Banks

The Root of Today's Global Imbalances

Mon, 22 Jun 2026 22:30:00 +0400

Lee Jong-Wha, Professor of Economics at Korea University, is a former chief economist at the Asian Development Bank and a former senior adviser for international economic affairs to the president of South Korea.

Global imbalances are again dominating international economic debates, and with good reason. Large and persistent imbalances often end badly, whether in abrupt capital-flow reversals, exchange-rate volatility, geopolitical conflict, or, as in 2008, financial crisis. And with the United States now running significant current-account deficits, and China having returned to substantial surpluses, fears that the world is headed toward another reckoning are mounting.

To be sure, today’s imbalances are smaller than those that preceded the 2008 global financial crisis. Last year, the US current-account deficit approached 3.6% of GDP, compared to its pre-2008 peak of 6%, and China’s surplus was 3.7% of GDP, compared to over 9% before the crisis. But the gaps are widening—and, unlike in the mid-2000s, this is happening against a backdrop of heightened uncertainty about economic security, supply chains, reserve currencies, strategic competition, and financial stability.

These imbalances have contributed to a resurgence of protectionism, particularly in the US, with President Donald Trump using America’s trade deficits to justify sweeping tariffs. European leaders, for their part, have sharply criticized Chinese industrial overcapacity in electric vehicles, batteries, and solar panels. Because “China Shock 2.0” is concentrated in these higher-end sectors (which also include semiconductors and robotics), rather than low-cost consumer goods, it is putting pressure on advanced-economy producers and impeding industrial-upgrading efforts across the developing world.

But today’s persistent imbalances are not just a trade issue. As recent analyses by the International Monetary Fund, the G7, and the Bank of England show, they are driven primarily by domestic saving and investment dynamics.

In the US, the core problem is fiscal dissaving. While the US runs large budget deficits and racks up external liabilities, it continues to attract a huge volume of foreign capital. This partly reflects enduring demand for dollar assets—an upshot of the dollar’s reserve-currency status. America’s technological leadership has further made the US financial assets all the more appealing to foreign investors.

As a result, the US has been able to sustain external deficits for far longer than most countries, contributing to growing financial vulnerabilities that extend well beyond the US. Global investors are heavily exposed to dollar assets and US equities and bonds, and their investment portfolios are highly concentrated in a narrow set of assets, particularly AI-related equities. A sharp correction in US markets would thus reverberate rapidly across the global economy.

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China’s surplus reflects the opposite dynamic: weak domestic demand relative to productive capacity. The causes include the property-sector downturn, high precautionary household saving in the face of an incomplete social safety net, and demographic pressures. While industrial policy has reinforced these trends, it cannot fully explain China’s surplus.

This distinction matters because it alters the policy implications. If industrial subsidies and trade barriers were the main problem, tariffs might offer a solution. But if the underlying issue is a structural imbalance between savings and investment, the impact of trade measures will be limited. In fact, recent IMF research shows that exchange-rate movements and supply-chain adaptation offset much of the tariffs’ long-run effect on current-account balances.

Ultimately, global imbalances are domestic problems requiring domestic solutions. The US must gradually reduce its fiscal deficits and boost financial resilience, and China must increase domestic consumption by strengthening its social safety net, supporting household income, allowing gradual real exchange-rate appreciation, and facilitating greater two-way capital flows. Reining in support for manufacturing and expanding high-value services would also support China’s shift toward consumption-led growth.

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These adjustments are in both countries’ interest. Debt-financed consumption and rising external liabilities are no more reliable a long-term growth strategy than dependence on external demand.

While the prescription is fundamentally domestic, international coordination is also essential. After all, a disorderly adjustment could lead to financial instability, exchange-rate volatility, and sudden stops in capital flows, which would hit emerging economies hard.

The central challenge today is thus not simply to reduce trade imbalances. It is to manage the financial vulnerabilities created by massive and concentrated global capital flows—vulnerabilities that are exacerbated by rising leverage in non-bank financial institutions, concentrated portfolio positions, bubbly valuations for US technology equities, and mounting pressures in sovereign-bond markets.

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To this end, the US and China should correct their respective domestic imbalances gradually and responsibly. But other major powers and international institutions must also do their part. The IMF, the Bank for International Settlements, and the Financial Stability Board should strengthen surveillance of cross-border capital flows, leverage, and liquidity mismatches, while enhancing macroprudential coordination, stress testing, and crisis-prevention mechanisms. While grand macroeconomic bargains like the Plaza Accord of the 1980s are unrealistic at a time of geopolitical fragmentation, the G7 and G20 can also make a difference by promoting transparency, dialogue, and coordination.

While today’s imbalances are linked to trade, they are driven primarily by domestic saving-investment dynamics and the interaction between geopolitical rivalry, technological competition, and concentrated global capital flows. Only by recognizing this and taking coordinated action to manage the associated risks can the world prevent today’s tensions from erupting in another global economic crisis.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

PPLS Rooms Co-living and Villa3 Community Hub Open in Dilijan as Part of Green Rock’s Mixed-Use Development

Thu, 18 Jun 2026 12:25:00 +0400

Two new projects — PPLS Rooms Co-living and Villa3 Community Hub — have officially opened in Dilijan. Both projects form part of Green Rock’s broader development strategy for Dilijan. The projects will be operated by Green Rock Operations.

The new projects support a range of ways people engage with the city — from short stays and study programs to long-term living, remote work, and entrepreneurship.

PPLS Rooms Co-living: Affordable and Modern Living in Dilijan

Located at 142/3 Myasnikyan Street, just a few minutes from the city center, PPLS Rooms was developed in response to the growing demand for affordable, high-quality accommodation in Dilijan. The project is designed to accommodate both short-term visitors and long-term residents.

The co-living features 60 rooms and can accommodate up to 120 residents at a time. The building combines shared and private living options: the lower floors are organized around a shared living concept, with shared kitchens and common areas, while the upper floors offer more private accommodation options.

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PPLS Rooms is designed for a diverse audience, including students, professionals, company employees, freelancers, tourists, and long-term residents. The project is expected to welcome up to 8,000 guests and residents annually.

The property is located in a part of Dilijan that has historically seen less tourism and business activity. By attracting a steady flow of residents and visitors, the project is expected to generate demand for local services and contribute to the development of the surrounding neighbourhood.

Villa3 Community Hub: A Space for Work, Creativity, and Collaboration

Villa3 Community Hub is a new community space designed to foster connections, exchange ideas, and support collaborative projects.

The hub is intended for both local residents and visiting professionals, digital nomads, students, entrepreneurs, and members of the creative industries. Villa3 includes coworking areas, meeting rooms, a library, a lecture space, lounge areas, and an outdoor terrace.

The interior design was developed in collaboration with the international architecture and design studio IND. One of the hub’s signature features is a central fireplace created from recycled plastic using 3D-printing technology.

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Villa3 has also completed an EDGE assessment, an international standard that measures the environmental efficiency of buildings. According to the assessment, the project is expected to reduce energy use by 35%, water use by 30%, and the carbon footprint of building materials by 39%.

The concept of Villa3 is inspired by the idea of the “third place” — a space that exists between home and work, where people can gather, connect, and build community. For growing cities, such spaces play an important role in modern urban development by helping attract talent, encouraging collaboration, and strengthening local communities.

Vazgen Gevorkyan, Strategic Advisor of Green Rock:

“Dilijan has changed significantly over the past few years and is becoming increasingly recognized as an international destination. At the same time, people’s expectations of the city are evolving — they need modern spaces for living, working, and learning.

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PPLS Rooms and Villa3 are part of this transformation. Our goal is to create an environment that is attractive to young families, professionals, students, and everyone who sees their future in Dilijan. Green Rock views this work as a long-term commitment to the city and its community.

We are grateful for the trust we experience from the local community. Meaningful development is only possible when it happens in partnership with the people who live here.”

