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The Future of Globalization

We looked into the technological aspect of solutions and the Government’s part in the fiscal management. Now looking up the next important question, how can Globalization affect the Economy rate? These questions are pertinent to be answered, and Marco Annunziata, Co-Founder, Annunziata + Desai Advisors is sharing his thoughts with us.

In the past four years, the predominant narrative has been blaming Trump for single-handedly destroying the global infrastructure of worldwide relationships. When he pulled out the US from the Trans-Pacific Partnership (TPP) free trade deal, the Paris climate accord (Paris Agreement) and the World Health Organization (WHO); he even forced to pull out of NATO (North Atlantic Treaty Organization) and regularly disapproved the trade partners and strategic allies for not paying their rational shares. But on his first day in office, Joe Biden responded by getting both the Paris accord and the WHO accords back, and many presume that the US will now recapture the lead in raising sturdier international collaboration. However, the pandemic itself has revealed that we have misjudged the risks of globalization. Global trade and tourism enabled the spread of the virus even faster, and the disturbance of this complex global supply chains strengthened the economic damage of the lockdowns which was not expected at first. And when it came to the head, international cooperation was pushed away in the concern of the national security. Countries stockpiled medical supplies and pharmaceutical apparatuses and imposed clumsy independent travel bans instead of trying to agree on mutual ethics and safeguards, so much so that even the basic exchange of statistics left a lot to be anticipated. Unexpectedly, the idea of protecting a reliable local supply of medical equipment and grave industrial components no longer seemed like protective babble. The recent UK-EU tensions on vaccine provisions are another example.

Adding to this that sneaking isolationism had been on the upsurge well before Trump got into office; many evolving markets and some established countries had progressively installed local-content necessities and other non-tariff trade fences. The WTO (World Trade Organization) had long been stressed, and bilateral trade deals had become more predominant. The adverse consequences of global trade on specific businesses and job groups in the US and other industrialized countries had already taken a noticeable roles in policy and theoretical debates. In 2016, Hillary Clinton also ran on a protective platform, and Biden has doubled down on Trump’s “Buy American” plan with even sturdier protectionist requirements.

Remaining in this context, there are some new technologies which will take on particularly sensitive tactical position. Imagine the of 5G technology, it will be a critical enabler for self-directed vehicles, smart cities, smart electrical grids and the entire digital-industrial rebellion. It will, thus, also be a vital cradle of delicate data and possible entry point for the attacks on these critical infrastructure. No country can feel at ease on leaving it entirely to the globalized free market as the argumentative debates on China’s 5G technology validate.

In the future years, these realities will most certainly shape the global trade much more than the self-assigned globalist/nationalist labels of discrete leaders. International trade will be achieved more across a wider range of magnitudes as governments try to alleviate key economic and geopolitical hazards. The task will be, to do this whilst conserving, as much as possible, the productivity advances that have made international trade an influential device of global growth. New tools will come to the rescue here, manufacturing platforms and 3D printing, for example, by this time allow companies to function competently at a smaller scale, have better flexibility in where they locate their services, switch invention lines more swiftly and safeguard greater flexibility in their supply chains as well. But outstanding the right balance in this area will be critical to have the resilient and more balanced global growth in the times ahead.

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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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