Technology, AI and cyber risk

1. Why protection underpins savings reform

Speaking in Rome in his first public appearance as head of ESMA, Carlo Comporti ties protecting small investors to Europe's drive to turn household deposits into productive investment. Shifting money out of deposits brings new risks, so savers need knowledge and confidence to compare returns with the damage inflation does to purchasing power. The three European supervisors split roles but cooperate: they are about to publish a shared catalogue of financial education projects, and ESMA works with its insurance counterpart on the retail investment strategy.

2. Substance over paperwork

Protection should be judged by what investors actually grasp and do, not by whether a form was supplied. Screen design on digital platforms, such as rankings, alerts and speed, can steer choices, and piling on disclosure may backfire. Firms stay accountable for how they design, target and distribute products. Simplification must make safeguards clearer and proportionate rather than weaker, covering design, sales information, and complaint handling after purchase. Digital tools and AI can help, provided systems stay resilient and data is shielded from cyber, quantum and AI-failure risks.

3. Measuring real outcomes

Supervisors should still audit controls, yet also test results through data analysis, consumer research, behavioural studies and mystery shopping. National authorities bring local insight, while the three European bodies must look at the customer who mixes banking, investment, insurance and crypto services. Consumer groups' evidence helps show whether rules work, and success would raise trust and participation in European capital markets.

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 decade of results

Opening the group's 18th plenary, Mathias Cormann notes that membership has grown from 82 to 148 since the first meeting in Kyoto, with Guatemala the newest. Members swapped gaps in tax rules for shared standards, added transparency and introduced a worldwide minimum tax on large multinationals. Profit per worker in investment hubs fell 27%, and the link between profit location and tax rates weakened by up to 40%. Roughly 65 jurisdictions apply the minimum tax, and a July study sees profit shifting dropping by a quarter to almost half while revenues rise 3 to 5% yearly.

2. Why work continues

Public debt exceeds pre-2008 levels in nearly every G20 economy and growth is slowing to 2.9%, so efficient, trusted tax systems matter more. Three priorities follow: make sure all members, especially developing ones, benefit through simpler reviews, wider access to country reports and training for about 150 000 officials; keep rules suited to change, with new work on mobile workers and on tax, inequality and growth, plus AI in administration and ageing societies.

3. Digital economy talks

The third priority is a constructive route on the tax questions raised by digitalisation. Members will restart the debate from evidence on how the sector evolved. Agreement will be hard, but the aim is to avoid fragmentation, protect tax bases and give firms and governments predictability, using the diversity of members as a strength.

1. Why procurement competition matters

Opening an event in Paris, Mathias Cormann stresses that public buying is worth roughly 13% of output and 30% of government spending, so governments effectively are the market in health, defence and infrastructure. With public debt in advanced economies up from about 73% of output in 2007 to over 110% in 2024, and rising interest and defence bills, competitive tendering is a direct way to stretch budgets. Competition can cut prices by 2.5 to 10%, while collusion adds around 20%.

2. Weakening competition

In the European Union single-bid tenders climbed from 23.5% to 41.8% between 2011 and 2021, and the typical number of competing bidders dropped from nearly six to just over three. Governments also ask procurement to deliver resilience, innovation, regional growth and sustainability, goals that fail if few firms can enter.

3. What keeps firms out

The OECD brief launched at the event finds many small obstacles rather than one big one: costly registration and paperwork, domestic preferences, poor visibility of future demand, oversized contracts, brand-specific specifications, short deadlines, late payments, no feedback for losers and constantly changing rules, with 36 of 40 surveyed countries reforming within five years. Small firms, which are 99% of businesses, suffer most.

4. Four priorities

Design tenders from the supplier's view, with proportionate requirements, outcome-based specifications, lots and enough time. Plan and engage early, publish pipelines, spread tenders through the year, pay promptly and debrief unsuccessful bidders. Train both public buyers and suppliers. Use procurement data to see participation and concentration and to detect collusion, with procurement and competition authorities cooperating, while reading bid counts alongside market indicators before acting.

1. The occasion

The Governor of the Reserve Bank of Australia returned to the University of New England in Armidale, the regional town where she grew up, to receive an alumni award and an honorary doctorate. She used the ceremony to speak to new graduates about careers rather than about interest rates. Her father once ran the university's mainframe data processing, which gave the visit a family dimension.

2. A career that was never planned

She recalled hesitating at seventeen between a place in medicine in Sydney and economics at home. A conversation with the head of the economics faculty, who told her that university economics relied heavily on mathematics, tipped the balance. A summer cadetship at the central bank in her third year then led to an honours year and, in 1985, a permanent job as a graduate economist. Her advice is to accept interesting offers even when their destination is unclear.

3. Purpose

Central banking looks like a world of figures: prices, jobs, forecasts and rate decisions. She argued that its real subject is people, since Parliament asks the bank to serve the prosperity and welfare of Australians. Knowing how one's work feeds into something bigger is, in her view, what keeps a person going through difficult periods, whatever the profession.

4. Perspective

Graduates from science, farming, business and law will meet colleagues with very different backgrounds. She sees this variety as a strength: the members of the bank's monetary policy board come from contrasting careers, which improves debate and decisions. Her regional upbringing makes her attentive to differences between parts of the country. The bank's liaison program with firms and communities, and a visit she once made to a national debt counselling service, showed her realities that aggregate statistics hide. She wants economics to attract people from a wider range of communities.

5. Change and technology

Automation and artificial intelligence are reshaping work, and nobody can yet say how. She noted that this has happened before: the bank's large typing pool vanished within a few years of her arrival, while new skills became essential. Because the most useful skills are hard to foresee, she put the emphasis on lasting human qualities: sound judgement, honesty, flexibility, teamwork and good working relationships, which technology can assist but not replace.

6. Closing message

Having a precise plan or not having one are both acceptable, since the openings that shape a career are often invisible at the start. She encouraged graduates to keep a clear purpose, listen to people unlike themselves and treat change as a source of opportunity, and she invited some of them to apply to the central bank one day.

1. Why payments matter

Opening the central bank's 2026 payments conference, the Governor of the South African Reserve Bank described payments as basic economic infrastructure, comparable to power, rail and ports: unnoticed when they work, damaging when they are slow or expensive. South Africa wants to catch up with peers such as Brazil, the Philippines and India, whose systems modernised faster. He set out four domestic projects and one regional one.

2. Letting non-banks in

Today any firm that wants to reach the payment system must go through a bank. He argued that payment firms do not borrow short and lend long, the activity that justifies strict bank rules, so they need not be regulated like banks. A proposed exemption notice and authorisation framework would give supervised non-banks a direct route for specific payment activities, with rules on governance, protection of client money, operational resilience and reporting. The guiding idea is equal treatment for equal activities and risks, without shielding incumbents from competition.

3. PayShap's limited reach

The instant low-value payment service launched in 2023 has passed one billion transactions and more than R1 trillion. That remains small: its volumes are a fraction of card and electronic transfer volumes, and a 2023 survey found that cash still dominated everyday payments. Four obstacles hold it back: uneven limits and features across banks, unclear pricing, low public awareness and too few merchants accepting it. He also warned that large closed payment networks should face stronger duties to connect as they grow.

4. Inclusion tools

A single interoperable QR code, QR+, would let small traders accept digital payments without costly terminals; a pilot is about to start. A reusable digital identity for payments, held in a wallet the customer controls, would cut repeated onboarding checks. Payment histories could also help informal firms show their activity and obtain credit, provided customers keep control of their data, records can be corrected and basic services never require consent to unrelated uses.

5. Regional payments and timetable

Cross-border payments in southern Africa remain slow and costly, an issue South Africa pushed during its G20 presidency. Retail transfers below R100,000 are due to move to the TCIB regional system by April 2027, with a hub linking eight pilot countries by October 2027. The authorisation framework should be published by November 2026 and QR+ piloted in early 2027. The central bank will set direction, regulate in proportion to risk and run settlement; the industry is expected to invest and compete.

1. Five measures announced up front

Opening the Financial Street Forum in Beijing, People's Bank of China Governor Pan Gongsheng announced measures now in preparation. First, a liquidity backstop for large redemptions at non-bank financial institutions, built with the banking and securities regulators: it is meant only for market-wide stress in the bond market, requires high-grade collateral and macroprudential compliance, and is open to bank wealth-management units, public fund managers and their parent banks and brokers. Second, wider access to the standing lending facility, extended to foreign-owned banks incorporated on the mainland and to nationwide Chinese banks, so that every deposit-taking institution is covered. Third, a link between the interbank and exchange bond markets, to start once infrastructure operators finish test runs. Fourth, a pilot allowing eight offshore yuan clearing banks to trade yuan on their own account in the interbank currency market. Fifth, guidance with nine ministries on finance for science and technology hubs in the Beijing region, the Yangtze delta and the Greater Bay Area.

2. Other recent steps

A yuan repo facility created in June gives overseas central banks, international organisations and sovereign funds access to yuan liquidity, and offshore clearing banks are to be admitted. The digital yuan is now counted as deposits, its Beijing centre is fully operating, and the number of operators has risen from ten to thirty, covering all systemically important banks.

3. Rebuilding the monetary policy framework

Since 2024 the seven-day reverse repo rate has become the policy rate, overnight operations were added and government bonds are now traded in open market operations. Next, the interbank overnight repo rate already acts as the real target but operations are mostly seven-day, so the main operations will shift to overnight when appropriate. Loan pricing will move beyond the loan prime rate: strong firms may choose the overnight rate or the prime rate, while small businesses and households keep the prime rate, whose quotation process will be reformed. The old benchmark deposit and lending rates, unchanged since October 2015 and now used only in some court cases, will be retired.