Katerina Danekina, CEO of Green Rock:

“As Dilijan continues to grow, the city needs not only new jobs but also the infrastructure that supports everyday life. Over the coming years, Green Rock’s projects are expected to create up to 800 jobs, and it is important for us that housing, workspaces, and community infrastructure develop alongside that growth.

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PPLS Rooms and Villa3 are part of this effort. These spaces help the city welcome more students, professionals, entrepreneurs, and visitors, while also creating new opportunities for local businesses and services.”

About Green Rock and Green Rock Operations

Green Rock is a company rooted in Dilijan, developing large-scale territorial projects by shaping ecosystems of the future. We work at the intersection of infrastructure, culture, education, and economy — designing spaces that are locally grounded and globally relevant.

Green Rock Operations is an operational and management company focused on launching, developing, and efficiently running projects in the hospitality, real estate, and lifestyle sectors. It provides a full cycle of operations, from concept development and business model creation to day-to-day management and financial performance control.

Why Isn't Europe Poorer Than the US?

Sat, 13 Jun 2026 23:05:00 +0400

Dalia Marin, Professor of International Economics at the School of Management of the Technical University of Munich, is a research fellow at the Centre for Economic Policy Research.

Dalia Marin

The Nobel laureate economist Paul Krugman has kicked off an important debate by questioning whether Europe is really in decline, as former European Central Bank President and former Italian Prime Minister Mario Draghi argued in his 2024 report on European competitiveness.

In several commentaries, Krugman shows that when relative European GDP is measured at current PPP prices (that is, GDP adjusted for differences in countries’ overall price levels), rather than GDP per capita at constant prices, Europe is holding up well relative to the United States. Europe should therefore not be overly concerned about technological inferiority and instead appreciate the standard of living it has achieved. If we want to know who enjoys a higher standard of living, the relevant measure is the purchasing power of income—namely, GDP per capita at current PPP prices.

According to this measure, Europe is performing as well as the US. But, as Krugman himself points out, this raises an empirical puzzle: how can Europeans enjoy the same standard of living as Americans despite significantly lower productivity growth, as reflected in lower per capita GDP growth at constant prices?

GDP at constant prices captures productivity growth over time because it measures the volume of output produced per hour worked. As Draghi emphasized, US productivity growth has been driven primarily by Silicon Valley. The US produces and consumes the leading high-tech products, whereas Europe largely consumes them without producing them. If Silicon Valley is excluded, the productivity gap between the two regions largely disappears.

But the London School of Economics economist Luis Garicano responded that Krugman’s argument is flawed because it neglects the positive spillover effects of innovation in Silicon Valley, reflected in substantially higher wages throughout the economy than comparable workers in Europe receive. Nobel laureate economist Philippe Aghion, Antonin Bergeaud of HEC Paris, and Garicano further argued that Krugman relies on the wrong measure of productivity.

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But does it really matter for Europeans’ standard of living where innovation occurs? Innovation certainly matters for economic growth, but not necessarily for a country’s standard of living. The goods produced in Silicon Valley have become steadily cheaper over time due to domestic and international competition, which forces IT firms to pass productivity gains on to consumers in the form of lower prices.

As a result, the purchasing power of European consumers has risen alongside that of US consumers. Europe has benefited from adopting technologies developed elsewhere. Krugman’s “paradox” is resolved: Europeans produce less per hour worked compared to Americans, but their income can nevertheless buy just as much because Europeans have benefited from trade with the US.

This argument is supported by the seminal work of Gene Grossman of Princeton and Elhanan Helpman of Harvard examining the determinants of economic growth and welfare in countries engaged in worldwide innovative activity. A country that falls behind in innovation, such as Europe, may lose an ever-growing share of world markets, and its growth rate may decline as international competition eliminates the duplication of innovation efforts. Yet despite slower growth, the lagging country may still gain in terms of economic welfare, because international competition among firms with monopoly power ensures that consumers benefit from innovations taking place in the more innovative country.

In short, European consumers can enjoy all the benefits of the products invented in Silicon Valley. Large monopoly profits for US firms do not alter this conclusion, so long as IT prices decline as much in Europe as they do in the US, which they largely do.

But Europe does need to worry about economic growth. Its largest economy, Germany, has been stagnating since 2019, as measured by GDP at constant prices. Germany’s weak economic performance has far more to do with China than with the US, despite US President Donald Trump’s tariffs. The turning point in Germany’s economic fortunes roughly coincided with China’s rapid growth in technological capacity and meteoric rise in high-value exports, reflected in its position as a global innovation leader in green and digital technologies.

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This has hit Germany hard because China is now challenging several of its most R&D-intensive sectors, including automobiles, machine tools, and chemicals. With Germany losing global market share to China in precisely these core industries, economic growth has come to a standstill. If this continues, Germany—and Europe more broadly—may lose out not only in terms of innovation, but also in terms of living standards, despite benefiting from cheaper imports of Chinese electric cars and machine tools.

Economic growth depends on the amount of inputs, such as labor and physical capital, that an economy employs to produce output. American GDP per capita is higher in part because Americans work more. Germany’s labor input, by contrast, is low compared with other countries: employees work about 1,350 hours per year on average, compared with 1,500 in France and 1,800 in the US.

Concerned about falling living standards after seven years of economic stagnation, German authorities plan to increase the number of hours worked. In particular, policymakers want to strengthen incentives for women’s participation in the labor market by removing tax advantages that encourage mothers to stay at home.

This has some logic. Average annual hours worked are relatively low in Germany because many women entered the labor market through part-time employment. While this increased labor-force participation, it reduced the average number of hours worked per employee. Germany has one of the highest labor-force participation rates in the OECD, but its average annual working hours are among the lowest.

Unfortunately, increasing labor input is unlikely to be enough to revive Germany’s economy. By far the most important determinant of long-term economic growth is a country’s ability to innovate and generate new ideas. Yet Germany risks losing precisely those industries that have historically driven its economic success to China, where much of the recent innovation in these sectors has taken place. Not only is economic growth (GDP per capita at constant prices) at stake for Germany and Europe; so is their standard of living (GDP per capita at PPP prices).

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The debate launched by Krugman ultimately highlights the distinction between economic growth and economic welfare. Europe has so far been able to maintain living standards despite lagging behind the US in innovation, largely because globalization has allowed European consumers to benefit from technological advances developed elsewhere.

But this advantage cannot be taken for granted indefinitely. As Germany’s experience illustrates, a prolonged loss of innovative capacity and industrial competitiveness can eventually translate into slower growth, weaker incomes, and declining living standards.

Increasing labor supply may provide a temporary boost to output, but it cannot substitute for the creation of new technologies and industries. Europe’s long-term prosperity depends not on working more hours, but on restoring its ability to innovate and compete at the technological frontier.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

Fiscal Discipline Requires More than Rules

Thu, 11 Jun 2026 00:05:00 +0400

Antonio Fatas is Professor of Economics at INSEAD and Vice President at the Centre for Economic Policy Research in Paris.

Government debt in several advanced economies is now at its highest level outside wartime, and emerging-market debt has been steadily rising over the past decade. With interest rates no longer at record lows (as they were after the global financial crisis of 2008), concerns about fiscal sustainability are growing.

The question of how to restore sustainability is hardly new. Policymakers and academics have debated for decades the policies and institutions needed to support fiscal discipline and debt reduction. Many countries adopted numerical fiscal rules. Others strengthened the checks and balances on governments, including through the creation of independent fiscal councils.

But the outcomes have been decidedly mixed: despite some successes, there have been many more failures. That should not come as a surprise, because fiscal policy is ultimately a creature of politics. Decisions on spending and taxation reflect social preferences, economic constraints, distributional conflicts, and electoral incentives. Fiscal sustainability is about reconciling these pressures in ways that place debt on a sustainable path. Given this, there is no easy fix.

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Well-designed fiscal frameworks can, however, tilt policy choices toward financial discipline, even when there are other pressures pushing the other way. Research and experience have shown that better design makes a real difference in two areas: assessing debt sustainability and building fiscal rules that survive the political cycle.

