italy described a world economy pulled between the Middle East conflict, which raises energy prices and revives fears of bottlenecks, and the spread of artificial intelligence, which lifts investment, high-tech trade, share prices and, through wealth, consumption. The United States gains from low energy exposure and technological strength; China relies on manufacturing and tech exports but imports much of its energy. The euro area, already growing slowly, suffers from costlier energy despite more diverse suppliers, and benefits less from AI investment. Household confidence and services expectations have weakened, inflation is close to 3% and should stay above that until early 2027, and renewed hostilities have pushed oil and gas up again. The ECB's quarter-point rate rise in June was a first, measured answer to upside inflation risks; next steps will depend on energy, activity, wages and prices, with the goal of keeping expectations anchored.

2. Markets: a fast rebound, perhaps too fast

The US-Iran conflict that began in late February first caused volatility, falling shares, wider risk premiums, capital flight from emerging markets and higher rates. Hopes of a ceasefire then brought a rapid recovery, with some sectors at record highs and junk bond spreads back down, while government yields stayed above pre-war levels, especially where public finances are weak. He read this partly as an underestimation of risk: shares rose together with interest rates, earnings expectations are very high and equity risk premiums are at twenty-year lows, recalling how crypto-assets long ignored risk before falling. The dollar regained its role as a refuge, helped by oil invoicing in dollars and the US status as a net oil exporter.

3. The AI trade

Demand for AI services has pushed big technology firms to spend heavily on data centres, creating shortages of advanced chips, exceptional margins and soaring chipmaker shares. The boost has been largest in the United States and in Asian markets dominated by semiconductors, smaller in Europe, where gains came mostly from banks and energy firms. Prices of some chipmakers assume that today's margins will last, which new capacity, new competitors, including Chinese efforts, or alternative technologies could disprove. AI service providers face cheaper rival models while borrowing heavily to fund investment, which makes them more fragile if conditions tighten. Korean stocks, heavily exposed to data centre parts, recently dropped about 25%. Investors should manage exposures carefully where optimism is greatest.

4. Italian banks

Bank credit still matters more for Italian firms than elsewhere in large European economies, representing 46% of their financial debt. Energy costs raised firms' cash needs, and banks responded: annualised loan growth to firms rose from 2.3% in February to 6.2% in May, though a long war could make lenders more cautious. Profitability, capital and asset quality are strong, as confirmed by the IMF's recent assessment of Italy's financial sector. Net bad loans have fallen from over 8% of loans a decade ago to about 1%, helped by EU rules on full provisioning that are demanding given slow Italian courts; the Bank of Italy plans to extend this approach gradually to smaller banks' older loans. A few small banks have failed, some because of unlawful conduct, which shows that integrity and governance remain the first defence, since supervisors cannot replace boards or judges. Mergers among banks, insurers and asset managers can strengthen the system if capital, business plans and integration are sound and competition is preserved; the market and shareholders decide once legal conditions are met.

5. Financing innovation

Since 2008, firms in advanced economies have borrowed less from banks and relied more on equity, because rules made lending more selective, services need less credit and intangible assets such as software and patents are hard to value or pledge. Private equity and venture capital funds, whose global assets tripled to $10 trillion between 2014 and 2025, bring both money and expertise. In Italy these funds remain small, focused on restructuring deals and start-ups, so promising firms often go abroad when they need to scale up. Insurers and pension funds, natural long-term investors, place only 0.5% and 0.7% of their assets in private equity. Rules are not the main obstacle; the market is simply too small, creating a trap where scarce investors and small funds reinforce each other. Funds of funds with public support, simpler tax incentives, better financial education and a truly integrated European capital market could break it.

6. Conclusion

Risks cannot be removed, but resilience can be built. Stability is a condition for investment; banks will stay central, but deeper capital markets and more risk capital must complement them. Italy has strong banks, high savings and adaptable firms to build on.