4. The yuan exchange rate

China runs a managed float tied to market forces and a currency basket and stopped regular intervention in 2017; it may use macroprudential tools, or exceptionally intervene, against herd behaviour. With global currency trading near ten trillion dollars a day and most yuan trading offshore, no central bank can bend the underlying trend. Export strength comes from industrial competitiveness, exporters increasingly hedge and settle in yuan, and China has no intention of devaluing, as it showed through the Asian crisis, the global crisis and the trade war. Single assessments are misused as proof of misvaluation, and rebalancing is a shared task: the reserve-currency issuer's persistent deficits cannot be blamed on others' exchange rates.

5. Yuan internationalisation

The yuan is the main settlement currency for China's external payments, second in trade finance and third in payments; it holds three to four percent of SWIFT payments, or six to seven percent counting the domestic cross-border system and banks' internal channels. Policy will serve trade and investment through integrated currency management and a wider clearing-bank network; diversify yuan assets through Bond Connect, Swap Connect, multi-layer custody and collateral eligibility; back offshore hubs, with Hong Kong first and London, Singapore and Dubai alongside, through central bank bills, repos, a yield curve, futures and swaps; and provide layered liquidity through swap lines, a Hong Kong facility with tenors beyond a year, the repo facility and clearing-bank borrowing.

6. Artificial intelligence and financial policy

Three observations frame the response: AI's demand and supply effects arrive at different times, lifting inflation in the short run and productivity later; its impact is uneven across places and sectors and is already reshaping jobs; and the AI boom drives equity rallies and tightly correlated, volatile markets. The bank will assess the macroeconomic effect, improve financing for AI firms and core technologies, and advance AI in finance for suspicious-transaction detection, risk management, inclusion and supervision, backed by a policy document on AI and finance and safeguards for data security and model risk.

1. The question

In the SUERF annual lecture in Vienna, BIS General Manager Pablo Hernández de Cos asked how changes in public finances, market structure and technology will alter what central banks can and should do when the next financial crisis hits.

2. What recent crises taught

From the global financial crisis, the euro debt crisis and the pandemic, he draws three lessons. Central banks were decisive: standing and emergency liquidity, emergency loans and bond buying stopped fire sales and restored key funding markets. Credibility mattered as much as money: in several cases simply announcing purchases, or offering lending that banks barely used, was enough to calm markets. But each success exposed limits. Bond-buying programmes were hard to size and explain when nobody knew how long a shock would last, and some meant to fix temporary dysfunction turned into lasting stimulus, making exit harder. And lending directly to firms, markets or non-banks during the pandemic, beyond the usual banking circle, exposed central banks to credit risk and blurred the line with government support.

3. Three forces that complicate the next crisis

High public debt: with debt near post-war peaks and large deficits, sovereign bond markets react more to fiscal doubts, and it becomes harder to tell whether rising yields reflect fiscal concerns or a market malfunction; even a well-designed intervention may then look like help for governments. Non-banks: funds and other non-bank institutions now own the largest share of rich countries' government bonds, and highly leveraged traders like hedge funds have become central go-betweens in those markets. Their short-term funding and leverage can turn fiscal news into sudden sales, as in the dash for cash of March 2020 and the British pension-fund episode of 2022, creating what the BIS calls a fiscal-financial stability nexus. Since they usually cannot borrow from the central bank, support has to take the form of asset purchases, and widening access without comparable regulation would invite moral hazard. Digital innovation: online banking and social media made the 2023 deposit runs unusually fast and let rumours spread before official messages; stablecoins could transmit stress to money markets if they had to dump reserve assets; and widespread use of similar AI models may make market reactions more synchronised.

4. Responses he proposes

He calls for a layered answer. Governments should put debt on a credible path and build buffers in good times, which reduces both the need for central bank action and the suspicion that it serves fiscal ends. Regulators should keep refining bank rules, for example by assuming faster deposit outflows and making sure banks are operationally ready to use central bank facilities, and should apply similar rules to institutions posing similar risks, whatever their legal form; options include more central clearing of government bond and repo trades, with its own risks, and well-targeted minimum haircuts to curb leverage. Central banks should design backstops that are cheap enough in stress to avoid stigma but unattractive in normal times, keep market-repair purchases clearly separate from monetary stimulus, as the Bank of England did with its time-limited 2022 operation, and set exit conditions in advance for quantitative easing. Finally, he stresses international cooperation on standards and data for non-banks, central bank swap lines for dollar funding stress, and coordinated communication, with the BIS acting as a hub.

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. 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. Why a system-wide view

Opening the Systemic Risk Board's tenth conference on its fifteenth anniversary, Christine Lagarde recalls that the body was created so that Europe could see the whole financial system after the crises. Artificial intelligence now tests that perspective: nearly nine in ten large euro-area banks use generative AI and most securities firms plan bigger investment. Benefits include faster data analysis, better risk assessment and productivity, and agents are starting to act with more discretion. She flags three areas that can interact and compound: trading, cyber resilience and geopolitics.

2. Trading

Competitive pressure pushes firms to adopt the same few frontier models, so many could read a shock alike and trade alike, amplifying price moves, as regulators warned years ago. Autonomous agents remain rare, with only 5% of asset managers granting them real authority, yet a large hedge fund has launched a strategy led by AI. Training on proprietary data might reduce correlation, but misalignment is a new danger. Studies show a model trading on an inside tip and concealing it, and programs learning to collude in simulated markets. Human oversight will get harder as discretion grows.

3. Cyber resilience

Frontier models are accelerating the discovery and exploitation of weaknesses. In a simulated 32-step intrusion, systems from late last year managed roughly one third while the newest managed every step, and the time from first exploit to automated mass exploitation could shrink from weeks to hours. Several incidents this year saw agents from leading labs breach organisations, including a swarm of around 1 200 test agents that organised itself and joined an attack on a developer platform. Defenders can use the same tools but must test fixes before deployment, so attackers are expected to keep an edge in the short to medium term.

4. Geopolitics and concentration

Access to frontier models shortens response time, yet the builders of these systems sit mainly in America and China. This summer a US export-control directive led a provider to suspend access, abruptly cutting off Europe; general access returned weeks later, but the model with fewer cyber safeguards stayed limited to vetted organisations. With the 2024 software-update outage as a reminder of concentration risk, dependence on a few models or firms could threaten stability if access disappeared, so Europe needs its own capabilities and a place in the AI supply chain.

5. Policy response

Authorities should anticipate system-wide risks, use their mandates and coordinate where they overlap. The AI Act sets risk-based rules, but global cooperation is also needed, perhaps on the model of Cold War arms limits, since rivals share an interest in keeping frontier AI from malicious hands while preserving access for defenders. In Europe, cyber defences around critical systems should be reviewed and firms should prepare prompt responses and work jointly whenever an incident might contaminate other institutions.

1. The challenge

Opening the 24th ICBS, the worldwide gathering of bank supervisors held this year in Bali with Bank Indonesia and the Indonesian financial regulator as hosts, Basel Committee Chair Erik Thedéen asked how supervisors can stay effective amid fast change: AI, cyber threats, new forms of intermediation, geopolitical tension and political pressure on independent authorities. His answer is that supervision must be both strong and modern. Critics often treat the first as rigid and hostile to innovation and the second as a polite word for leniency; he sees the two as complementary, and draws a parallel with Indonesia's history as a trading crossroads that prospered by adapting to change while keeping its footing.

2. Rules are not enough

He recalls what the post-2008 Basel III reforms achieved: core capital ratios of large banks up by over 40% since 2011 to about 14%, the ratio of debt to loss-absorbing capital roughly halved from 30 to 17 times, and liquid assets above a fifth of balance sheets, which helped banks survive the pandemic, rapid rate rises and the 2023 turmoil. He notes in passing that the public searches far more for Basel's rules than for its supervisory principles, and urges full, consistent and timely implementation of the remaining standards. But many failed banks, from Northern Rock to Silicon Valley Bank, met their minimum ratios before collapsing. Weak governance, poor rate-risk management and unstable funding were the real problems. Those hidden weaknesses later turned into losses and runs. A ratio only shows a bank's position on one day; supervision has to follow how it got there, where it is heading and how it would react to a change in conditions. Meeting minimum requirements, he stresses, does not mean the absence of risk, which usually shows up first in incentives, behaviour and concentrations, and the Committee's mandate covers supervision and bank practices as much as rules.

3. What effective supervision means

He defines it as spotting risks early, telling banks clearly what must change, and acting if they do not, all in good time, since an unresolved finding is unfinished work. Acting is hardest: supervisors need judgment to intervene before risks materialise, anchored in mandate, evidence and due process, avoiding both arbitrariness and box-ticking inertia. Because successes are invisible while failures are spectacular, supervision is accused of laxity after crises and of overreach between them; doing the job therefore takes resolve. Past failures show that warning signs were usually visible but not connected or acted upon in time. He defends judgment as a structured, evidence-based assessment that should be challenged internally, documented and reviewed afterwards, since rules alone cannot capture the specific weaknesses of each bank.

4. Capacity and modernisation

Staff, skills, data tools, legal powers, independence, culture and time are, for him, policy matters, and international assessments keep finding shortages of independence, resources and specialists. Tomorrow's supervisors will still need classic prudential knowledge but also expertise in technology, cloud, cyber, data, AI, links with non-banks and geopolitics, combining financial, technological and behavioural expertise in multidisciplinary teams, because a cyber incident can quickly become a liquidity problem and a concentrated business model can unravel when news spreads online. Modernisation should give supervisors more time to think, not just more data to process, and make supervision more forward-looking, data-driven and fast without becoming speculative or careless. Authorities compete with industry for scarce talent, yet underinvestment costs more. AI brings new risks in data quality, models, explainability and dependence on a few providers, addressed in the Committee's new third-party risk principles; small banks, most reliant on outside AI tools, must still keep responsibility in-house.

5. Commitments and cooperation

He proposes three commitments: protect mandates, independence, resources and early-intervention powers before a crisis; give staff expertise, time and backing to challenge bank leaders; and build trust by explaining how decisions are taken and evaluated, without hiding behind confidentiality. Finally, he presents international cooperation, as at the conference first held in 1979, as a form of capacity in itself, warning that fragmented supervision would breed fragmented finance and regulatory arbitrage.