While the standard framework for assessing debt sustainability is widely accepted, there is a gap when it comes to capturing the feedback loop from fiscal-policy decisions to macroeconomic outcomes that reinforce sustainability. For example, fiscal tightening can lower debt ratios, but only when done at the right time and in the right way; otherwise, it can weaken growth to the point of damaging sustainability.

Moreover, treating all spending as alike can be just as self-defeating: cutting public investment or spending on education or research for the sake of short-term consolidation can lower growth and raise debt ratios over the medium term. Nor is it accurate to claim that any spending will pay for itself through higher growth. What is needed is more guidance on which types of spending have the largest effects on sustainability, and under which conditions. That requires more modeling—beyond what current frameworks offer—of the link between fiscal choices and sustainability.

Much more clarity is also required about fiscal rules, which have become the standard instrument of fiscal governance in much of the world. While evidence shows that they do improve fiscal outcomes on average, their effectiveness is uneven, and their durability depends heavily on the circumstances of their adoption.

Rules introduced under market pressure during periods of economic stress often generate only short-term improvements. Once the immediate pressure fades, so does the political commitment to enforce them. Fiscal rules adopted when governments are compelled to build consensus, as opposed to when majority governments simply impose a framework, are more durable. As it turns out, credibility cannot be legislated into existence. The time to build robust fiscal frameworks is before a crisis hits, not after it is too late.

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Ultimately, the underlying challenge is the same. Debt-sustainability analysis rests on technical judgments—from growth prospects to returns on different types of spending—that are genuinely difficult to make. And governments have incentives to use optimistic forecasts or selective accounting to shade these judgments in favorable ways. Similarly, the credibility of fiscal rules depends not only on consistent application, but also on sustainability assessments that are both rigorous enough to command trust and resilient enough not to be bent after the fact.

Both areas require research that is technically sound and insulated from political pressures. This underscores the importance of independent fiscal councils, transparent budget processes, and strong technical institutions. Governments, of course, make all fiscal choices, but these technocratic actors raise the quality of those choices, challenge unrealistic assumptions, clarify trade-offs, and anchor rules in analysis that commands wider trust.

Fiscal discipline, in the end, requires more than a framework. It requires public institutions with the technical capacity and the resources to conduct rigorous and honest research. A lack of analytical rigor and integrity produces bad fiscal decisions and short-lived fiscal rules.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

"Soaring Growth in 6 Years": MB Legal Expands Its Services and Geography

Thu, 04 Jun 2026 22:30:00 +0400

Founded in 2020, the law firm MB Legal has in recent years undergone a path of rapid and notable growth, becoming one of the country's largest and most multidisciplinary law firms.

Today it is not only expanding its range of services - adding new practice areas such as criminal law and the regulation of the cryptocurrency and gaming sectors - but is also growing its geographic reach, having already opened an office in Georgia as well.

The law firm's founder, Mesrop Manukyan, along with partners Grigor Grigoryan and Anahit Sargsyan, spoke with Banks.am about MB Legal's new stage of development, the changing demands of the market, the expansion of the partnership team, and the firm's upcoming goals.

"Today we are one of Armenia's largest law firms"

Mesrop Manukyan

Today MB Legal is a firm providing complete and comprehensive legal services in Armenia across a variety of sectors and businesses. Having been founded just 6 years ago, I can now confidently say that we are one of the largest law firms in Armenia.

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Since our previous conversation, the firm has recorded significant growth - in headcount, in revenue, in geographic presence, and in the volume of services provided. Alongside all this, quality has in no way suffered, as evidenced by three key indicators. First, we hire only people with high professional expertise and a strong sense of purpose; our requirements are quite high, even for the firm's interns. The second indicator is our work with clients, which is grounded in long and in-depth analysis, ensuring the high quality of the end result. The third indicator is continuous development - both of the firm and of its specialists individually. At MB Legal, we always encourage our employees' growth and motivate them not to stay in the same place.

"At MB Legal, the criminal law practice is developing very rapidly"

Another testament to the firm's growth is its involvement in the field of criminal law, which was absent in previous years. We decided to develop this practice based on both the size of the market and client demand.

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The field of criminal law is usually served by individual attorneys who have already established a certain name and reputation. For our firm, the best way to enter this field was precisely to collaborate with such a specialist. As a result, we made an offer to Artashes Hovhannisyan, who worked for about 6 years at the National Security Service of the Republic of Armenia, after which he also went into legal practice, accumulating very interesting and unique experience. Today, under his leadership, the criminal law branch at MB Legal is also developing very rapidly.

In parallel with this, it is a matter of principle for us to continue ensuring high quality in the practice areas that constitute the firm's "core" - the corporate and IT sectors, and the securities market.

"There is great interest in Armenia today"

In addition to the practice areas mentioned above, we are also working actively in the new, fast-growing field of gaming-sector regulation and in the cryptocurrency market. Client demand in these areas is now incomparably greater than it was three years ago.

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In a broader picture, I can say that Armenia is becoming more attractive to major investors. The construction of data centers, the energy sector - there are "big players" who want to make large investments in Armenia and need a reliable local representative to do so. There is quite considerable interest in Armenia today, and our firm stands, as it were, at the crossroads of these changes.

Time to share management

The firm's growth inevitably brought with it the need to restructure management as well. The decision to expand the number of partners was very organic and directly tied to the firm's overall growth, under which sharing management is the more effective approach.
At the time of its creation, MB Legal was a small firm, but in 6 years, as I noted, we have appeared on the list of Armenia's largest and leading law firms. This is also attested by the fairly high rankings awarded to MB Legal and its partners by the authoritative Chambers & Partners and Legal 500 platforms.

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New partner Anahit Sargsyan grew professionally within the firm itself - together with the firm. At many decisive moments she has been indispensable, and partner status is a recognition of this professional approach.
The other partner, Grigor Grigoryan, joined us from Ernst & Young, bringing with him serious international management experience.

"The firm's soaring growth influenced my decision to join the team"

Grigor Grigoryan

I joined the MB Legal team relatively recently. Before that, I worked at various firms both as a corporate-sector lawyer and as a consultant. At the heart of my decision were the soaring growth of this Armenian law firm and the great opportunities I see in terms of MB Legal's development. Today the firm is continuously expanding both its range of services and its geographic reach.

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I myself am mainly focused on corporate and business law, and I provide clients with advisory services precisely in these areas.

"The legal market is closely tied to economic activity"

As in any country, so too in Armenia, the legal market is closely tied to the country's economic situation: the more active the economy, the more active legal services are as well, because all the processes taking place in the economy require corresponding legal support.
Today I can divide our main clients into two large groups.

The first consists of foreign companies preparing to begin operations in Armenia and needing to find their bearings in this market. We present to them the country's general picture and existing regulations, including in the tax and legal spheres.

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The second group is our existing clients, for whom we carry out ongoing servicing. We often also take on the role of in-house lawyers, even in cases where a company has its own team of lawyers, since there is a need for an "outside perspective" or, for example, for court representation.

"The company and I are growing up together"

Anahit Sargsyan

I joined MB Legal in 2021 in the capacity of a lawyer. I was still a student, and I can say that I have matured here the most - both as a professional and as a person. The company and I are growing up together (smiles - ed.). For me it was a matter of principle to choose a workplace that has growth potential and strives to provide unique services in the market. I give the same advice to the young professionals who are choosing their path today.

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By working actively in the capital and securities markets, we today provide services in these areas that are unique for Armenia, and the quality of these services is reflected in our clients' steady trust. I myself have been actively involved in these fields from the start; in addition, I carry out ongoing servicing of investment service providers and financial institutions, provide support related to amendments to charters and the attraction of investment, and also work in migration law.

"Companies are making the decision to come to Armenia in a more conscious way - not fleeing some calamity"

Three years ago, in connection with the geopolitical situation that had arisen, we singled out only one migration bloc, driven by the Russia–Ukraine war and the relocation that followed it.