1. Praise for Côte d'Ivoire and the national plan

Speaking in Abidjan as a group of advisers on raising money for Côte d'Ivoire's 2026-2030 national plan was launched, African Development Bank President Sidi Ould Tah thanked the host country for housing the bank and praised President Ouattara's transformation of the economy: average growth above 6% over a decade, controlled inflation, fiscal consolidation, a better business climate and major infrastructure. The 2021-2025 plan delivered gains in infrastructure, access to electricity and water, agriculture and inclusive growth despite shocks. The new plan has six pillars covering peace, agriculture, private investment, people and jobs, infrastructure and climate resilience, and governance, with priorities of industrialisation, jobs for young people and women, and a green transition.

2. The bank's commitment

Guided by its four cornerstones and the New African Financial Architecture, the bank pledged to help mobilise resources across public projects, private initiatives and public-private partnerships, using lending, guarantees, private capital instruments and technical support.

1. The founding idea and the framework around it

Addressing the New York economic club days before the 250th anniversary of the Republic, SEC Chairman Paul Atkins linked Jefferson's declaration and Adam Smith's Wealth of Nations, both from 1776, as expressions of one conviction: individuals should be trusted ahead of institutions. Jefferson owned a well-worn copy of Smith's book, and the founders' debates echoed Smith's themes: a government large enough to protect people but too small to shackle them. The founders, he said, knew the invisible hand would not preserve itself, so they built a light framework of clear rights, coherent rules and bounded public authority, more trellis than cage, along which prosperity could climb, producing the world's most prosperous and resilient capital markets. He asked whether today's stewards have the wisdom and restraint to preserve it.

2. Two and a half centuries of markets

He traced American enterprise from Tocqueville's praise of its spirit and Washington's view of commerce, through the 1792 buttonwood agreement among stockbrokers, nineteenth-century growth of New York, widening share ownership, the postwar boom and the 1980s return to limited government. Every crisis threatened US markets, he argued, but none broke them, because the bedrock of free enterprise held and Americans returned to first principles; the 1933 securities law aimed to preserve markets by restoring trust through transparency rather than replacing investors' judgment. He quoted Washington's remark that a commercially minded people can achieve almost anything and a former SEC chairman's point that prosperity has to be created before anyone can distribute it, and the Tocqueville idea that Americans are instinctively enterprising and generous. He cited de Soto on formal property systems and contrasted collectivist experiments that ended in poverty with a system that rewards risk and innovation, noting foreign World Cup visitors surprised by everyday American life, and warned that some local leaders now speak the language of control.

3. The SEC's ACT strategy

He said recent regulation drifted: rules served social goals, enforcement became a policy tool, disclosure was redirected toward what regulators found interesting, and digital-asset uncertainty pushed innovation overseas. The SEC's response is a three-part ACT strategy. Advance: Project Crypto modernises rules to let markets move on-chain and gives issuers certainty about when an asset is a security. Clarify: the SEC and the CFTC signed a memorandum aligning definitions and coordinating oversight, ending a gap in oversight between the two agencies. Transform: with listed companies down about 40% since the 1990s, the agency is proposing offering and filer-status reforms to scale disclosure to company size and maturity, and has proposed rescinding the prior climate disclosure rule, re-tying the rulebook to materiality. Initial submissions for traditional IPOs rose 70% from January to early June against 2024, and one June offering raised 85.7 billion dollars.

4. Children's accounts, enforcement and a closing image

He highlighted Trump Accounts, opening on 4 July for every child under 18: an IRA in the child's name, with family, friends and employers able to give up to 5 000 dollars a year, philanthropic top-ups for many low- and middle-income children and a one-time 1 000 dollars from the government for those born between 2025 and 2028; the SEC supports it through investor education. On enforcement, the agency has abandoned regulation by enforcement, prioritising fraud, manipulation and abuses of trust over case counts and record penalties, and plans a broad review of enforcement processes, only the second in its history. He closed by saying the task is not to uproot what predecessors built but to tend the trellis and safeguard the invisible hand, as regulators, builders, risk-takers and citizens, so that the Republic's promise lasts another quarter millennium. He also mentioned that foreign fans at the football tournament were praising everyday American life, from air conditioning to barbecue, as a present-day echo of Tocqueville, and noted that some local politicians in the city were speaking the language of control and warned that the same collapse followed every collectivist experiment.