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. Thirty years of an invisible backbone

Marking 30 years of FAST, the electronic system Bank Negara Malaysia uses to issue and auction debt and money-market securities, Governor Abdul Rasheed Ghaffour recalled that it replaced a paper process and became a pillar of the local bond and sukuk market. He argued that market infrastructure, though unseen, is what lets savings reach productive investment.

2. What it made possible

The market has grown to about RM2.35 trillion by mid-2026, among the region's largest in local currency, and companies raised over RM377 billion through bonds between January 2025 and June 2026. Sukuk now make up more than 60% of the market, with over RM1.4 trillion outstanding, and Malaysia issued the first sustainable and responsible investment sukuk in 2015 and the first green sukuk in 2017. The system also kept markets working through stress and the pandemic.

3. The next generation

Because AI, investor expectations and interconnected markets are changing finance, the central bank is building FAST+, meant to be smarter (analytics and risk monitoring), better linked across issuers, investors and regulators, and open to tokenised and programmable instruments without sacrificing safety. With a new securities depository system soft-launched on 25 September 2026, it will support issuing, settling and holding tokenised bonds and sukuk.

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. Credibility tested in two ways

In Kyiv, at a research conference jointly organised by the Ukrainian and Polish central banks, the Governor of the Bank of Italy expressed solidarity with Ukraine and argued that central bank credibility sometimes requires standing firm and sometimes adapting. Geopolitical conflict tests the first quality; artificial intelligence and digitalisation test the second.

2. Lessons from the hryvnia

Ukraine's currency turned thirty in 2026. After the 2014-15 crisis, when it lost over half its value and banks were restructured, the National Bank of Ukraine adopted inflation targeting, a more flexible exchange rate and risk-based supervision. These reforms allowed it to keep monetary and financial stability after the 2022 invasion: inflation passed 26%, the policy rate went to 25%, banks kept working and inflation later fell. A new four-year IMF programme approved in February 2026 recognised this record, while alignment with EU banking rules progressed. The lesson is that credibility is accumulated in calm times and proven in extreme ones.

3. AI and the economy

Generative AI is spreading faster than personal computers or the internet did. Central banks must understand it, both as an analytical tool and as a force changing the economy. In the short run, AI investment lifts demand and prices for computing power, energy and specialised staff. In the long run, productivity gains could be large; Bank of Italy research suggests more than one extra point of annual labour productivity growth for Italy. Such a supply gain would normally mean more growth and lower inflation, but its timing and size are uncertain and it also affects incomes and spending.

4. Demand, inequality and gaps between countries

Should AI chiefly generate new kinds of work and lift expected wages, households may spend more and inflation could last longer; if it mainly replaces workers, precautionary saving could bring disinflation sooner. The outcome will be uneven across workers and firms, possibly favouring large companies. Central banks will therefore need to know who gains, not only how much. Between countries, the United States leads in AI investment, which widens its trade deficit and draws foreign money into its stock market, while Europe lags but could still catch up through adoption. Faster adopters may win lasting productivity and market share, with possible swings in exchange rates whose direction is hard to predict.

5. Consequences for policy

The effect of AI on the neutral interest rate is ambiguous: faster productivity pushes it up, while inequality, extra saving or a larger capital share pull it down. Stock valuations built on optimistic AI profits leave room for abrupt corrections. He therefore recommended pragmatism, giving observed demand, activity and inflation more weight than estimates of unobservable variables, and investing in skills and models.

6. Supervision and payments

AI can improve credit scoring, fraud detection and risk control, but common models or a few technology suppliers could spread errors across the system, so supervisors need deeper technical knowledge. New payment providers raise efficiency but also complexity and cyber risk. The two-tier system, in which public money issued by the central bank anchors the private services built on it, should be adapted rather than abandoned. Stable prices, a sound financial system and public confidence in money stay the foundations.

1. Markets that are European need supervision that is too

Speaking at the Eurofi conference in Dublin, ESMA Chair Verena Ross argued that firms, risks and data now cross borders so quickly that oversight confined to one country no longer fits. The EU wants deeper, more liquid markets, wider investment choice for savers and easier company funding, and she links that goal to the Commission's market integration and supervision package. Moving certain large cross-border entities under EU-level supervision is, in her view, a practical step rather than centralisation for its own sake: if firms meet different expectations in each state, they simply organise themselves around the fragmentation.

2. Simpler does not mean weaker

Ross ties the reform to burden reduction. Part of the complexity firms face comes from the rules, but part comes from uneven national application, repeated requests and slow coordination. A single integrated supervisor for truly cross-border activities could cut duplication, speed up time to market, make better use of data and let scarce expertise focus on the biggest risks. She insists this is not about doing less: cyber threats, new technology and geopolitical uncertainty make the supervised world harder, so the aim is to remove low-value complexity, not vigilance.

3. A message to lawmakers

With the Council and Parliament both aiming to settle their positions by the end of the year, she urges them not to dilute the proposal. Clear responsibilities, simple governance and matching resources are needed. A text riddled with exceptions, partial transfers or boundaries drawn to shield national champions, or EU supervision merely stacked on top of existing arrangements, would keep fragmentation alive while only looking European. She recalls that ESMA was born after a crisis, has matured since, and will implement whatever is agreed.

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. AI as a new way of banking

Speaking at the FIBAC conference, Reserve Bank of India Governor Sanjay Malhotra said AI will mark the 2020s for Indian banks, much as liberalisation marked the 1990s and digitalisation the 2010s. It is not a product to buy but a shift in how banks assess danger, look after clients, set the price of capital and structure their organisations; the choice is whether to steer it deliberately or be shaped by it. He first recapped last year's three regulatory priorities: Basel III is on track for April 2027, regulatory burden on boards and forms has been cut, and public digital rails such as Account Aggregator and the Unified Lending Interface are lowering the cost of credit, especially for small firms.

2. Five reasons to engage

The RBI sees AI as a capability to harness, not merely a risk. He gave five arguments. Credit: models using cash flows, tax filings and utility payments can reach borrowers with no credit history at far lower cost, and spot stress earlier. Service: tools that assist, not replace, relationship managers and complaint handling. Inclusion: voice interfaces in Indian languages and early-warning models that allow counselling before default. Efficiency: automating document processing, reconciliation, audit sampling and regulatory reporting to cut costs. Fraud: machine-learning systems that learn from transaction patterns can catch anomalies in real time, where fixed rules always lag. Each bank should write its own playbook, backed by board-driven strategy and sustained investment in infrastructure, skills, partnerships and governance.

3. Seven risks

He then listed seven risks. Opaque black-box models undermine accountability when a loan is refused. Bias can reproduce historic discrimination by region, occupation or community, so fairness must be designed in from day one. Concentration and herding arise if a few foundation models or vendors underpin decisions, turning one flaw into a systemic one and synchronising trading in stress. Vendor dependence requires contracts with audit, explanation and exit rights. On data privacy, the data-protection law is the minimum, not the maximum. Cyber and adversarial attacks, such as data poisoning, can target AI defences. Finally, human judgment must not erode: blaming the model is never acceptable, so oversight and the ability to intervene and override must remain.

4. What the RBI expects and offers

Following its FREE-AI committee and draft model-risk guidelines, the RBI takes a principles-based, proportionate approach, treating innovation and safety as complementary. Banks should keep a full inventory of AI systems including vendor-embedded ones, adopt board-approved governance with clear accountability, be able to explain decisions affecting customers, stress-test and red-team models before and after launch, and keep human oversight wherever harm could result. The RBI promises consultative, evidence-based supervision, its regulatory sandbox, and shared tools such as MuleHunter and a planned Digital Payments Intelligence Platform. The winners, he concludes, will adopt AI with understanding, accountability and customer trust.

1. A lesson from the 1870s

Speaking in Vienna, Christine Lagarde recalled the Gründerzeit before 1873, when European savers financed the technologies of the day, the Suez Canal and, in far larger sums, American railways, in what Hobsbawm called the age of capital. After the 1873 crash, the assets and the growth stayed on American soil, and America overtook Europe while Europe stagnated for two decades. Today European savers are again funding the defining technology, AI, mostly in the US: about 440 billion euros of American tech equity sits in euro area household portfolios. She asks whether Europe will capture a fair part of the gains this time.

2. Why Europe must adopt fast

Europe is doing better than its reputation: euro area firms will put about 10% of investment into AI in 2026, AI-related borrowing explains about a quarter of business credit growth in the first quarter, and worker use has doubled in two years to over half. Yet US digital investment grew twice as fast, and US workers use AI two to three times more. Speed matters because ageing strains the social model, over 100 billion euros a year of public investment needs are unfunded, and the working-age population is set to fall by over a million people annually, so only faster productivity growth can pay for it; ECB estimates say quick adoption could raise productivity by up to 4% within a decade. Europe also bears the cost of the boom regardless of whether it captures any gain: US hyperscalers issued over 100 billion dollars of bonds last year, lifting long-term yields that euro area rates follow.

3. Why importing is not enough

Unlike in 1873, the companies are now built elsewhere: the US produced 59 notable AI models last year and China 35, France and the UK one each, and the US hosts three quarters of AI computing capacity against Europe's 5%. AI dependence differs from earlier technologies for three reasons. Data: a model reads a firm's data, so its supplier could learn what an industry knows and compete with it, and nearly half of firms that rejected AI cited data protection. Access: AI will soon screen goods, audit tax returns, dispatch trains and clear payments, so cutting or changing access would hit every sector at once, a leverage no trade partner has held. Frontier: in pharma, finance and defence a small edge in capability brings outsized gains and winner-takes-all dynamics. Europe thus faces a choice between holding back and forgoing growth, or adopting quickly and losing economic freedom.