Today migration to Armenia has changed, and businesses we could not even have imagined years ago are often relocating to our country. This is happening not because of one calamity or another, but as a result of genuine interest in Armenia.

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Companies are coming to Armenia by conscious choice - not fleeing one calamity or another. At the same time, clients today are more demanding and, before making an investment, want to thoroughly study the country's legislation and market.

"To become the indisputable leader in Armenia"

Mesrop Manukyan

Today we want and strive to become the indisputable leading law firm in Armenia, while at the same time also expanding the geography of our operations. The first step in this direction has been taken, and MB Legal's Georgian office has already been operating for several months, providing services to quite serious clients in the financial-banking sector. This is extremely important for us, because usually it is foreign companies that come to Armenia, whereas in this case it is an Armenian company expanding its geographic reach - becoming a trusted partner abroad as well.

Anahit Sargsyan

Especially over the last year and a half, MB Legal has truly been in a phase of lightning-fast yet stable growth.

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This is noticeable not only in the increase in the number of employees, but also in the diversity and size of our portfolio.

Grigor Grigoryan

Yes, the law firm MB Legal is moving with steady steps toward expansion in every respect. We are approaching this stage with great responsibility, because it is a matter of principle for us that the pace of growth in no way affects the quality of the services provided.

Yana Shakhramanyan

Photo by Emin Aristakesyan

Impacture 2026: Business, charity, CSR, “One Dram,” and big results

Wed, 27 May 2026 08:58:00 +0400

On May 26, 2026, Mediamax Media Company hosted the Impacture 2026 conference, dedicated to discussions on charity, corporate social responsibility (CSR), and impact investments.

The partners of the Impacture 2026 conference included Ucom, IDBank, JTI Armenia, Tufenkian Foundation, and HENDERSON Armenia.

The first panel discussion was titled “Charity, CSR and Impact Investments: Conflict or Complementarity?”

The discussion featured Mher Abrahamyan, IDBank Board Chairman, Nazareth Seferian, Social Entrepreneurship and CSR Expert and Impact Hub Yerevan Board Member, Vache Vardanian, the Director and Founder of the Hayordi Charitable Foundation, and Larisa Hovannisian, the Founder and CEO of Teach for Armenia Educational Foundation.

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The discussion was moderated by Sharmagh Sakounts, Fundraising Consultant at APRI Armenia and Head of Fundraisers Club Armenia.

The distinction between charity and CSR

Mher Abrahamyan, IDBank Board Chairman

Sometimes it is difficult to draw a clear line between charity and corporate social responsibility (CSR). To distinguish between the two, it is important to understand the purpose each serves. As a rule, charity aims to address a specific, immediate issue, while social responsibility represents a more systemic approach focused on solving long-term challenges.

The key difference lies in philosophy, and the most important concept here is responsibility. It means being accountable to the environment and the society in which you operate and generate income.

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Of course, businesses create jobs, contribute to economic development, and pay taxes. It may seem that by doing so, they can avoid taking on additional responsibilities. However, taking responsibility and sharing the fruits of success is equally important.

Under the 2025 amendment to the tax code, commercial entities can reduce their corporate income tax by up to 2.5% of their gross income through donations made to state educational institutions.

Tax legislation and government policy can significantly influence this sector, but I do not believe they can serve as the primary driving force. Such regulations may encourage, facilitate, or complicate implementation, but they cannot play a decisive role.

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We recently implemented a highly valuable program at YSU, providing scholarships to 103 students from Artsakh. This initiative was not launched because of the tax amendment, it was part of the “Side by Side” program launched in 2024 to support our compatriots from Artsakh.

Nazareth Seferian, Social Entrepreneurship and CSR Expert, Impact Hub Yerevan Board Member

One of the most important priorities for any business is long-term planning, during which various issues emerge that may pose risks to its sustainable development.

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In the case of corporate responsibility, these issues are viewed through a business lens and include their strategic connection to the business. In other words, within CSR, a business sets goals that are relevant both to itself and to society.

The “meeting” of foundations and business

Vache Vardanian, Founder and Director of the Hayordi Charitable Foundation

Since 2020, various circumstances have led to a significant increase in the number of foundations operating in our country. There are many foundations with dedicated teams that face difficulties in raising funds.

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Based on our experience, I can say that it is critically important for foundations to present their activities professionally. When a company receives a proposal from a foundation, its first step is to search online to understand what the foundation does, whether it has any affiliations, etc.

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I can cite the cooperation between Hayordi and IDBank as an example. Friends and like-minded people often tell me that, knowing Idram supports our foundation, they prefer to make payments through that digital platform, because within the framework of the “Power of One Dram” initiative, a donation from each transaction is directed toward charitable causes. In this case, it does not even matter which specific foundation receives support during a given month.

Larisa Hovannisian, Founder and CEO of the Teach for Armenia Educational Foundation

I should also mention IDBank and Idram, as they were among the first representatives of Armenia’s private sector to begin working with us. This cooperation has been built in the spirit of genuine partnership.

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Today, Teach for Armenia is also collaborating with companies in the technology sector. We are not simply asking them for financial support; rather, we offer them to engage their best employees in teaching within communities alongside their professional work.

“The Power of One Dram”

Mher Abrahamyan, IDBank Board Chairman

“The Power of One Dram” is a classic example of corporate social responsibility and, I believe, has helped shape a new culture within the sector.

Over the past six years, “The Power of One Dram” has partnered with more than 50 foundations and non-governmental organizations, allocating more than 300 million drams.

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We firmly believe that even small steps, modest resources, and just one dram can make a meaningful difference in improving people’s quality of life, as well as contributing to the protection of the environment and nature. At the same time, it is crucial who implements these programs. Reliable partners capable of translating their goals into tangible results are needed. It is one thing to have good intentions and goals; it is another to bring them to life.

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We apply a set of criteria and conduct thorough assessments of every organization with which we plan to cooperate.

Impact investments

Nazareth Seferian, Social Entrepreneurship and CSR Expert, Impact Hub Yerevan Board Member

When considering a classic investment, the primary focus is on financial return.

However, when we speak about impact investments, financial return is only one of several factors. It is equally important to understand and measure the social or environmental impact generated by that investment.

We are talking about social enterprises established to address specific social or environmental challenges. This is an important direction for our country.

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The consumer mindset is also very important. We should each understand that, as consumers, we make choices every day – we choose one company or another and, in doing so, contribute to social impact.

Sensitive issues

Vache Vardanian, Founder and Director of the Hayordi Charitable Foundation

International organizations avoid funding initiatives focused on local and national issues, even though our programs are primarily humanitarian and socio-psychological in nature.

We face various challenges during fundraising. For example, we are currently in the middle of a campaign and have postponed our regular summer camp fundraising efforts until after the elections.

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Foundations like ours must be extremely careful in the language we use when working with beneficiaries, as the issues we address are highly sensitive both for beneficiaries and for businesses. Many companies, upon hearing the word “war,” tend to perceive it as a political term rather than as a humanitarian and social issue. With this in mind, over the past six years we have revised our media campaigns, reshaped the presentation of our programs, which has enabled us to move forward.

Learning from each other

Mher Abrahamyan, IDBank Board Chairman

I believe foundations and NGOs have come to understand that success cannot be achieved simply by sending out emails. They are becoming more responsible, better organized, more targeted, and results-oriented.

At the same time, we have also learned to assess these needs and to understand what our country and target groups need most today.

Nazareth Seferian, Social Entrepreneurship and CSR Expert, Impact Hub Yerevan Board Member

It is important for businesses to speak openly about strategic approaches to corporate responsibility so that the broader public begins to understand what a systematic approach entails, rather than assuming that businesses simply have surplus funds to distribute here and there.

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Measurement mechanisms are equally important. It is not enough to record that, for example, 50 young people completed a training program. We must seek to understand what actually changed in their lives as a result, and how many of them genuinely benefited from the initiative.

