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China’s belt and road plans losing momentum

China’s vast Belt and Road Initiative is in danger of losing momentum. Because, opposition in targeted countries rises and debts mount paved the way for rival schemes. President Xi Jinping launched BRI in 2013, in order to harness China’s strengths in financing and infrastructure construction. This is for building a broad community of shared interests throughout Asia, Africa and Latin America.

Xi’s project of the century is now facing major challenges. It also faces backlashes abroad, according to a study by AidData, a research lab at the College of William and Mary in the United States. Brad Parks said that a growing number of policymakers in low- and middle-income countries are mothballing high profile BRI projects. This is due to overpricing, corruption and debt sustainability concerns. AidData said that $11.58 billion in projects in Malaysia have been cancelled, $1.5 billion cancelled in Kazakhstan and more than a $1 billion in Bolivia. China’s foreign ministry said that not all debts are unsustainable. Since its launch the BRI had consistently upheld principles of shared consultation, shared contributions and shared benefits, according to them.

He Lingxiao, from the China-led Asian Infrastructure Investment Bank, said that the overarching principles of BRI are sound. He added that how these principles will be translated into operational reality is where they advocate for high international standards. The AidData study looked at 13,427 China-backed projects in 165 countries over 18 years. This is worth $843 billion. Major changes in public sentiment makes it difficult for participating countries to maintain close relations with Beijing.

China-backed projects are increasingly suspended. Credit risks have also increased, with the exposure to Chinese debt. This is exceeding 10% of GDP in many low- and middle-income countries. 35% of Belt and Road projects were struggling with corruption, labour violations, environmental pollution and public protests, as per the survey. In June, the United States announced a rival G7 initiative known as Build Back Better World.

Financial support for developing nations can be provided for building infrastructure. Parks stated that B3W is going to increase choice in the infrastructure financing market. This could lead to some high-profile BRI defections. AidData’s study received funding from a diverse group of private and public organizations. This includes the Ford Foundation and the U.S. Agency for International Development. It said that, it is an independent research.


LexisNexis risk solutions study reveals sharp rise of financial crime compliance costs

Decision makers inside banks, investment firms, asset managers and insurance firms identify the drivers impacting financial crime compliance. LexisNexis® Risk Solutions revealed that the results of its annual True Cost of Financial Crime Compliance Study for the U.S. and Canada. The total projected cost of financial crime compliance for the region is approximately $49.9 billion. The survey illustrates the sharp increase in financial crime compliance costs.

The study projects the average annual cost of financial crime compliance for U.S. financial institutions with $10 billion. Pandemic Continues to Spur Growth. The pandemic continues to negatively impact compliance operations. Sixty eight percent of U.S. respondents report longer times required to complete due diligence. Fifty five percent of U.S. respondents report reduced productivity compared.

More U.S. financial institutions now rank real estate and hospitality as top money laundering risk segments. Crime involving digital payments, trade-based money laundering and money mule schemes are on the rise. Digital currency is a growing problem for Canadian firms. Crimes involving digital payments have the greatest impact on compliance costs. Cryptocurrency crimes have the greatest impact on compliance costs for Canadian firms. The survey results demonstrate that financial institutions are battling a broader set of issues.

Survey respondents indicate that a lack of current and extensive data tops the list of Know Your Customer (KYC). Leslie Bailey, vice president of financial crime compliance strategy for LexisNexis Risk Solutions stated that the study shows clear linkages between the pandemic, digital crime and increasing regulations. Hence, financial institutions need to prepare for expanded compliance obligations and risks from emerging financial crime. Bailey added that digital transformation is a game-changer for financial crime compliance operations.

This will require a sophisticated approach that incorporates insight into digital behaviors. This study surveyed 145 decision-makers in the U.S. and Canada. Responses were collected in June 2019, August 2020 and June 2021. Organizations such as banks, investment firms, asset management firms and insurance firms. The total annual cost of compliance across firms was calculated using survey data. The spend amount was generated by multiplying the average percent allocated to financial crime costs.

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COP26 delegates agree on need to deliver on $100 BLN climate finance pledge

Delegates heading to the COP26 U.N. climate summit in Glasgow. These delegates agreed that they must deliver on the $100 billion per year pledge. COP26 president Alok Sharma said that, it is to help most vulnerable nations for tackling the climate change.

After many days of meetings at the pre-COP26 climate event, which happened in Italy, Sharma said that there was a consensus to do more. Which is to keep the 1.5 degrees Celsius target within reach, adding more needed to be done collectively in terms of national climate plans.

The COP26 conference in Glasgow aims to secure more ambitious climate action. This is from nearly 200 countries, those all that have signed the 2015 Paris Agreement for limiting the global warming, well below 2.0 degrees Celsius. And to 1.5 degrees, above pre-industrial levels.

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City’s exposure to Evergrande is very minimal-Hong Kong finance Chief

Hong Kong’s exposure to debt-laden developer China Evergrande Group is very minimal at 0.05%. This is of banking assets, South China Morning Post reported, citing the city’s finance minister. Financial Secretary Paul Chan told the newspaper that it is very minimal and won’t cause them any systemic risks. He added that he had arrived at the conclusion after a recent audit of the local banking sector’s exposure to the company.

Chan also said that the Hong Kong’s stock market was inevitably subject to some volatility. This is amidst a recent mainland crackdown on some industries. But still he believed any setback would be temporary. With liabilities of $305 billion, Evergrande has sparked concerns its cash crunch could spread through China’s financial system. This may reverberate globally and that is a worry that has eased with the Chinese central bank’s vow, to protect homebuyers’ interests. Evergrande has missed two bond interest payments. Bondholders have said this and its offshore debt, amounting to about $20 billion, trades at distressed levels.

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