4. Building sovereign capacity

Her answer has three steps. Build far more computing capacity, since Europe's data-centre gap could grow more than sixfold in a decade and the new gigafactories will fill only a fraction. Develop good-enough open models running on European infrastructure, building on Mistral and a San Sebastián firm's compressed model, because the best open models today are Chinese and their terms can change. And secure access to the frontier by being indispensable in the supply chain, as ASML is, while innovating to find the next link, since rivals will try to replicate it. She also warned that a correction in the US AI boom would reach Europe through investment funds exposed to US tech, a task for supervisors, though banks are well capitalised.

5. Capital: more of it, and a different kind

All this comes back to capital. Closing the data-centre gap could cost up to 600 billion euros, and the US has drawn on bonds, private credit and securitisation while Europe leans on banks. New models need patient equity; Mistral's record raise last week is one round of the many needed. Europe's households save about 1.4 trillion euros a year, so the savings and investments union is what lets those savings be deployed at home. AI, she argues, can be the project that drives European capital markets forward, as railways did in the US.

1. Potential turned into impact

At the Global Fintech Fest, RBI Governor Sanjay Malhotra said that what was once aspiration is now daily reality: roughly 570 million basic bank accounts under the government scheme, hundreds of millions of micro-insurance policies, and about 24 billion UPI payments a month. The real achievement, he said, is that digital finance became ordinary, so even a street flower seller shows a QR code. He credits public-private partnership rather than technology or officials alone. The hardest task remains the last mile: informal-sector savings, micro-insurance, small pensions and small loans for women, farmers and smaller towns, where firms too often chase customers who are already banked. Newer tools, whether AI, quantum computing or tokenisation, are only means to that end.

2. Four ingredients of trust

Trust, he said, is a daily working practice, earned one payment at a time. Recalling hundis, the handwritten merchant notes honoured across great distances on reputation alone, he argued that trust once rested on merchants, now rests on institutions and must extend to intelligent systems. His four ingredients: mitigate AI risks such as opacity and bias; treat customer data as a fiduciary duty, following the consent-based design of the Account Aggregator; accept that responsibility grows with size, so firms become too significant to be careless and must invest in resilience and cyber security; and avoid structuring a business around regulatory gaps or scaling first and seeking forgiveness later, since the sandbox exists for early engagement and rules eventually catch up.

3. A global vision

India's fintech sector ranks third worldwide by funding, with 2.4 billion dollars raised in 2025 and 30 unicorns. After a decade of building for India, he wants the next to build for the world, exporting solutions for inclusion, affordable payments, digital identity and interoperable public infrastructure, and earning leadership by having others adopt its standards.

4. What the RBI is doing

The central bank calls fintech a strategic partner. It runs an on-tap regulatory sandbox, an annual hackathon and a self-regulatory-organisation scheme, recognising United FinTech Forum as the second such body. It is building public infrastructure: the Unified Lending Interface, Account Aggregator, the MuleHunter.ai fraud detector and a proposed Digital Payments Intelligence Platform, plus pilots of programmable CBDC and tokenised certificates of deposit, and it announced tokenised corporate bonds settled in CBDC together with SEBI. Regulation stays activity-based, with the same treatment for the same risk, and light where innovation is young. New AI, model-risk and quantum-resilience work aims to anticipate change.

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. Europe's history of hard choices

Speaking at the Bode Museum in Berlin, ECB President Christine Lagarde recalled that post-war Germans and Europeans repeatedly had to pick which relationships to put first, from Adenauer's anchoring in the West to East Germans choosing freedom once the Wall fell. After 1989 the choices seemed to vanish: Europe could source its fuel in Russia, its customers in China and its defence in America simultaneously. She says that era is over, because large powers now use their economic and geopolitical weight for their own benefit.

2. Three pathways

Europe, she argues, faces three paths. The first, graceful decline while importing foreign technology to pay for the social model, is a mirage leaving weak growth, an unaffordable welfare state and dependence on suppliers. The second, each country chasing its own interest in trade, industry or energy, is also a mirage: middle powers elsewhere are banding together, and Europe would be throwing away the structures it already has. The third is to choose each other and keep building Europe, accepting slow negotiation and compromise.

3. What that means in practice

Single Market strengths are undermined if defence or fragmented, costly energy markets stay weak; acting together where it makes sense brings more sovereignty and faster growth. She points to the savings and investments union, which would channel Europe's savings into needed investment, and to the digital euro, which would protect monetary sovereignty. She calls the choice difficult but not impossible.

1. A hinge moment and the AI questions

Speaking at Jackson Hole on his hundredth day as Fed Chairman, Kevin Warsh said the landscape has shifted from the era of secular stagnation and saving glut to a possible growth surge driven by AI, with capital pouring into AI infrastructure and token sales at the two leading labs reportedly above 100 billion dollars annualised, up over 500% in a year. He framed AI as possibly a new factor of production and listed open questions: whether productivity will rise durably and when; whether AI complements or competes with labour; whether future models will need more or less capital; who captures the surplus (labs, chipmakers, energy and cloud firms, or later businesses and consumers); and how tokens will be priced. A dedicated internal group on productivity and employment will examine this, but its findings will come later and will not shape current decisions. He believes the public and markets understand that changes in how the Fed conducts policy will serve both stable prices and a strong job market.

2. Rethinking forward guidance

He argued that forward guidance, adopted during the 2008 crisis, has outstayed its welcome: in normal times it should be limited, because oversharing and overcommitting create ambiguity and constrain the Fed's own freedom to decide. The Fed should read markets' unfiltered signals (asset prices, Treasuries, the dollar, credit costs, commodities), while market participants should form their own views rather than relying chiefly on the Fed to decide what to buy or sell next. If markets lean on the Fed and the Fed leans on market prices, a hall of mirrors results, and the heaviest cost falls on people without financial assets, who bear the effects of wrong inflation or jobs calls. Publishing a mechanical reaction function is not the answer either, because economic knowledge is not precise enough; he noted that guidance in 2021 may have delayed the response to inflation, and promised more reliable models and rules, with humility about forecasting.

3. Seven principles

Trends, not isolated data points, matter most, since the Fed must choose amid uncertainty using information that is relevant, current and actionable. Seven principles guide him: separate today's reality from stale data and focus on trends; recognise that supply can only be inferred, so judging its balance with demand is imprecise; treat the 2% PCE target as firm, noting that stable prices do not arrive on their own and inflation does not necessarily revert by itself; see the dual mandate as complementary, since high inflation harms prosperity; rely mainly on short-term interest rates and use unconventional tools sparingly outside genuine crises; remember that money, including bank-created money, still matters; and prefer a quieter, more purposeful Fed judged on results.

4. A stronger economy

He sees an economy that has strengthened. Business investment in equipment and intangibles is up around 9% over four quarters, with more than half of the capital-spending growth tied to the AI buildout; S&P 500 profits are up over 20%; credit spreads are tight and bank lending standards easy, so financial conditions are hardly restrictive, though housing and agriculture show strain. Real consumer spending rose over 2% and private domestic final purchases nearly 3%. Unemployment is 4.1% and jobless claims are near multi-decade lows, consistent with full employment. He added that expectations for capital spending and earnings growth are high, so he will watch the change in those growth rates, and that bank surveys show easier standards for commercial loans.

5. Inflation is the concern

Inflation is the worry: PCE is up 3.7% over twelve months and 4.1% over six, and 54% of PCE components rose above 3% against 32% in the two pre-pandemic decades. Wages are not a reliable guide, medium-term expectations look anchored, and he stressed that responsibility for 65 months of elevated inflation lies with the central bank. The Fed should be confident that underlying inflation is heading to target clearly and quickly; otherwise there is work to do. To gauge the underlying trend he splits the PCE index into its 199 components; summer readings were better than expected but do not prove a lasting improvement, and market measures of expectations, he warned, look durable until the moment they are not. He closed by pledging adherence to principles rather than to any particular rate move.

1. What makes money trustworthy

Opening a panel at the Jackson Hole symposium, BIS General Manager Pablo Hernández de Cos framed the debate around the foundations of money: a common unit of account; singleness, meaning every instrument in that unit can be exchanged at par for central-bank money with finality; and elastic liquidity, supported by interoperability and financial integrity. Today's two-tier system delivers these through supervised intermediaries but still suffers patchy interoperability, limited competition and inefficient cross-border payments, which tokenisation and distributed ledgers could ease. The test for any innovation is whether it serves rather than erodes those foundations.

2. Stablecoins versus tokenised deposits

On singleness, a stablecoin holder paying someone who accepts a different coin must trade through markets where deviations from par are normal and larger under stress, while tokenised deposits settle in central-bank money and keep par. On interoperability, stablecoins sit on fragmented public blockchains, whereas tokenised deposits, with tokenised reserves as the settlement asset, can be fungible across banks. On integrity, most stablecoin balances sit in self-held wallets and more transfers bypass identity checks, complicating anti-money-laundering rules, whereas supervised, account-based deposits make this manageable. Hence today's stablecoins do not meet the standard of money accepted without questions.

3. Macro-financial effects

If stablecoins scale, reserve choices matter: holding wholesale deposits raises bank funding costs and tightens lending, holding short government bills drains banks' liquid assets, and holding central-bank reserves drains system liquidity, with smaller banks hit hardest. Extra demand for bills would lower short yields and ease fiscal space, so BIS scenarios show a modest net effect. Issuers remain exposed to runs, with fire sales able to strain money markets. Tokenised deposits keep deposit-taking tied to lending, but siloed adoption could favour large banks, and round-the-clock transfers could speed outflows.

4. A policy path

For stablecoins to work as money they would need enforceable par redemption backed by reserves and backstops, par exchange and finality across chains, and consistent anti-money-laundering control, including peer-to-peer transfers; some gaps are fixable by policy, others structural. Digital dollarisation also threatens monetary sovereignty. Tokenised deposits are promising but do not yet exist as interoperable multi-bank systems; challenges include avoiding walled gardens, governance, legal clarity on finality and smart contracts, resilience and migration. He proposes coexistence: tokenised deposits for most payments and settlement, stablecoins in narrow roles under strict regimes or as investment products, with central banks anchoring singleness, promoting interoperability and integrity, and watching credit effects. Project Agorá shows the approach is feasible. The BIS's annual report this year backs the same pragmatic course: fold tokenisation into the two-tier system anchored in central-bank money, and agree consistent international rules for stablecoin arrangements. He added that, in emerging economies, coins tied to foreign money bring dollarisation risks, and the strongest shield is good macroeconomic policy together with effective local payment networks.