Vache Vardanian, Founder and Director of the Hayordi Charitable Foundation

Many companies, when rejecting a foundation’s application, do not explain the reasons behind their decision. I believe that providing such feedback would help foundations reflect on unsuccessful experiences and improve future applications.

Personally, I have also learned to better understand business interests. I often put myself in the position of a company executive and try to view the issues we raise from their perspective.

Read also:

Students of Gyumri Music School got their Ian Gillan and Tony Iommi Awards

“Collective birth certificate” Matenadaran and its like-minded partners

Ralph Yirikian on responsibility, regional development, and the potential of the Diaspora

Arpi Jilavyan

Photos by David Ghahramanyan

Interest Rates Can’t Control Today’s Inflation

Sat, 23 May 2026 00:10:00 +0400

Carolina Alves is Associate Professor in Economics at the Institute for Innovation and Public Purpose at University College London.

For much of 2025 and early 2026, central banks have framed their decision to hold interest rates steady as an exercise in prudence. With inflation once again edging upward even as growth slows, institutions like the US Federal Reserve and the Bank of England have emphasized patience and “data dependence” as the responsible course, an approach shaped above all by lingering fears of recession.

That stance has pushed the policy debate toward a familiar question: How long can central banks resist raising interest rates? But that framing misses the point. The real issue is not the pace of monetary tightening; it is whether policymakers can maintain the fiction that higher interest rates are an effective, or even neutral, response to the inflationary pressures advanced economies currently face.

Today’s inflationary pressures are not being fueled by overheated labor markets or surging consumer demand. They reflect higher energy prices, geopolitical conflict, climate-related disruptions, fragile supply chains, and—increasingly—the pricing power of large corporations. Given that the problem is not excessive borrowing or spending, raising interest rates does little to address inflation’s underlying causes.

These pressures are likely to intensify. The United Arab Emirates’ recent decision to exit OPEC is about more than an internal dispute within a commodity cartel. It signals a deeper structural shift in the political economy of energy, marked by changing power dynamics in global oil markets and the weakening capacity of existing institutions to manage a resource that is both highly financialized and geopolitically fraught.

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Because OPEC’s influence has long rested on its members’ restraint, the UAE’s departure undermines the bloc’s traditional role in managing supply. With one of its largest and most flexible producers breaking away, coordination becomes harder to sustain, increasing market volatility. Oil markets, in turn, are responding less to collective strategy than to fragmentation, geopolitical risk, and unilateral decision-making.

As a result, central banks find themselves in an increasingly uncomfortable position. If they keep interest rates lower for much longer, they risk eroding their credibility as headline inflation ticks upward. Conversely, raising rates too aggressively could deepen recessionary pressures, exacerbate private and public debt burdens, and further squeeze households already battered by rising food, housing, and energy costs.

Against this backdrop, monetary authorities are not freely choosing between clear policy options. They are operating within tight structural constraints imposed by financial markets, fiscal fragility, and political pressures, especially when it comes to unemployment. Markets, for their part, increasingly anticipate rate hikes not because they will solve inflation, but because central banks feel compelled to act, even when their tools are ill-suited to the task.

The distributional consequences of that policy reflex are often overlooked. Higher interest rates act as a disciplinary mechanism: they protect asset values, reward creditors, and shift the burden of adjustment onto workers, mortgage holders, and heavily indebted countries. Casting inflation as a labor-market problem, even though it is driven by energy monopolies, geopolitical tensions, and supply disruptions, is a political choice, not an economic necessity. In reality, higher interest rates do not eliminate inflation so much as redistribute its costs through higher unemployment, increased household debt, and fiscal retrenchment. This is not an unintended side effect of monetary policy, but the mechanism through which inflation is typically managed.

That reality has done little to shift the terms of debate. Policymakers continue to treat inflation as a monetary problem rather than a structural and distributional one. Central banks respond by tightening financial conditions, but higher interest rates do nothing to reduce food prices, which reflect surging fertilizer and energy costs. They do, however, raise the risk of job losses, mortgage distress, and entrenched poverty.

If inflation remains elevated for years, the problem becomes one of social exhaustion. Households cannot keep absorbing higher costs without long-term damage, from rising indebtedness to poorer nutrition and worsening health outcomes. At that point, inflation is no longer just an economic issue but a source of political instability, potentially leading to a crisis of institutional legitimacy.

These dynamics underscore the limits of central banks’ current approach. As inflation becomes closely tied to climate shocks, war, and the strategic control of essential resources, monetary policy alone cannot stabilize prices without imposing serious social and economic costs. Higher interest rates may suppress demand, but they cannot produce oil and natural gas, unblock ports, repair supply chains, or reduce corporate markups.

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Central banks can delay rate increases, move gradually, or embrace “optional pauses.” But such tactical adjustments do not resolve the underlying contradiction: policymakers are using a technocratic instrument designed for demand management to curb price increases driven by structural and political forces.

Until that contradiction is addressed—through coordinated energy policy, public investment, price regulation, industrial strategy, or active fiscal intervention—interest rates will continue to oscillate without resolving the problem they are meant to solve. Monetary tightening will remain a symbolic gesture to convey control rather than a real solution.

At its core, policymakers’ continued reliance on interest rates to manage crises stemming from the interplay between energy markets, corporate power, and geopolitical conflict reflects how inflation is framed. Treating structural inflation as a demand-management problem allows policymakers to appear decisive while avoiding a more difficult confrontation with those who set prices, control resources, and extract rents. That, too, is a policy choice—one whose social costs are becoming harder to ignore.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

The Deeper Forces Shaping Global Trade

Wed, 20 May 2026 07:00:00 +0400

Tiago Devesa is a senior fellow at the McKinsey Global Institute in Lisbon

Jeongmin Seong is a senior fellow at the McKinsey Global Institute in Shanghai

Olivia White, a senior partner at McKinsey & Company, is a director of the McKinsey Global Institute

With conflict disrupting shipping in the Middle East and the future of US tariffs still uncertain, global trade is firmly in the spotlight. But while it certainly matters how these political developments unfold, one must not lose sight of the deeper forces at work in the global economy.

The past year was among the most tumultuous for global trade in living memory, with US tariff rates rising to their highest level in nearly a century and trade between the United States and China—one of the world’s largest trading corridors—falling by roughly 30%. Yet global trade did not decline. On the contrary, it continued to grow, rerouting in ways consistent with patterns we began measuring three years ago in McKinsey Global Institute research on geopolitically driven shifts in trade.

We find that the world is not “deglobalizing” so much as reconfiguring—like water finding new channels. As geopolitical tensions escalate and economic security concerns grow, companies redirect investment and redesign supply chains.

In our latest analysis of 2025 trade flows, what stands out most is how resilient US demand for foreign goods remained. Still, while Americans kept buying from abroad, what they purchased was different. The US imported more chips and data-center equipment, but fewer autos and less energy. Sourcing shifted from mainland China to Vietnam, Taiwan, and other Asian economies.

It would be natural to assume that tariffs were the driving force behind these and other shifts. But that explanation is incomplete, because the race to develop AI has also emerged as a powerful new factor, accounting for about one-third of the growth in global trade in 2025. This development has received far less attention than AI’s implications for economic growth, financial markets, or jobs, perhaps because much AI-linked commerce is concentrated among geopolitically aligned economies.

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Another underappreciated factor is the extent to which China’s economy has changed. It is still the world’s export engine, but it has leaned further into its role as the “factory to the factories”: a supplier of the machinery and components that power manufacturing elsewhere, particularly in emerging economies. Shipments of Chinese-made industrial inputs rose by more than $175 billion in 2025, led by exports of intermediate goods such as chips or smartphone parts, which grew by 9%—twice as fast as China’s overall exports.

Meanwhile, as access to the US market shrank for some industries, firms sought new markets for consumer goods. To keep volumes growing, exporters of consumer products cut prices by an average of 8%, and these changes cascaded unevenly through regional economies.