1. Honouring Mundell

Opening a Rome workshop held with CEPR and LUISS in memory of the Nobel laureate Robert Mundell, the Governor of the Bank of Italy recalled that Mundell's work covered optimal currency areas, the global monetary system and its geopolitics. His 1961 analysis saw low labour mobility as Europe's main obstacle to a shared currency, while others stressed the lack of common fiscal stabilisation.

2. A political project

In a 1969 plan, Mundell argued that Europe's money should rest above all on political reasons. Panetta agreed: monetary union grew from the post-war drive for reconciliation that produced the Coal and Steel Community in 1951, and three decades after Mundell's plan the euro was born.

3. Two waves of crises

The 2008 financial crisis and the 2010-11 debt crisis split the area into core and periphery, with uncoordinated budgets leaving monetary policy alone until Draghi's pledge restored calm. The pandemic and energy shock, though larger, met a joint response through Next Generation EU and national support.

4. What remains to be done

Europe should revive growth with reforms and joint investment in research, energy, digital networks and AI; build a true savings and investments union with simpler rules and a common safe bond; and digitalise payments, including a digital euro, to protect monetary sovereignty, a risk Mundell already linked to the dollar. Quoting Monnet's idea that Europe is built through crises, he argued that such slow, crisis-led progress no longer fits a fast-changing world: Europe must act before crises force it to, and the euro stands for unity, sovereignty and shared values.

1. Why policy can go back to basics

Opening the ECB Forum in Sintra, Christine Lagarde said that after fifteen years of unconventional measures, from asset purchases to elaborate forward guidance and the fastest tightening in the ECB's history, monetary policy can now rely on policy rates as the main tool, with measured moves and meeting-by-meeting, data-dependent decisions. She cautioned that this is no return to an idealised past. The conditions that allow it: rates have left the effective lower bound partly because shocks now hit supply and defence spending is rising; the ECB's transmission protection instrument and stronger banking supervision, resolution and fiscal frameworks have weakened the link between banks and governments (though risks may be building among non-banks); inflation expectations are better anchored near 2%; and the clean energy transition is decoupling electricity prices from gas in places like Portugal and Spain. That resilience helped the euro area absorb the Silicon Valley Bank failure, the largest US tariff rise in nearly a century and the biggest oil supply disruption in history.

2. A harder world to read

Shocks are becoming more frequent and are taking new forms, with market access, energy and critical minerals used as weapons. Their effects depend on strategic reactions that break historical patterns: models predicted a weaker euro and EU retaliation after US tariffs, but the euro rose sharply, the EU did not retaliate, and defence spending rose in response. Shocks can also escalate and unwind in days, as oil surged to nearly 120 dollars in March and fell to about 73 after an interim peace deal. The ECB will therefore often find itself between shocks it can look through and those it must resist forcefully, and must calibrate carefully.

3. Better indicators and robust decisions

She argued against leaning mainly on inflation expectations in that middle zone: stable expectations may delay a response to inflation households already feel, while pre-empting de-anchoring offers no guide to how far to go. Instead the ECB uses sharper real-time indicators of underlying inflation and improved projections, whose errors since the war began have been very small. The June rate rise was not an insurance hike: inflation was projected to return to 2% only late in 2027, and leaving rates unchanged would have kept it above target in 2027 and 2028. Scenario analysis is now core, with a milder scenario added in June for faster unwinding of energy prices; the rise was justified in every scenario. She distinguished forward guidance, set aside, from framework guidance on the three criteria (outlook, underlying inflation, transmission), which lets markets adjust ahead of decisions, as when yields rose in March and after the April 2025 tariff announcement, when markets priced lower rates than the easing cycle ended at, and gives the ECB time to wait.