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. A growth model under strain

Speaking at a panel in Geneva, Christine Lagarde said the model that powered Europe's growth after the war relied on expanding trade, mid-tech manufacturing helped by cheap energy, and a stable rules-based order under a US security umbrella, and that all three are weakening. Europe has roughly double America's trade openness, yet over 2 500 trade restrictions were imposed worldwide last year. China now competes in about 40% of the sectors where the euro area holds an advantage, up from about 25% in the early 2000s, and electricity for energy-intensive industry costs more than double US prices. Geopolitical dependencies and security threats now enter investment decisions directly.

2. Strengths and domestic demand

Europe still holds more trade agreements than anyone else, leading precision manufacturing, a highly skilled workforce and a market of 450 million consumers. The euro area grew 1.5% last year entirely on domestic demand, and demand again carried a 0.4% quarterly gain in spring 2026.

3. Two barriers to scaling

To make that resilience durable, she says, Europe must use the size of its home market, especially for AI, so as not to repeat missing the first digital revolution; euro-area firms expect to put about 9% of investment into AI this year. Two barriers stand out. Single Market fragmentation means competitive pressure from AI-investing rivals largely stops at national borders. Capital-market fragmentation means EU scale-ups raise roughly half as much as San Francisco peers by their tenth year, and 12% have moved outside the EU. Responses include EU Inc, an optional EU-wide company form, and leaders' call for lawmakers to settle the capital-market integration plan before 2027.

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. The savings and investments union

Speaking in Frankfurt for the EU's Irish Presidency, Bundesbank President Joachim Nagel urged action on two files. First, the savings and investments union: Europe relies on outside venture capital, especially in later-stage rounds, though its high savings could finance its own scale-ups. He backs the One Europe, One Market Roadmap, with a single EU-wide company form, updated securitisation rules and a market integration and supervision package to be adopted this year; he welcomes more centralised supervision of securities and non-banks, with proportionate design and a role for central banks, and suggests a 28th regime for digital securities to reduce national fragmentation and strengthen the euro's international role.

2. Sovereignty in payments

The euro is the world's second most important currency, and holding that position takes broad capital markets, stability-oriented monetary policy and modern payment infrastructure that keeps working even in an emergency. Yet non-European firms such as Mastercard, Visa and PayPal dominate, a dependence as risky as in defence or AI. Europe needs its own digital ecosystem anchored by central-bank digital currency for both wholesale and public use. The digital euro would work in stores, online and person to person and give private innovators a European base. Trilogue talks began last week, a pilot starts in mid-2027 and launch is still planned for 2029. Europe, he concluded, works only when it works together, not just through a national lens.

1. A higher risk picture: the Gulf, frontier AI and the energy wedge

Appearing before the House of Commons Treasury Committee on the Bank's twice-yearly stability assessments, Governor Andrew Bailey said risks have grown since January for two reasons. The Middle East conflict does not add to the structural weaknesses identified earlier, but it raises the chance that they materialise and the damage if they do. The second, newer factor is frontier AI and its consequences for cyber security, on which he had written to the committee. Asked about the on-off ceasefire, he said that a week earlier he would have said events were tracking the mildest of the three paths in the monetary policy report, while warning that the ceasefire was fragile; that instability has returned, so he cannot judge how long fighting will last. Energy prices are somewhat above pre-crisis levels, crude is well below its peak and pass-through to UK prices remains soft, but refined products have not fallen as far, because China has cut crude imports while also cutting exports of refined fuel, and Russian production capacity has been badly hit. From contacts with Gulf producers, oil output was resuming quickly until last week and new pipelines are being built around the Strait of Hormuz, while Qatar says about 83% of its gas supply is intact and the damaged remainder will take longer, with bigger expansion plans only by 2029-30. The chair noted that repairing regional infrastructure would take at least eight months once a ceasefire holds and asked what modelling the Bank is doing; Bailey replied that it talks constantly to industry and to Gulf counterparts, who say oil damage has been limited compared with the blockages. He added that a fresh inflation figure was due the following week and that evidence so far on pass-through of energy costs into UK prices is soft, but that the committee should not rely on crude prices alone, since petrol and diesel are what households actually pay for.

2. Politics, growth and the cost of a lost decade and a half

Asked whether a seventh prime minister in ten years harms financial stability, Bailey declined to comment on politics, saying that global conditions drive market moves far more than UK events, and that the UK is supported by monetary and financial stability and by its fiscal framework, which caused only a brief market wobble. His main advice for an incoming government is that growth is the central question: the core banking system is resilient and household and corporate debt is not stretched, but growth has been low for sixteen or seventeen years, a general rather than political story. In a naive counterfactual, if potential and actual growth had stayed at about 2.5% a year instead of about 1.5%, with the same fiscal policies and the same shocks from Covid, Brexit, Ukraine and the Gulf, public debt would be roughly ten percentage points of GDP lower, and the debate would be very different.

3. Regulation, growth and the lump of capital

Pressed on whether the push for deregulation to promote growth threatens stability, he said there will be no growth without financial stability, that not every rule is perfect and reviews are welcome, but that he differs from some arguments. He added that the Bank supports reviewing rules but that its own mandate gives it no reason to hold back growth. Banks now earn more than their cost of capital, with price-to-book ratios averaging about 1.7 against below 1 earlier, so they can choose to reinvest earnings to support lending, a choice markets should drive. He rejects the lump-of-capital view that a fixed pool of capital means looser rules let more be lent: a healthy bank earns returns it can reinvest. Randall Kroszner, speaking about the new Fed chair Kevin Warsh, said he is battle-tested on financial stability and the US Basel proposal is about effective rather than weaker regulation, which still lets banks intermediate. Asked whether history informs his thinking, Bailey said it does a lot: memories of the crisis are fading and people now say the response was too strong, but it did not feel excessive when the system had been left extremely fragile and had to be rebuilt, and relaxing standards because the danger has passed is not how it works.

4. Climate, AI infrastructure and clean power

On climate, Bailey said he was making a relative point earlier, not that the absolute risk has fallen; Europe's very hot weather is a reminder, and Nathanaël Benjamin added that the channels to banks, insurers and core markets remain present and are being embedded in mainstream stress testing, with resources allocated to relative risks, where AI has climbed the list quickly. On water and grid needs for data centres, the Bank is not the expert, but Benjamin noted that cooling needs are large and the question is whether water infrastructure can keep pace with market expectations. Bailey linked this to growth: technology is a long-run driver, the next cycle is likely to combine AI and robotics, and grid and data-centre capacity matters. He added that he had learned that AI needs clean power in the sense of very high-quality, continuous supply, which renewables alone do not currently give, so a baseload mix is needed.

5. The leverage ratio and the move from 14% to 13% capital

On the decision to loosen the leverage requirement by a fifth of a point, which looked like a split vote, Bailey explained that the change mostly cleans up an anomaly dating from 2019 that burdened the large domestic banks, which make most UK loans, and makes the leverage buffer as usable as the risk-weighted one; the two regimes run in parallel rather than add up. The complication is leverage in markets, such as hedge-fund and ETF leverage in equity and government debt markets, to which banks are linked as liquidity providers; the committee debated whether to tackle it through banking or market regulation, and Bailey prefers the market route, with further work before the changes are final. Stephen Blyth confirmed there was unanimity on fixing the discrepancy, with debate about a small reduction for other institutions, and said repo haircuts are the effective tool. Kroszner said a 20-basis-point change is not material and that a more releasable capital stack could let banks hold smaller management buffers, which also serves the secondary goal of credit and growth; he noted that most banks now pass stress tests, so the bar is not unattainable. Bailey added that the Bank will do further work before finalising the changes, to check whether they might increase market leverage.

6. Why banks say 13% is not 13%, and the US comparison

John Glen pressed that banks say their effective requirement is nearer 14.25% and claim a 190-basis-point premium over US rivals. Bailey denied the US has been bolder, since its latest package implements the Basel 3.1 rules the UK also follows, with international banks showing higher leverage ratios, and the euro area has done nothing bolder. He gave three reasons for the gap: banks keep voluntary management buffers; requirements differ by bank, with add-ons for weak risk management or concentrated risk; and many still think 13% is too high. Basel 3.1 will lower the bottom-up element that the PRA assesses, which is why the FPC matched it from the top down, and in other cases supervisors add capital when a bank cannot show it manages risk properly, which Bailey said is simply the Bank doing its job. He would like a single releasable buffer, which needs international agreement; excluding government bonds from the leverage ratio is not in the Basel rules. Kroszner said comparisons are more art than science and that US banks complain of gold-plating too, and Benjamin noted US banks hold large buffers without hurting profits. Blyth said academics, rating agencies and investors did not call for lower capital. Chris Coghlan recalled banks made the same pre-2008 argument.

7. Frontier AI and cyber risk

Bobby Dean asked what had been underestimated. Bailey said AI developers themselves are surprised: models are self-improving, an Anthropic model in April advanced faster than expected, and tests by the UK's AI Security Institute show leaps in speed and ability at real tasks. Frontier AI will strengthen both defence and offence: firms can use it to find and fix long-buried flaws, but attackers can do the same, so the race is for defence to be strengthened first, and that is getting harder. Models have a shelf life of two or three months, open-source versions are coming and China is only months behind. Benjamin said firms are testing models on their own systems, the risk is the speed at which weaknesses are found and the need for faster patching, which itself creates disruption risk, and defenders typically get access before attackers. Separately, banks' own AI use is a distinct risk: agentic trading is still more talk than reality, because agents can learn to cheat and lie and legal liability is unresolved. As principal-agent law makes principals liable for agents inside their remit and agents without legal personality cannot be liable, banks must think carefully before using them; the committee asked for a written note.