For example, the ASEAN region expanded its role as a critical manufacturing hub, creating new connections in the shifting geopolitical landscape. All told, its trade with every major region increased, with exports growing by 14%—more than twice the pace of global trade. At the same time, India captured a large share of US smartphone demand once met by China; and Brazil expanded its commodity exports as China shifted purchases away from the US.

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Europe, by contrast, struggled to adjust. The European Union faced intensifying competition from Chinese imports, while higher US tariffs constrained key exports. Excluding a rush of gold and pharmaceutical sales ahead of anticipated tariffs, Europe’s trade balance with the US and China deteriorated by roughly $80 billion. Stronger trade with other markets offset only around half that decline. The strain was especially visible in autos. For the first time ever, Germany, Europe’s auto powerhouse, imported more cars from China than it exported there.

It is understandable that today’s headlines feel like proof that geopolitics now sets the rules of trade. But, again, the story is incomplete. Geopolitics is indeed reshaping the trading map, but longer-term shifts in technology and economic development are determining what the world builds and buys—as the surge in trade linked to the AI boom attests. Amid tariff hikes, legal uncertainty, and growing trade restrictions, firms raced to secure chips and servers, along with cooling systems and the other equipment required to build and power data centers.

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Fundamentally, global trade is being reshaped by long-term forces, from technology to shifting production networks and emerging-market growth. Making sense of what comes next requires a broad view that accounts for how these forces interact under different scenarios, rather than focusing on any single disruption.

Of course, geopolitical shocks will remain a feature of the system. The ability to adjust as conditions evolve will matter just as much as long-term positioning in a world where trade is still expanding, but along more contested lines.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

Has De-Dollarization Begun?

Sat, 16 May 2026 09:32:00 +0400

Kaushik Basu, a former chief economist of the World Bank and chief economic adviser to the Government of India, is Professor of Economics at Cornell University and a non-resident senior fellow at the Brookings Institution

As the economic consequences of US President Donald Trump’s war against Iran become evident, policymakers around the world are running out of patience. The recent Spring Meetings of the International Monetary Fund and World Bank in Washington made this abundantly clear, with UK Chancellor of the Exchequer Rachel Reeves lamenting the “folly” of a war that is “not ours.”

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But much of the cost will be borne by the United States itself. The immediate effects are visible: a sharp rise in gas prices, inflation climbing to a two-year high, and growing concerns that, as consumers cut back on spending to offset higher costs, unemployment will rise. While these short-term shocks are serious, a major risk that has received less attention is that the dollar could lose its status as the world’s primary trade and reserve currency.

The decline of a reserve currency is a slow process. The British pound ceded its dominance to the US dollar over roughly two decades, beginning in the 1920s. As Barry Eichengreen has noted, the Roman denarius—arguably the world’s first international currency—also unraveled over a long period, starting when Emperor Nero debased it in the first century CE.

Any international currency ultimately depends on trust. I witnessed this during my time as chief economic adviser to the Indian government under Prime Minister Manmohan Singh. On August 5, 2011, S&P downgraded the US long-term credit rating from AAA to AA+, fueling fears of immediate capital flight. Instead, the opposite happened: money flowed into the US economy. In the face of global turbulence, investors trusted that the US would honor its obligations, no matter the cost.

That trust, a cornerstone of soft power, is rapidly eroding. Samantha Power, the former administrator of the US Agency for International Development (USAID), highlighted this in a recent lecture at Cornell University, where she criticized the Trump administration’s decision to dismantle the agency. The abrupt and “heartless” manner in which it was shut down, she said, halted humanitarian aid without warning, leading to immense suffering among populations around the world that had depended on its continuity.

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The closure of USAID, alongside Trump’s military adventures in Iran and Venezuela and relentless attacks on long-standing allies like Canada and Denmark, has cast a shadow over America’s global standing and trustworthiness. This, in turn, puts the dollar’s hegemonic status at risk.

To understand the potential cost, consider seigniorage: because the dollar is globally trusted, the Federal Reserve can print a $10 bill for less than seven cents, and it will be accepted at full value around the world. As empires from Rome to Britain have shown, issuing the world’s leading currency allows a country to create value almost out of thin air. Losing that capacity would slow economic growth.

Unless US policy reverses course, this year may go down in history as the moment the US dollar began to lose its status as the world’s currency.

This raises the question: Which currency will replace the dollar? The renminbi appears to be the strongest candidate. A decade ago, the Chinese currency gained credibility when the International Monetary Fund included it in the basket of global currencies underpinning Special Drawing Rights (the Fund’s reserve asset), but it was still widely dismissed as “no match” for the greenback. Today, the prospect of renminbi primacy no longer seems unthinkable.

Yet China’s ability to assume that global role is far from assured. As economist Qiao Liu observed in his 2016 book Corporate China 2.0, the country combines an “authoritative political regime” with more flexible institutional arrangements in which “relationships still matter,” a hybrid that does not readily inspire the kind of global confidence a reserve currency requires.

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Chinese President Xi Jinping appears to understand this dynamic. In a 2024 speech, Xi emphasized the need to internationalize the renminbi to bolster China’s soft power, calling for a “powerful currency that can be widely used in international trade, investment, and foreign-exchange markets and attain reserve currency status.” But the main obstacle to reserve-currency status for the renminbi—the maintenance of capital controls—remains firmly in place.

The strongest rebuke of Trump’s policies over the past year came from an unexpected source: King Charles III. His address to Congress on April 28, delivered with characteristic British wit and restraint, sent a clear message that the US is on the wrong path, one that could destroy its global standing.

There was, however, cause for optimism. The repeated bursts of bipartisan applause Charles received from members of Congress suggested they were already aware of America’s predicament.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

The Geopolitical Battle Over Monetary Infrastructure

Tue, 12 May 2026 00:10:00 +0400

Camila Villard Duran is Associate Professor of Law at ESSCA School of Management

The development of payment infrastructure in emerging-market economies (EMEs)—from instant payment systems in retail markets to wholesale central bank digital currencies (CBDCs) for cross-border interbank settlement—is part of a broader technological transformation. But the intense scrutiny these initiatives face from the United States suggests that what is at stake is not only technical supremacy, but monetary power itself.

Changes to how payments are executed imply a shift in control over the critical infrastructure through which money circulates, with consequences for the exercise of monetary sovereignty. While sovereignty in monetary affairs was traditionally understood as the authority to issue currency, it expanded over time to include oversight of banking systems and financial flows. In an increasingly digitalized world, however, sovereignty now hinges on the mechanisms underpinning payments and settlements, and the data generated by financial transactions.

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This shift is especially visible in EMEs, where formal sovereignty has long coexisted with structural dependence. For years, the dollar’s dominance has rested not only on its status as a global currency, but also on a dense network of privately governed infrastructure—the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the New York Clearing House Interbank Payments System (CHIPS), and the Continuous Linked Settlement (CLS)—that shape how cross-border payments and financial settlements are conducted. Far from being neutral conduits, these US-dominated systems embed geopolitical power into the routine functioning of global finance, enabling “weaponized interdependence” through sanctions, exclusion, and control over financial flows.

Brazil’s Pix is a case in point. An instant payment platform created and managed by the Central Bank of Brazil, Pix has rapidly become a central pillar of the country’s financial architecture, surpassing payment cards in transaction volume. It embodies a governance model in which the state manages both payment rules and the data generated by transactions—an increasingly important source of economic and strategic power.

This has clearly spooked the US. The Office of the United States Trade Representative (USTR) opened an investigation into Brazil and included Pix in its 2026 National Trade Estimate Report on Foreign Trade Barriers under the broader category of “non-market policies and practices” that may generate “economic and national security risks” for the US. The report positions state-led payment infrastructure, data-localization measures, and digital regulations as potential distortions of competition that disadvantage foreign firms, particularly US financial-service providers.