1. Two challenges at once

Opening with the medieval Champagne fairs, where merchants cleared debts on paper rather than shipping silver, Christine Lagarde said Europe's first common market faded when tolls rose and sea routes opened. Today two challenges arrive together: technology, above all tokenisation, is rewriting how money and trades settle, and geopolitics has made owning financial infrastructure a matter of power, so sovereignty counts. For Europe she sees an opportunity to cut fragmentation in capital markets and open retail payments to pan-European operators.

2. Wholesale markets and retail payments

In wholesale markets, 32 central securities depositories keep records across the Union against two in the United States, and tokenisation on a shared ledger would record ownership once and settle payment simultaneously. But it needs a risk-free settlement asset: more than 60 market participants said they will not issue digital assets at scale without settlement in the central bank's own money, so the Pontes project will settle tokenised transactions this year, and Appia is drafting a blueprint for a single European tokenised market. In retail, the digital euro would keep public money available as cash fades, and because it would be legal tender accepted everywhere with open standards, it could break the vicious circle that has stopped European card schemes reaching scale: international schemes handle over 60% of card payments and 13 of 21 euro countries lack a national scheme.

3. Cross-border payments and the euro's role

Cross-border payments remain slow and costly, a gap dollar stablecoins want to fill; the Eurosystem is linking its instant payment system TIPS with others, including India's UPI. Deep integrated markets anchored in public money would make the euro more attractive to global users, but this needs market investment and shared standards, and governments must provide a common legal framework for digital assets so that national rules do not rebuild the fragmentation technology is dissolving.

1. The shock and the lessons of 2022

Three months into the Middle East war, world oil supply is about thirteen percent below its prewar level and liquefied gas about twenty percent, with very uneven effects. Georgieva first asked Europe to help the hardest-hit poor countries reach fertilisers and diesel. She praised decades of transition policy, which cut the energy intensity of European output by more than forty percent and ended dependence on Russia; today's gas shock is much smaller than in 2022, though the oil shock is almost as large.

2. Targeting support

Most new aid measures are temporary and cheaper than before, but again largely untargeted, which mutes the price signal and reduces energy saving. In 2022 over two-thirds of support was poorly aimed; protecting only the poorest forty percent of households would have saved almost two-thirds of the cost, whereas the richest fifth received nearly three times more than the poorest. The IMF therefore urges targeted help that still preserves savings.

3. Why an energy union

Three facts make the case. European industry pays two to three times more for electricity than American and Chinese rivals, and the doubling of real industrial energy prices has cut value added in energy-intensive industries by an estimated eighteen percent. Prices are also volatile and dispersed, with some countries paying over three times as much as others. And the union still imports more than half its energy, so outside disruptions pass quickly into prices.

4. How to get there

Speed up cheap renewables, integrate the internal market and keep private incentives right. Completing planned interconnectors, with more solar, wind and nuclear power, could lower average electricity prices by more than ten percent, and prices often fall on both sides of a new link; part of export revenue can be shared with the public. A common blueprint for supply, storage and interconnection is needed because wind and sun are unevenly spread. The carbon market should be protected: its revenue could reach about one percent of output, more than the public investment cost of the transition. Europe should use the crisis and act as one.

1. Present challenges

After the 11 June Eurogroup meeting, President Kyriakos Pierrakakis said ministers looked at both urgent problems and the choices that decide how competitive Europe will be. The Middle East crisis is already felt, energy markets are still strained and the dangers for growth and prices need close watching. The Commission and the ECB presented assessments, and ministers took stock of national fiscal plans: uncertainty has a cost, so fiscal coordination, stability, credibility and consistency matter even more. IMF Managing Director Kristalina Georgieva joined the annual exchange on euro area policies and broadly shares the European assessment.