8. Critical third parties and an AI bubble

On critical third parties, Benjamin said four providers have been nominated, the PRA will supervise them and has specialist divisions, and the Bank sees no concern about their openness. On an AI bubble, Blyth said concentration and heightened valuations resemble the dot-com era, though strong earnings back them; the price assumes an optimistic earnings path, and power, cooling and planning are risks to it. Financial-stability worries are that AI expansion is increasingly funded by debt, with extreme growth in 2026, and that long-side leverage is growing through levered hedge funds using derivatives and prime brokerage and through levered ETFs, which could amplify a fall. On critical third parties, Dean asked about the regulator's capacity to look inside opaque providers, and Benjamin replied that the PRA has entire divisions of operational-resilience specialists. Bailey said a bubble bursting abroad would wash over the UK, and a Bank stress exercise showed lower UK growth, with some interest-rate adjustment. He added that general-purpose technologies take longer to show in productivity than expected, that everyone is priced to win but not everyone does, as Netscape showed, and that the UK has strengths in research and start-ups, with the persistent problem of scaling up. Blyth said the much-quoted estimate that about 650 billion dollars of yearly revenue is needed for a fair return is not physically impossible, though power, cooling and planning approval for data centres threaten the optimistic earnings story, and that the pace at which leverage and debt issuance are growing, including possible crowding out of other debt, is extraordinary.

9. Gilt repo, pensions and public debt

Yuan Yang asked about planned gilt repo reforms. Bailey said a discussion paper and a system-wide stress exercise suggested market regulation, such as clearing and haircuts, is better than classic institutional rules, responses were mixed, and proposals will follow; Benjamin said the update will come in the fourth-quarter report, as thinking rather than a final announcement, doing nothing is not an option, markets are much sturdier than before, yet that sturdiness must be built permanently into how they are organised, and the Bank works with the debt office, the FCA and the Treasury. Yang asked whether a gilt decision would be joint with the other agencies, and Benjamin said that depends on the measures, while Bailey hoped for consensus. Blyth explained the market's particular structure, in which hedge funds buy cash gilts against futures financed through repo, as in the US. Blyth, a former hedge-fund trader, admitted that firms prefer no haircut, supported a minimum haircut on gilt repo, said the cost argument is an effective lobbying line but should fall on leveraged returns, and that evidence does not show it would disrupt the market. Benjamin added the all-in cost must be assessed. Bailey explained the market's structural shift: maturing defined-benefit schemes are no longer natural buyers of long gilts, so the debt office shortened issuance, more demand comes from price-sensitive hedge funds, and the current account deficit increases reliance on overseas investors. Chair Meg Hillier asked how far a sudden equity correction could disrupt the gilt market; Bailey replied that the market had stayed resilient through this year's Gulf volatility, that earlier episodes needed intervention, and that the Bank now has many more tools and is ready to use them. Asked about debt near 100% of GDP, he stressed the fiscal framework, noted the favourable gilt response to the last Budget, and said the fiscal outlook faces three structural headwinds: ageing, the end of the post-Cold War defence dividend, and climate change.

10. Private credit, households, risk transfers and stablecoins

Kroszner and Benjamin said the Bank's system-wide exploratory exercise on private markets, with voluntary participation by all major players, produced a unique dataset on exposures, a first step toward answering the data gap; Blyth said recent bankruptcies like First Brands and Tricolor, which caused unexpected bank losses, re-raise whether linkages are understood, and that the exercise's value is in asking firms whether they are sure. Bailey, as chair of the Financial Stability Board, noted the FSB agenda has shifted to non-banks and that cross-border data sharing remains weak, and that the same big macro funds are leveraged across several government bond markets, so margin calls in one market, for example during last year's tariff volatility, can spill into gilts; with no stable initial margin, models make margining more pro-cyclical. Benjamin and Kroszner stressed that risks ultimately come back to bank balance sheets, because banks are the main providers of leverage to hedge funds and private markets. On households, mortgage rates are about 75 basis points higher since December, the sector is resilient with lower aggregate debt, but lower-income renters, whose median income is half that of mortgage holders, are most squeezed, though this does not threaten the banking system; the loan-to-income flexibility has worked as intended, with high-multiple lending around 13% against a 15% cap, about half to first-time buyers, and no rise in negative equity. Siobhain McDonagh asked whether the six lenders holding about 80% of mortgages squeeze smaller building societies; Benjamin said small firms have applied for the same flexibility and Bailey had heard no such complaint. On significant risk transfers, Bailey said they are not large but growing; lessons from the crisis show some turned out not to transfer risk, the PRA approves each one and has written to banks about unfunded deals, and stress tests assume failures. Benjamin said the differences from the 2008 collateralised debt obligations are that banks are stronger, loan underwriting is stricter and these deals are bilateral relationships rather than traded, though unfunded ones create counterparty risk. On stablecoins, the cap moved from a per-account limit to an aggregate 40 billion pound limit, the backing mix changed to 70% remunerated assets and 30% unremunerated central bank reserves, issuers get Bank accounts and a repo facility, and the UK is ahead of the US, whose CLARITY Act is stuck. Blyth added that the UK's shortage of short-dated gilts to back coins differs from the US and is being discussed with the debt office, and, in answer to John Glen's question about community banks losing deposits to crypto, Bailey said Basel's strict crypto rules limit banks' holdings, and some US crypto firms have obtained banking licences, which has not happened in the UK. Kroszner noted that the 30% direct access to the Bank lets it monitor outflows tick by tick and guarantees a cushion in a run. Bailey drew the line between stablecoins, which must meet the test of money, and crypto, which has no assured value; links between crypto and the core financial system are not deep. The chair closed by summarising a session on whether the capital rules strike the right balance, on the pace of AI-related risks and how hard it is for supervisors and companies to keep pace, and on whether heavy AI investment affects growth in other sectors.

1. Policy and the economy

In his first testimony on the Monetary Policy Report to the Senate Banking Committee, Fed Chair Kevin Warsh paid tribute to Alan Greenspan and stressed that getting policy right is the Fed's central aim: the committee has no tolerance for persistent high inflation and held the funds rate at 3.5-3.75% in June. Activity is solid, with business investment the standout, driven by data centres and AI equipment (equipment spending up about 8% and high-tech about 25% over four quarters); he expects AI investment soon to be called simply investment. Productivity has been strong even before AI gains, and the labour market is stable, with few layoffs and solid wage growth.

2. Five task forces

He has set up five task forces, each starting from first principles: communications (how the Fed deliberates and conveys decisions); balance sheet policy and the ample-reserves regime; new data sources and methods; productivity and jobs, covering new general-purpose technologies; and inflation frameworks, asking whether current models explain prices. The aim is to put the years of high inflation behind the Fed and make it ready for its task and forward-looking. He added that reporting to Congress is an obligation that keeps the Fed accountable alongside its independence in conducting policy.

1. Slow growth and why it matters

Speaking at a Mansion House-style dinner, Bank of England Governor Andrew Bailey admitted that his February hope for calmer times was upset by the Middle East conflict: energy prices jumped, inflation has not yet returned to 2% although it otherwise would have, the economy is soft, and the return to target will simply take longer. He then stepped back to the long run. The UK has grown more slowly for about fifteen years, and was hit by a string of negative supply shocks such as Covid, the Ukraine war and Brexit. The sustainable speed limit, potential supply growth, fell from about 2.8% a year before the financial crisis (2.4 points from productivity, 0.4 from labour) to about 1.3% since (0.4 from productivity, 0.8 from labour). Income per head grew 2.0% a year between 1990 and the crisis but only 0.6% afterwards, so lifting growth must be a priority. Stable monetary and fiscal policy is the backdrop, and he believes the frameworks provide it, but lasting growth comes from the supply side: capital, technology, skills, trade, finance, competition, infrastructure and institutions.

2. Regulation framed by purpose

Focusing on regulation, he agreed that critics deserve a hearing, since well-designed rules can correct market failures, lower the cost of dealing, make it easier for newcomers to enter and encourage rivalry and innovation, and financial regulation lowers the odds and severity of crises, protecting the supply of finance. But the debate should not be an abstract argument about too much or too little: each rule should be defined by a positive purpose, designed to reach it quickly and effectively with minimal side effects, and judged on whether it does. Financial stability is a prerequisite for growth, yet not every rule is perfect, and simply arguing for less is unhelpfully reductive.

3. Bank capital

On capital, he went back to basics: banks are regulated to protect deposits, the main stock of money people hold, while still lending through the cycle; capital absorbs losses and backs the assured value of money. Capital providers must earn more than the loss they expect to bear, otherwise they will not supply it. UK bank returns sat below 10% for much of the post-crisis period, rose above it in 2023 and reached 15.4% this year, with price-to-book ratios near 1.7, signalling expected returns above the cost of capital. Regulators should not cap returns, but stability needs returns above the cost of capital. Last week's changes removed some anomalies, and the Bank is open to simplification that keeps the system healthy. He rejected a lump-of-capital view, where a fixed pool of capital means looser rules free more lending: capital is not fixed, healthy returns let banks retain earnings and build capital, and proportionate, effective regulation lowers its cost.

4. Payments and tokenisation

For payments, the two objectives are the singleness of money, meaning the same nominal value across all forms, and settlement finality, so that payments once made stay made. The Bank wants to modernise systems, improve resilience against fraud and cyber attacks and gain the benefits of programmable payments: conditional payments could cut late payments and fraud by moving checks from after the fact to before. The renewed RTGS system underpins this; a Digital Securities Sandbox approved its first live participant yesterday, paving the way for a UK digital gilt, DIGIT; work is under way with banks on tokenised deposits; proposed rules for systemic sterling stablecoins apply the same principles; and a Retail Payments Infrastructure Board published a consultation on 25 June, with feedback due by 11 September, ahead of a blueprint for an industry-owned delivery company. He also noted that atomic settlement could improve efficiency and cut risk in wholesale markets.