But Brazil is not an isolated case. The USTR report expresses similar concerns about efforts in India, China, Indonesia, Turkey, Vietnam, Pakistan, Algeria, Oman, Kuwait, Qatar, and Thailand to develop domestic payment systems and strengthen regulatory control over digital and financial infrastructure, including through data-localization requirements.

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This trend reflects a broader global shift toward a state-led approach to building financial infrastructure for the digital economy. Domestic payment systems, including Pix and India’s UPI, should therefore be understood as part of a wider movement among EMEs to reclaim control over the rails on which money and financial data move.

Such a structural shift becomes even more consequential at the cross-border level, unlocking the potential for connecting domestic instant payment systems (like the Bank for International Settlements-led Project Nexus) and, crucially, using CBDCs for wholesale transactions.

Projects such as mBridge—bringing together China, Hong Kong, Thailand, the United Arab Emirates, and Saudi Arabia with initial support from the BIS—as well as emerging BRICS+ initiatives, illustrate how CBDCs can be used to redesign international payment infrastructure. By integrating messaging, clearing, and settlement, a single, state-governed platform may reduce reliance on traditional intermediaries and enable direct settlement in local currencies.

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More importantly, this approach embeds public authority into the technological architecture of payments and settlements, expressed in code, protocols, and governance rules. Monetary sovereignty, in this context, becomes infrastructural: it is exercised through the design and control of systems that support cross-border financial flows.

For EMEs, this represents a strategic opportunity. By reducing dependence on dollar-based infrastructure and enabling settlement in local currencies, multi-CBDC platforms and a standardized protocol linking domestic instant payment systems provide a pathway, albeit still limited, to expand the external dimension of monetary sovereignty.

To be sure, these developments do not signal the end of dollar dominance. The structural foundations of today’s US-led system, from deep and liquid domestic financial markets to strong network effects and global demand for dollar-denominated assets, are robust. The rapid expansion of dollar-backed stablecoins may even reinforce this dominance in the digital realm.

But a more fragmented and contested landscape is emerging. The new initiatives are reconfiguring the existing system at the margins: creating alternative channels, redistributing power (albeit to a limited degree), and, above all, demonstrating that infrastructure, not currency, is the primary terrain of monetary competition.

This evolution has two important implications. First, future conflicts in the international monetary system are likely to center on standards, platforms, and data governance rather than exchange rates or reserve currencies. Second, EMEs are no longer merely passive recipients of global financial standards; they are becoming drivers of institutional and technological innovation.

In this context, the central question is no longer who issues money, but who designs and governs the infrastructure through which it moves. The answer will not be determined by technological efficiency alone. It will be shaped by law, institutional choices, and geopolitical strategy—and will ultimately define the future distribution of monetary power.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

A New Economics for the 21st Century

Wed, 06 May 2026 17:54:00 +0400

Mariana Mazzucato, a professor at University College London, is Founding Director of the UCL Institute for Innovation and Public Purpose.

Lara Merling is a research fellow on industrial strategy at the UCL Institute for Innovation and Public Purpose.

In the run-up to this year’s International Monetary Fund and World Bank Spring Meetings, the one story that cut through the noise was that the World Bank had embraced industrial policy after decades of advising against it. But while much of the ensuing debate focused on whether this “U-turn” is good or bad, overdue or dangerous, few pondered the fundamental question: What has actually changed?

The Bank has merely affirmed what many of us have long argued: the framework it has promoted since 1993—when its East Asian Miracle report cautioned against industrial-policy tools—has not served developing countries well. Such advice, World Bank Chief Economist Indermit Gill recently observed, “has the practical value of a floppy disk today.” Yet in his defense of the report, he also made clear how limited the shift remains. Industrial policy, he argued, should be “targeted and temporary,” an exception to a market-led model, rather than a tool for driving broader economic transformations.

The Bank’s latest work confirms that industrial policy is more replicable across income levels and institutional contexts than the old consensus admitted, with a toolkit that extends beyond tariffs and subsidies. Public support for private actors, the Bank now argues, should come with carrots and sticks, including withdrawal of finance from firms that underperform. This new position aligns with arguments we made in The Entrepreneurial State and through more recent work on the role of missions and conditionalities.

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But new conclusions do not automatically produce new economics. The Bank still treats the state as a mere fixer of market failures, rather than as a market creator and shaper. The question is not whether governments should intervene after markets have failed. It is what kind of economy we want to build in the first place. Which public purposes should guide investment, and how can institutions govern the public-private bargain so that value is created collectively and shared fairly?

Viewed in these terms, the Bank still falls short, because it treats fiscal-policy space as a fixed constraint within which to optimize, rather than as a set of institutional capacities that can be developed. As a result, the Bank would still organize industrial policy only around specific sectors and considerations of comparative advantage. But the energy transition, water and food security, public health, and economic resilience are not sectoral issues. They call for economy-wide missions.

This matters now that the Bank itself is adopting “mission” language. Mission 300, with a focus on African electricity access, and Water Forward, launched at the Spring Meetings to address water security, do take on major systemic, cross-sectoral challenges. But our assessment of 30 African national energy compacts finds a gap: the ambition is systemic, but the architecture remains sectoral.

Nor is the World Bank an isolated case. The IMF’s own economists have similarly documented how austerity and liberalization fail to deliver. Yet these findings have yet to translate consistently into new operational practices.

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That needs to change. The IMF and the World Bank sit at the center of an international order whose default advice still reflects an economics not supported by real-world evidence. What they model, measure, and recommend shapes how development and macroeconomic policy are done around the world. They help determine who has access to liquidity, and on what terms; whose debt is treated as sustainable; whose public investment is seen as credible; and whose policy autonomy is constrained.

The wealthy countries that fund and control these institutions are not exempt from the consequences of the same economics. For decades, the same flawed assumptions shaped policy in Europe and the United States, suppressing public investment, weakening public services, treating wages as costs rather than as fuel for aggregate demand, and leaving households exposed to shocks that markets failed to manage.

The resulting affordability crisis has now become a political one. The economics that constrained development policy abroad—hollowing out public capacity and narrowing what governments can do—helped fuel the far right at home.

Europe’s response to the 2022 energy shock shows what is at stake. From 2022 to 2025, EU member states and the United Kingdom incurred $1.8 trillion in additional costs, much of it absorbed by households and public budgets, while the shareholders of firms charging higher prices benefited. Spain points to an alternative. Having invested in energy security as a mission, rather than as a subsidy category, it now generates more than half of its electricity from renewables, leaving it more insulated than its neighbors from the latest energy shock.

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Making such resilience the default, rather than the exception, requires an economic framework that governments can apply consistently. The Global Progressive Mobilisation, convened by Spanish Prime Minister Pedro Sánchez, recently brought together progressive governments from around the world to start shaping a new economic consensus.

Its foundations are clear. We need public institutions with the capacity to invest, coordinate, and govern markets in the public interest. We need finance designed around missions, not leverage ratios, and policy frameworks that treat fiscal space not as a market-determined ceiling, but as something built by productive investment. And we need measures of value oriented around the common good.

A Global Council on New Economics for the 21st Century, co-chaired by one of us (Mazzucato) and First Vice-President of the Government of Spain, Carlos Cuerpo, will bring these elements together. Our goal is to translate the new economics into operational principles organized around justice, equality, sustainability, and global solidarity. The argument for a new economics is being won. Now we must show what comes next.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

The dialogue between free sound and strict calculation: Wilco enters jazz

Wed, 29 Apr 2026 22:30:00 +0400

Jazz is often described as freedom, yet inside it is built on strict discipline. The same duality exists in business, especially where long-term capital management is concerned.

It is at this intersection that the partnership between Wilco Wealth Management Company and the Ulikhanian Jazz Club was formed.

Wilco often defines its role as a “co-pilot” – a partner for those who think not only about today, but also about decades ahead.

“Building a sustainable future for capital also requires nurturing the environment in which it exists,” said Olga Omelchenko, the company’s deputy CEO.