2. Energy, technology and financing

Energy supply, cost competitiveness, the climate transition and industrial strategy form a single problem, so Europe needs a strategy that cuts both costs and dependencies, through better interconnections, network investment and domestic sources. On technology, Europe has universities, research and talent; its only deficit is scale, because it often fails to turn innovations into global champions. Technological sovereignty means having the capabilities, skills and industrial base to make its own decisions, not isolation. All of this is financed by channelling European savings into productive investment through the savings and investments union. He welcomed new colleagues from Latvia and Slovenia and concluded that Europe must manage today's crisis and prepare for tomorrow at once.

1. Rates on hold amid a stagflation dilemma

Presenting the 10 June decision, Bank of Canada Governor Tiff Macklem said the policy rate stayed at 2.25% as the Middle East conflict, higher energy prices and supply disruptions weigh on global growth and lift inflation, while US tariff uncertainty continues. Canadian GDP fell 0.1% in the first quarter, with consumer spending up 1.4% but government spending, housing and business investment weak; unemployment dropped to 6.6% but employment is little changed this year, and growth should resume in the second quarter while the economy stays in excess supply. CPI inflation rose to 2.8% in April on energy and the carbon-tax base effect, with no broad pass-through yet and core measures near 2%.

2. Risks and policy options

Oil is about ten dollars a barrel above the bank's assumption, so inflation should hover near 3% before easing toward 2%. Weak growth with rising inflation is a dilemma: raising rates could further slow the economy, easing risks entrenching inflation, so holding balances the risks. The bank will disregard the war's short-run impact but not let high energy prices become persistent inflation. If the US imposes major new trade restrictions, further cuts may be needed; if energy prices spread into generalised inflation, consecutive increases could follow. Structural shifts in trade, AI adoption and demographics complicate assessment.

1. A meeting of academies in Sinaia

Opening a seminar in Sinaia with the Spanish royal academy for economic and financial science and Romania's Academy, National Bank of Romania Governor Mugur Isărescu welcomed guests, paid tribute to former Prime Minister Petre Roman and the improvised decisions of the early-1990s transition, and noted that the central bank has hosted an international financial stability seminar there for almost twenty years. He described long ties with the Spanish academy, recalled earlier joint sessions and his own talks on Romania's role in the EU and on monetary policy in an emerging economy, and said economics, law and sociology are anthropological disciplines that gain meaning through dialogue.

2. Money without cash

Reflecting on a career that began with handwritten ledgers and administered exchange rates, he said cash was once the only money citizens knew, whereas today people pay, send money abroad or borrow without touching banknotes, through bank cards, the internet, mobile payments and now central bank digital currencies. With the ECB and others debating a digital currency, he wondered whether central banks are agile enough to manage the shift without losing stability, trust and protection of citizens; he has no firm answers and values dialogue between solid institutions. He ended with Sinaia's history and a football anecdote, giving guests a commemorative coin on Steaua Bucharest's 1986 European Cup win over Barcelona.

1. Reagan's legacy

Speaking at the Reagan National Economic Forum in Simi Valley, the SEC Chairman, stressing that his views were personal, paid tribute to Ronald Reagan as the United States nears its 250th anniversary. He recalled the economic revival he witnessed as a young lawyer in New York in the 1980s and Reagan's faith in the market, which he credited with spreading free enterprise beyond the Iron Curtain and contributing to the fall of communism. Markets, he argued, need rules clear enough to guide but limited enough not to stifle. He joked that, after three periods at the agency, he finds a proposal for yet another disclosure obligation as frightening as Reagan found an official offering help.

2. A regulator that became an obstacle

Congress gives the SEC three linked goals: protecting investors, keeping markets fair and efficient, and helping companies raise capital. In his view, previous commissions piled on disclosure duties unrelated to these aims and to the reasonable investor standard, making listings costly, litigious and politicised. Between 1994 and his return as Chairman, the number of US-listed companies fell by about 40%. Hostility toward digital assets drove innovators abroad, treating the technology rather than bad actors as the problem.