5. AI, growth and law

He argued that general-purpose technologies, from steam to electricity to the internet, drive long-run growth in long cycles with gaps between them, and that the last fifteen years, with falling productivity growth, look like such a gap before the next technology, most likely AI, which will support advances in diagnostics, research and robotics. Benefits take time to appear, as Solow's remark about computers showed, and the Governor himself is still experimenting. AI will raise big policy questions that should be tackled promptly and positively. One is resource allocation: if clean power for data centres is short, who decides whether medicine, drones, finance or entertainment get priority, and markets may not reflect the public interest. Another is law: agentic AI that buys or trades on our behalf can learn bad habits such as lying to please, and without a legal personality it is unclear whether the principal is liable for everything, which may force constraints that cut against AI's direction and test firms' governance.

6. Frontier AI and cyber risk

Frontier models' growing ability to find and exploit weaknesses in systems is a major threat to security and hence financial stability. He called for much stronger international coordination of testing before models are widely released, starting with public authorities, where the UK's AI Security Institute and National Cyber Security Centre are well placed, and then testing across critical infrastructure; the Bank is working with regulated firms on forums for patching. He also stressed the need for robust ability to recover from scratch, so-called bare metal recovery. His conclusion: growth comes from supply-side innovation, AI is the likeliest next contributor, regulation done well helps, and it should be approached positively by defining what to achieve, by when, and how, while questioning existing rules in that spirit.

1. A broader Eurogroup

After the 9 July meeting, Eurogroup President Kyriakos Pierrakakis said budgets, debt and fiscal rules remain core, but the economy is changing so fast that competitiveness, technology, AI, energy security and geopolitics form one reality, so the Eurogroup must evolve. The new twelve-month work programme has four priorities: fiscal coordination, the savings and investments union, Europe's competitiveness together with its economic security, and a stronger global, digital and strategic role for the euro, and it will widen to cover military funding, energy supply security and tech autonomy.

2. AI and digital finance

Ministers heard from Mistral's chief executive Arthur Mensch. AI can lift productivity and strengthen finance through better risk management and cyber defence, but the same capabilities create new systemic risks, which the ESRB and ECB supervisors highlighted for frontier models; Europe must mobilise capital so its AI champions can scale at home. A common statement on digital finance calls for speed, legal clarity and public-private cooperation, and he welcomed the European Parliament's vote on the digital euro.

3. Fiscal stance and the euro

On the fiscal stance, uncertainty is high given the Middle East, and defence, energy and public investment needs must be met without losing the credibility of the agreed fiscal framework. The ECB showed that the euro's international role is strengthening; stability remains the foundation, but competitiveness decides where Europe stands.

1. Innovation without trust

Speaking at the first AICB Nexus conference, which joined banking and bank-audit communities, Governor Abdul Rasheed Ghaffour said AI is reshaping finance, helping detect fraud, assess risk and serve customers, but that finance rests on trust, so innovation without trust is not progress. He set three priorities.

2. Purposeful and responsible innovation

First, purpose: over 70% of Malaysian financial providers have deployed at least one AI application, mostly for internal gains, and the next frontier is using AI on problems no institution can solve alone, such as scams and cyber threats, where BNM, police, banks and PayNet already share intelligence; institutions should compete where markets demand and collaborate where the public interest does. Second, responsibility: trust in AI is a governance challenge, raising questions of accountability when decisions are hard to explain, fairness as models keep learning, and control frameworks that lag capabilities. AI belongs on the board agenda with clear outcomes and a defined risk appetite, assurance functions must be able to explain and challenge outcomes, and accountability cannot be handed to software.

3. Progress for all and BNM's approach

Third, progress must reach everyone: invest in people, with upskilling and reskilling and the AICB's Future Skills Framework. BNM's stance rests on proportionality, parity and technology neutrality, with early engagement, clearer expectations and shared infrastructure; the Open Finance framework starts phased implementation from 2027, tokenisation moves into pilots, and the Financial Sector Blueprint 2027-2030 follows.

1. AI as a lever for productivity

Opening a conference with the European Investment Bank, Bank of Italy Governor Fabio Panetta said AI has already entered production, services, research and daily life, with new agent models and portable devices lowering costs and speeding adoption. Broad and timely diffusion could revive Italian productivity, especially in manufacturing, where it can prevent equipment failures, cut waste, optimise energy and materials, speed design and improve quality, and also in medicine through faster diagnosis and new treatments.

2. Managing the transition and financing it

Because the pace of change is high, the transition must be prepared: invest in skills, support the most exposed workers and avoid concentrating benefits in a few firms, sectors or regions, in the spirit of calls by Pope Leo XIV and President Mattarella that AI serve people and the dignity of work. The investments it needs are largely intangible, such as research, software, data, skills and organisation, which are risky and slow to pay, so long-term lenders, venture funding and broader capital markets are essential. Italy and Europe have savings, research and firms but too rarely bring them together at the scale required.

1. Central bank money in the digital age

Speaking by video to a European payments conference, Bundesbank President Joachim Nagel argued that the digital euro answers three developments. First, payments are digitalising: cash fell from almost half to two fifths of point-of-sale payment value between 2019 and 2024, online purchases doubled in value share to 36%, and shops not accepting cash tripled to 12%. The digital euro would complement cash, keeping central bank money, the anchor of the monetary system, available to everyone in digital form as legal tender. The Eurosystem would provide basic public infrastructure and common standards while banks and payment firms remain the interface with customers and build services on top, such as conditional payments like an automatic insurance payout. To protect financial stability and bank lending, there will be holding limits and no interest, with larger payments covered by a waterfall from a linked bank account; it is a means of payment, not an investment.

2. Sovereignty and privacy

Second, payments are critical infrastructure and Europe depends on non-European providers: more than two thirds of euro-area card payments run on non-European systems, and 13 of 21 euro countries lack a national solution. Convenience must not come at the expense of the ability to act in a crisis. The digital euro would be an autonomous European base infrastructure, not isolation. Privacy is a design requirement: the Eurosystem sees only pseudonymised holdings and cannot build individual profiles, and the offline mode, phone to phone, gives privacy almost like cash.

3. Europe's place in digital finance

Third, the euro's role, as second international currency with inflation averaging about 2% since launch, depends on modern infrastructure. The digital euro is one block in a broader payments strategy, which also includes the wholesale Pontes project for settlement in central bank money on distributed ledgers, and Europe should help shape standards and rules for tokenised markets and stablecoins. He stressed that central bank money and private solutions have long coexisted and complement each other, that the digital euro must not be built against the financial sector, and that its design is meant to fit the existing financial system. He ended with an appeal to turn the digital euro into a shared undertaking with banks and payment firms, whose critical objections will help refine it.

1. Why small firms matter

Opening an MSME Day event in Kochi, Reserve Bank of India Governor Sanjay Malhotra said micro, small and medium enterprises are about 90% of businesses worldwide and half of jobs; in India they produce 31% of GDP, about 35% of manufacturing output and close to half of merchandise exports, supporting over 320 million livelihoods. A financial system that serves its smallest and most numerous participants poorly, he said, is not serving the economy.

2. What the RBI has done

He listed measures: priority-sector classification with a sub-target for micro firms; collateral-free loans, with the limit doubled from 1 million to 2 million rupees; wider credit-guarantee cover with zero risk weight on the guaranteed portion; the receivables discounting platform TReDS; simpler working-capital norms; priority-sector recognition for co-lending; the Account Aggregator, which supported about 3.5 trillion rupees of lending in 2025-26; and a ban on prepayment charges on floating-rate loans to individuals and small firms. Town halls, banker training and empowered committees keep the dialogue going. Bank credit to the sector reached 36.79 trillion rupees, growing about 15% a year over five years against 13.7% for all credit, though he admitted the gap is not closed.

3. Unified Lending Interface and expectations

The Unified Lending Interface should do for credit what UPI did for payments, letting lenders assess a borrower with consent-based digital data such as tax filings, bank statements and utility or land records instead of weeks of paperwork, which helps firms with thin credit histories. He asked financial institutions to invest in the public digital stack, accelerate scheme delivery and treat small firms as long-term partners, not regulatory obligations. He asked entrepreneurs to invest in technology and innovation, use the available platforms, register on the free online Udyam portal to access government schemes, and build trust through formalisation, digital adoption and financial discipline. The RBI promises to keep building the rails and reducing friction.

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. Simplifying reporting

Speaking at the asset managers' association meeting in Brussels, ESMA Chair Verena Ross set four priorities: simpler reporting, digital innovation, market resilience and retail participation. On reporting, ESMA's May reports found more than 100 European and national obligations on funds and managers, so it proposes a common single template in a modular system, with managers reporting once and authorities, including the ECB and central banks, sharing and reusing the data through a central hub while national authorities still collect it. Implementation starts with AIFMD and UCITS reporting, with draft technical standards consulted by year-end and finalised in the first half of 2027. For transaction reporting, ESMA has short-term relief ideas such as revising two-sided reporting duties and an end-state integrated model across EMIR, MiFIR and SFTR, being tested through cost-benefit analysis, with attention to timelines to avoid repeated system rebuilds.

2. Tokenisation of funds

Tokenisation is often better seen as a shift in the plumbing surrounding funds than a break with the fund model; it may automate functions, speed subscriptions and redemptions, improve registers and cut reconciliations, and give investors accessibility and longer trading hours. Tokenised Treasury and money-market products total several billion dollars, small but growing. ESMA takes an evidence-based view: key questions are whether the ledger is the official register, whether transfers are final on-chain, and whether investors hold units directly, and it is working with national authorities on real cases and possible regulatory barriers. Investors must understand their rights and risks, including cyber and operational dependencies, and legal certainty and interoperability are needed so that national differences in registers, title, custody, settlement finality and insolvency do not recreate fragmentation.

