Huda Said‏‏

Amid the increasing challenges facing the world economy due to severe climate change, the events of the 28th Conference of the Parties on climate change (COP28) have come to a close. The conference was held from November 30 to December 13, 2023, in the UAE’s Expo City Dubai. The UAE Minister of Industry and Advanced Technology, His Excellency Sultan Al Jaber, presided over the conference, which hosted about 70,000 world leaders and public- and private-sector representatives. The conference activities yielded unprecedented outcomes leading to extraordinary agreements and financial commitments.

What Came of the COP28 Negotiations?

Climate Agreements:

In the largest collapse of an American bank, the US banking sector suffered a strong financial shock after US regulators closed Silicon Valley Bank (SVB), rekindling memories of the global financial repercussions of 2008, triggered by the bankruptcy of Lehman Brothers. The closure of SVB followed its collapse and failure to compensate for its financial losses and its inability to accommodate its customers’ sudden withdrawal of funds. This led to an official announcement of its bankruptcy on the morning of Friday, March 10, 2023. The bank came under the control of the US Federal Deposit Insurance Corporation (FDIC), which later announced that SVB had been taken over by the Department of Financial Protection and Innovation in California.

Will the US Silicon Valley Bank Crisis Repeat the Lehman Brothers Scenario?

Fears of Collapse:

Since the beginning of Russian military operations in Ukraine, wheat-importing countries have become concerned about the war’s repercussions for commodity supply chains. They fear a potential disruption of global wheat supply or the politicization of wheat exports by one of the parties to the conflict, given that both Ukraine and Russia are key exporters.

Understanding the Politicization of Wheat During the War in Ukraine

Food Diplomacy:

As the US and its European allies continue to impose sanctions on Moscow aimed at isolating it economically, certain Russian banks are now excluded from SWIFT payments, meaning that its trade payments will certainly be interrupted. This move comes in conjunction with the US sanctioning Russian banks with assets over $1.4 billion, banning four major banks, and freezing their assets.

What are Russia’s Options for Evading Global Economic Isolation?

SWIFT Alternatives:

At a time when central banks around the world are moving toward tightening their monetary policies to prevent the risk of rising global inflation rates, the Chinese economy (the world’s second largest) is moving toward adopting flexible monetary policies. In that framework, the decision of China’s central bank to reduce the required reserve ratio and bank interest rates and begin a new easing cycle for monetary policy comes at a stage when it has pledged to continue to maintain the application of stable macroeconomic policies, avoid taking excessive stimulus measures, and ensure the adoption of a soft monetary policy focused on supporting the real economy. This trend is due to increased expectations for a slowdown in China’s economic growth in the coming months, amid the ongoing supply crisis, the electricity crisis in China, and rising concerns over the potential repercussions of closures due to the outbreak of the Omicron variant, which may lead to lower GDP growth than the target of about 5% for 2022.

What are the Chinese Monetary Policy Trends in 2022?

Stimulus Agenda:

Fears of a new credit crisis similar to the one global economies experienced in 2008 have grown recently, amid divergent views on global market collapse following the worsening crisis of China’s Evergrande (one of the world’s largest real estate companies). The Evergrande Group has not been able to pay the $83 million interest accrual on a March 2022 dollar-denominated bond. Associated banks have not seen any flow of interest payments to the accounts of the company’s creditors as pertains to the real estate giant’s bonds. The 30-day grace period on $150 million bond payments has also expired, driving the company towards officially defaulting on the payment.

Huda Said‏‏

Huda Said‏‏

الإصدارات