3. The new agenda

Following the administration's goal of making the country the leading crypto hub, the SEC launched Project Crypto, now shared with the CFTC, to modernise rules for on-chain markets, clarified which digital assets are securities and is preparing an exemption for tokenised listed shares and guidance for on-chain trading systems. He and the CFTC chairman are working to end overlapping oversight between the two agencies. To revive initial public offerings, the SEC has proposed letting companies report quarterly or every six months, recalibrating disclosure and easing access to markets, and on the day of the speech it proposed withdrawing the previous climate disclosure rule, arguing that the agency must serve all investors rather than particular political goals. He presented harmonisation with the CFTC as turning a zone of unclear jurisdiction into fertile ground for new businesses, and said the agency is acting with both rigour and restraint across its whole mandate.

4. Conclusion

He described these steps as a beginning. Recalling the jobs and lower inflation of the Reagan years, he said the question is not whether Americans can build new prosperity but whether regulators are willing to let them, and voiced confidence that the agency will keep American markets strong for the coming 250 years. He closed by quoting Reagan's call, made at the same library, for a new beginning for citizens not yet sharing in prosperity.

1. Scenarios for an unpredictable world

At the Reykjavík Economic Conference, the Governor of the Bank of England recalled that a year earlier he had explained how, after Ben Bernanke's review of its forecasting, the Bank would use scenarios to explore how shocks spread to inflation and how policy might react. That foresight proved useful: the Middle East conflict has curbed traffic through Hormuz and damaged energy facilities, a large negative supply shock for the world.

2. The shock to UK inflation

Before February, UK inflation was heading back to the 2% target from April, and with slack building and a softer labour market, further rate cuts were likely. Instead April inflation reached 2.8%, with household energy adding 0.8 point more than expected, and it should rise further as utility bills and supply-chain costs climb. As an energy importer, Britain faces a loss of real income that policy cannot prevent; the outcome depends on whether Hormuz reopens and infrastructure is repaired. The Bank's task is to stop inflation from becoming entrenched and bring it back to 2% over the medium term.

3. A flexible target and the lambda question

Since the 1998 Act, the Bank sets policy independently to achieve price stability, under an annual remit from the government and accountable to Parliament, which protects the promise of low inflation from political temptation. The 2% target applies at all times, but the remit accepts that returning to it too fast could cause unwanted swings in output. It does not say how much weight output should get, the parameter economists call lambda, which makes the remit an incomplete contract leaving the committee constrained discretion. He sees this as deliberate: the right weight depends on the shock, high when a temporary price jump can be ignored, low when expectations are at risk. When inflation deviates by more than one point, the Governor writes an open letter to the Chancellor. Compared with a dual mandate, the UK framework puts price stability first but leaves more freedom in managing trade-offs.

4. Applying it to the energy shock

Direct energy effects are usually looked through, since rate rises would hit after the shock fades and would require extra slack to offset them, so lambda is high there. Indirect effects through supply chains last longer and justify a moderate weight. Second-round effects, where higher expectations feed wage claims and then prices, deserve a low weight, but they are uncertain and slow to appear, so the Bank cannot wait for proof yet risks overreacting. Given economic weakness, tolerating temporarily higher inflation is reasonable, but that tolerance would shrink if second-round signs emerged.

5. The current decision

The April report presented three scenarios without a central projection or probabilities because of the unpredictable conflict, covering its length, the scale of energy price rises and the risk of persistence. Holding Bank Rate at 3.75% was an active choice: removing expected cuts has already tightened conditions, with mortgage rates up. Weak activity should limit second-round effects, though they would grow with larger and longer energy price rises, and policy will be adjusted as events unfold.

1. Economy under strain

After the euro-area finance ministers met in Cyprus, Kyriakos Pierrakakis describes a demanding moment. Instability in the Middle East pressures energy markets and supply chains, and the Hormuz situation disrupts oil, gas, fertiliser and helium. The Commission now projects growth slightly under one percent this year and about 1.2% in 2027, weaker than before yet far from recession, with renewed but milder inflation pressure than in 2022.