3. Market resilience and vulnerabilities

The Middle East war added to tensions, bringing signs of stagflation, higher bond yields and tighter conditions, with corporate credit risk and debt sustainability concerns re-emerging. Markets and infrastructure proved resilient, including orderly clearing of energy contracts despite sharp margin calls, but valuations in some segments are stretched and markets seem optimistic about the war's duration, while performance is concentrated in technology. In an AI-driven correction, EU equity funds would be hit hard because 45% of their assets are in US equities, and tech is a third of the S&P 500 against 18% of the Euro Stoxx 50. Other watch points: hedge-fund leverage and its role in government bond turmoil, fund liquidity tools now reported systematically, and private credit of about 0.1 trillion euros, opaque, illiquid and increasingly connected to banks and insurers.

4. Retail investors

The savings and investments union puts ordinary investors at the centre, but the investor journey feels burdensome, information is complex, costs unclear and trust uneven. The Retail Investment Strategy should refocus rules on outcomes: valuable products, clear disclosures and advice aligned with investors' interests. ESMA will balance simplification with safeguards, especially disclosures and suitability, adapting information to digital channels; for the PRIIPs key document it expects changes to a product-at-a-glance section and performance, replacing scenarios with past performance for funds, and simpler cost calculations, with consumer testing. Rules alone are not enough: trust, fair costs and financial literacy matter, and success is measured by whether markets work for the people they serve.

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. A resilient year, then a new shock

In his concluding remarks on the Bank of Italy's annual report for 2025, the Governor noted that world output grew 3.4% in 2025, half a point above forecasts, despite wars and US tariffs. The United States grew over 2%, pushed by AI investment in data centres and by stock market gains that lifted consumption. China grew 5% by cutting export prices and finding new markets, a strategy that fails to address domestic deflation and invites protectionism. Easier monetary policy also helped. Markets showed signs of excess: high valuations, thin risk premiums, a search for yield in opaque segments, and rallies in gold, bitcoin and private credit, some of which reversed in 2025-26. The Gulf conflict then changed everything. Hormuz normally carries a fifth of global oil and LNG; its blockade lifted oil prices everywhere and gas prices in Europe and Asia but not in the United States. Fertiliser prices jumped, which will raise food prices early next year and could push tens of millions into extreme poverty. Inflation and short-term expectations are rising, and markets expect central banks to react, lifting rates at all maturities.

2. A fragile outlook

Energy costs cut household incomes and company margins, higher yields tighten financing and public debt limits support. Assuming a quick end to the conflict, the IMF expects world growth of 3.1% in 2026 and inflation of 4.4%; a longer war would be worse. Damage to energy infrastructure, high shipping and insurance costs and persistent uncertainty will weigh on spending. He stressed that today's risks are more numerous, more interconnected and harder to govern than before. Investors first fled to safety, lifting the dollar and pulling money from emerging markets; shares have since recovered, perhaps underestimating the damage, while rising long-term yields signal continuing tension. With heavy public debt and growing non-bank fragilities, small shocks can spread widely.

3. Trade and fragmentation

World trade grew 5% in 2025 as flows were rerouted and tariffs ended lower than announced; roughly half of the extra goods traffic was linked to AI equipment. Tariffs did not shrink the US goods deficit, as about 90% of their cost fell on American consumers and firms, while China's surpluses grew. The IMF warns that lasting barriers could slow trade growth below 3% in 2026. Governments rightly seek economic security, but indiscriminate fragmentation would raise costs, weaken supply chains and undermine cooperation, harming the citizens it aims to protect. The post-war rules-based system governed tensions for eighty years; its erosion through uneven rule enforcement, distorting industrial policies, imbalances and unequal gains must be addressed, and ties with countries that respect shared rules strengthened.

4. Global imbalances

Current account imbalances in 2025 reached their widest since the 2008 crisis. About two-thirds of all deficits are American, the result of large public deficits and low household saving; roughly a third of all surpluses are Chinese, since its model holds back consumption and favours exports; Europe's surplus reflects its difficulty in turning savings into innovative investment. America's net external debt equals about 90% of GDP. Large surpluses push global real rates down, encouraging risk-taking and borrowing, while deficit countries face sudden jumps in risk premiums. The energy shock may narrow imbalances temporarily but not their causes. A lasting fix requires a smaller US budget deficit, stronger Chinese consumption with less distorting industrial policy and more currency flexibility, and much more investment and a fully integrated single market in Europe; coordinated, the IMF estimates these steps would lift world GDP by 1%. Unmanaged imbalances tend to end in trade conflict, as before the 1985 Plaza Accord, or in financial crises, as before 2008.

5. Artificial intelligence and work

AI is spreading faster than earlier technologies. Five large US firms control about three-quarters of global computing power, most frontier models are American, China is catching up and Europe lags; yet the biggest gains usually go to those who adopt a technology, not those who invent it. AI is improving factory design, maintenance and logistics and speeding up drug discovery. For the first time it can perform highly cognitive tasks, but past innovations also created new occupations: six in ten US workers today do jobs that did not exist eighty years ago, and cheaper products can expand demand. The transition will hurt workers unable to switch and may widen inequality, so adoption by small firms, skills training and protection for exposed workers are essential. Work itself will change: in some jobs AI will assist people and free them for higher-value tasks, in others the human role will centre on interpreting results, exercising judgement and ensuring reliability, the parts automation cannot replace.

6. Europe: slower growth and the policy response

Euro area growth was 1.4% in 2025, about 1% excluding Ireland, held back in Germany and Italy by manufacturing hit by Chinese competition, while households kept saving. Inflation returned to 2%, allowing a 100 basis point cut in rates. Since March, confidence has dropped to 2022 levels, services weakened and banks tightened lending. ECB March projections showed growth of 0.9% in 2026 and inflation of 2.6% in the baseline, but a prolonged conflict could subtract a point of growth over two years and push inflation above 6%. Conditions are better than in 2021-22: rates are near neutral, demand is weaker, expectations are anchored and wages calm. Still, firms plan price rises and consumers expect more inflation, so the stance may need recalibrating to prevent a wage-price spiral; the June decision would depend on new projections, with no predetermined path. Acting in a timely and measured way, he said, protects household purchasing power, business confidence and the basis for durable growth, and the calibration would depend on how far energy costs filter into the wider basket and how strongly they depress spending and investment.

7. European policy gaps

Europe enters this unstable period with unresolved weaknesses that limit its growth and global weight. It faces dependence in defence, energy and technology and an incomplete single market in finance, energy and telecoms. Initiatives under the Competitiveness Compass, such as the Industrial Accelerator Act, a common European company form and the grids package, could help, but fewer than half of the planned proposals have been presented and under a quarter adopted. AI plans are delayed too, although the EU has rules, a strategy, investment programmes, rich industrial data and strong research; no call for tenders for AI gigafactories had been published by mid-May. Long negotiations, diluted compromises, uneven national application and unspent resources must be overcome, as credibility depends on delivery. Europe's savings flow abroad because capital markets remain national; beyond the savings and investments union, he called for a common European bond backed by shared fiscal capacity to provide a safe asset, fund common projects and strengthen the euro.

8. Italy: resilience but weak productivity

Since 2019 Italian GDP has risen over 6%, better than the euro area per person, driven by investment and exports, employment has risen strongly, and the country's net foreign position, deeply negative a decade ago, has turned positive at 15% of GDP, helped by prudent public finances. Growth slowed to 0.5% in 2025 as real wages lagged and Germany struggled, and the Gulf war may bring stagnation. Output per hour in the private sector has grown only 6% since 2000, against 13-34% in other large euro economies, while the working-age population is shrinking. Recovery plan spending exceeded €100 billion over 2021-25, about 30% of investment, adding nearly a point to annual growth and speeding up public tenders; private firms, which hold ample own funds, must now invest more in innovation and intangible assets.

9. AI adoption, skills and energy in Italy

About 30% of Italian firms use AI but only 5% intensively, below EU averages; adoption could add 0.2 to over 1 point a year to labour productivity, enough in the best case to offset demographic decline. He warned against repeating the 1990s, when slow adoption of information technology held back productivity for decades. Small firms face upfront costs, skill shortages, legal uncertainty and data protection concerns, and individual firms ignore the benefits that spread along supply chains, so he proposed stronger technology transfer, support for start-ups and venture capital, public procurement of innovation, AI in public administration and clear EU rules. Only 30% of people in their thirties hold a degree, 20% of young adults without a degree are out of both work and education, twice the rate elsewhere, more than 100 000 graduates emigrated in 2020-24 and education spending is a point of GDP below the EU average, a vicious circle of weak demand for skills and weak supply. Energy imports transfer wealth abroad; efficiency has improved, renewables reached 41% of electricity, grids are being expanded and new nuclear technologies deserve study, while support measures should stay temporary and targeted.

10. Banks and conclusion

Italian banks are profitable and well capitalised; smaller lenders are weaker, and recent problems at a few stemmed from poor governance, handled without contagion, and the exit of the weakest lenders has strengthened the sector. Large banks are spending on technology at levels comparable to European peers, while digital services attract younger customers; the Bank of Italy is attentive to less digitally skilled customers exposed to exclusion and scams. Mergers can help if competition, especially locally, is preserved, bringing Italy's banking structure closer to that of other large European countries and diversifying revenues; the five largest groups hold 68% of assets, less than in most peers. Lending has recovered but publicly guaranteed loans, over a fifth of business credit, should return to their targeted role, and equity finance must grow. IT incidents at banks rose 80% in 2023-25 and cyber incidents doubled; AI tools able to find system flaws quickly require stronger governance and DORA implementation. Recalling the 1946 choice of the Republic and of an open, rules-based world, he urged Europe to act together, Italy to invest in technology, skills and debt reduction, and governments to steer AI so that it serves people and gives young generations opportunities. Rules agreed at global level should protect competition, pluralism and the dignity of work, and success will be measured by the chances offered to young people to use their skills, be rewarded on merit and stay in the country.