2. Policy balance

Europe must protect fiscal stability while easing strain on households and firms, using measures that are temporary, targeted and tailored. He credits past energy adaptation with cutting the crisis impact by about 12% according to the IMF, and stresses coordination with partners after G7 talks led by France.

3. Housing and the digital euro

Ministers held a substantive talk on housing affordability, which affects productivity, mobility and inequality, agreeing no single fix suits all countries. They also met a European Parliament committee chair on digital euro legislation, which he wants finished by year end, calling the project vital for sovereignty and the euro's international role, deliverable by 2029.

1. Uncertainty as the new normal

At a Bangkok conference on Asia in 2050, Georgieva said the new Middle East conflict, whose regional and global effects the IMF is quantifying, puts energy security and confidence at stake for most of Asia. Uncertainty is now the permanent condition rather than a passing phase, so governments and firms need strategy, financial strength and above all agility, and should concentrate on what lies within their own control.

2. A golden quarter-century

Since 2000 the region built policy frameworks, financial oversight, reserves and trust, which brought stability, low inflation, investment, private-sector growth and poverty reduction on a vast scale. Asia now produces two-thirds of global growth and nearly forty percent of world trade.

3. First challenge: productivity through AI

AI could add up to eight tenths of a point to annual growth in Asia, provided large public and private investment in digital infrastructure and skills, fewer regulatory barriers, deeper stock and bond markets and sensible guardrails. Singapore tops the IMF's preparedness index, China and Korea lead in adoption, India is democratising access and Japan uses robotics; several Southeast Asian economies and Korea have out-of-court debt restructuring.

4. Second challenge: people

AI will not help everyone: middle and entry-level jobs are most at risk, which matters for young people, so workers must be taught to keep learning. Asia will age faster than any region, with the number aged over sixty-five doubling by 2050, yet conditions differ: Japan is old, China and Korea are ageing quickly, India, Bangladesh and parts of Southeast Asia stay young, so some need higher participation and others more jobs.

5. Third challenge: trade and integration

Openness can be a weakness, but trade finds a way around barriers, and Asia can act alone through regional integration: lowering nontariff barriers could raise regional output by about 1.8 percent in the long run. She urged an ambition beyond trade agreements, towards an internal market like the European one, helped by Asia's lead in digital payments, which will feature at the Annual Meetings.

1. A stalling convergence engine

Speaking to the Commission's competitiveness seminar in Leuven, Georgieva said Europe's convergence engine is stalling because the single market is unfinished and complacency about competing has set in, while threats mount: Russia's war to the east and a dented transatlantic alliance to the west, where a trade breakdown could cost the Union around 0.3 percent of output on top of half a point already lost.

2. Three hard facts

Europe's economy is shrinking in relative terms, since EU output once matched America's; it has lost its productivity lead in both technology and other sectors; and its firms are less competitive and struggle to grow, with promising startups moving abroad. The core objective must therefore be much faster productivity growth, through national structural reforms and completion of the single market.

3. Where regulation and fragmentation bite

Regulatory barriers to trade inside the Union are two to three times those between American states, moving workers is roughly eight times costlier, energy costs about double American levels, and a banking system split into twenty-seven pieces leaves a sixty-trillion-euro financial system holding timid money. She called for a deep regulatory clean-up, an end to national gold-plating, a 28th corporate regime created by Regulation rather than Directive, easier labour mobility through recognised qualifications, portable social security and flexible housing, one energy blueprint with interconnectors and faster permits, more joint EU borrowing for shared goods such as defence, and one unified financial system.

4. The payoff and three practical steps

Cutting internal frictions to American levels could raise EU productivity by about twenty percent, and Cyprus, Greece, Ireland, Portugal and Spain show reforms pay. She also backed rules-based trade and recent deals with Mercosur and India. Her three suggestions: make the single market a single-minded obsession under one empowered coordinator, set a hard deadline and plan backwards, and replace the image of a regulatory superpower with one that sweeps away obsolete rules, using AI for the clean-up.