In recent weeks, not only the program but also the sound at the Ulikhanian Jazz Club has evolved. The venue has upgraded its speakers and begun improving the hall’s acoustics.

Concerts featuring international musicians have been organized to foster exchange and build new connections. According to the club’s director, Vardan Ulikhanyan, the technical upgrade had long been postponed due to financial constraints.

“The piano came from our home, the drums were brought by our drummer, and the equipment we had could no longer ensure proper quality,” he admitted.

According to him, business involvement is a practical necessity.

“Cultural institutions like this simply cannot develop on their own,” Vardan Ulikhanyan said.

Wilco underscores that its role is to provide support, with no interference in the creative process.

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“Creative freedom and the choice of artists remain exclusively the club’s prerogative,” Olga Omelchenko emphasized.

The partnership is grounded in a convergence of values. The company notes that their approach to wealth management – long-term planning and flexible decisions – is comparable to jazz thinking.

“Jazz is a form of music where mastery goes hand in hand with the ability to improvise. These values resonate strongly with us,” she noted.

The Ulikhanian Jazz Club has functioned as a community platform since its founding, bringing together both experienced and emerging musicians. Over time, it has fostered an environment where young performers can share the stage with professionals.

“We were simply creating what we wanted, together,” said Vardan Ulikhanyan, noting that a stable musical community has taken shape over the years.

The club is already hosting concerts with Wilco’s support. In addition, regular meetings with jazz musicians are planned to address sector challenges and explore solutions. The first such meeting is scheduled for April 30 – International Jazz Day.

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The collaboration also has informal aspects. A new cocktail inspired by the New Orleans Sazerac has been created and is already on the menu, reflecting how different cultural layers intersect within the same space.

The importance of such cooperation is also driven by the problems in the field. Jazz life in Armenia remains largely concentrated in Yerevan, while regions lack the necessary infrastructure.

“There is a need for halls – even in large cities – to be equipped with professional technical equipment and high-quality instruments,” noted Vardan Ulikhanyan.

He added that audience size is another constraint in the regions, leading organizers to prioritize other genres. As a result, visits by international musicians are often limited to one or two concerts in Yerevan.

In these circumstances, the club emphasizes the development of festivals and the creation of new events in the regions to build an audience base.

Another issue is audience perception. According to Vardan Ulikhanyan, jazz in Armenia is often treated as background or “fashionable” music, which does not reflect its essence.

“Live music holds an intangible depth – the musician senses the breath and mood of every person in the hall. I am convinced that once the audience ‘catches’ this magic and becomes part of it, they will be drawn into jazz,” he said.

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Ulikhanyan also stressed that audience behavior directly influences the course and energy of a performance.

For Wilco, such initiatives are also a way to express their values.

“Such partnerships allow us to demonstrate our values through action and be engaged with the community,” said Olga Omelchenko.

According to her, supporting culture also contributes to the perception of the brand as a long-term thinking partner. Ultimately, the key indicator of success will be the sustainable development of Armenia’s jazz community.

Culture-business cooperation in Armenia is still evolving. As Vardan Ulikhanyan noted, while charitable models are relatively developed, systematic business engagement remains limited.

In this context, such collaborations represent an effort to shape a new model – one in which business participation moves beyond sponsorship toward sustained, long-term partnership.

Astghik Hovhannesov

How Trump’s Crypto Push Is Undermining American Power

Tue, 28 Apr 2026 09:43:00 +0400

Jayati Ghosh, Professor of Economics at the University of Massachusetts Amherst, is a member of the Club of Rome’s Transformational Economics Commission and Co-Chair of the Independent Commission for the Reform of International Corporate Taxation.

The Ouroboros, the ancient image of a serpent devouring its own tail, has long symbolized self-defeating strategies. It is thus an apt metaphor for US President Donald Trump’s current policies. His reckless and illegal war against Iran is the clearest example, but his administration’s enthusiastic embrace of cryptocurrencies represents a subtler, slower-burning expression of the same self-destructive tendency.

Unlike conventional money, cryptocurrencies are generally not legal tender and are not government-backed. Their price is largely determined by market demand, much of it driven by their ability to obscure transactions and bypass regulations, taxes, and legal oversight. This makes them attractive not only to speculators, whose activity fuels their extreme volatility, but also to criminals and other bad actors.

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Since returning to the White House, Trump has positioned himself as one of the industry’s most prominent champions. This reflects both the massive campaign contributions he has received from major crypto investors and his own business interests: members of the Trump family have reportedly earned roughly $5 billion from various crypto-related schemes.

In service of these interests, the Trump administration has aggressively deregulated crypto markets while promoting dollar-pegged stablecoins through measures like the GENIUS Act. At the same time, it has rejected the development of a central bank digital currency (CBDC), a more stable and regulated alternative to crypto, which is already being explored or adopted by countries like China.

By weakening regulatory oversight, these moves have introduced new financial risks. Enforcement actions against crypto firms have been scaled back, even in cases involving clear wrongdoing. Binance, which has business ties to the Trump family, is a prime example. Its founder, Changpeng Zhao, pleaded guilty to facilitating money laundering and served a four-month prison sentence, only to be pardoned by Trump. This has likely emboldened the crypto sector’s most dubious actors, undermining investor protection and financial stability.

But the consequences of Trump’s pro-crypto agenda extend beyond financial markets. Cryptocurrencies create an alternative financial infrastructure that can be used to evade economic sanctions, the United States’ tool of choice for bullying other countries. Their spread also poses a clear threat to the dollar’s global dominance.

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In this sense, cryptocurrencies have become a geopolitical Ouroboros. Their defining feature, opacity, has disproportionately benefited America’s adversaries. In 2025 alone, illegal cryptocurrency transactions increased by more than 160%, largely driven by countries like Russia, Iran, and North Korea. The Trump administration’s support for dollar-pegged stablecoins has further accelerated that trend.

Russia was among the first to seize the opportunity. After its central-bank assets were frozen by former US President Joe Biden’s administration, the country turned to cryptocurrency exchanges to circumvent economic sanctions, facilitate re-exports of sensitive goods through intermediaries like Kyrgyzstan, and finance the procurement of low-cost military drones deployed in Ukraine.

It has since moved to formalize this approach. In July 2024, the Russian Duma legalized the use of cryptocurrencies in international settlements. A month later, President Vladimir Putin announced the legalization of crypto mining, which the Trump administration has also promoted at home.

The same dynamic is now playing out in Iran. When the US and Israel launched their war in late February, the Iranian regime had already expanded its use of cryptocurrencies. By 2025, its crypto sector was estimated to be worth $7.8 billion, with entities linked to the Islamic Revolutionary Guard Corps (IRGC) accounting for more than half of all inflows.

More recently, Iran has made cryptocurrencies central to its efforts to assert control over the Strait of Hormuz, charging shipping companies $1 per oil barrel—payable in renminbi, Bitcoin, or the stablecoin Tether—in exchange for safe passage. On a single day this month, 15-18 tankers passed through the Strait; at roughly $2 million per ship, these tolls generated an estimated $36 million for the beleaguered Iranian regime.

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In other words, a strategic maritime chokepoint is now a hub for crypto transactions. Some of these transactions have reportedly been conducted on the TRON blockchain, which can settle payments in under three seconds. TRON, founded by the Chinese developer Justin Sun, has also been linked to ventures associated with the Trump family.

Taken together, these developments point to a remarkable shift. US policies, shaped by crypto financiers and pursued in the name of innovation, have expanded and legitimized the infrastructure used to evade American sanctions. The irony is hard to miss. For Iranians caught in the middle of a brutal conflict, and for ordinary people around the world facing rising energy and food prices, the consequences are all too real.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

The Hormuz Crisis and the Fate of the Global South

Mon, 27 Apr 2026 09:41:00 +0400

Laura Carvalho is Director of Economic and Climate Prosperity at Open Society Foundations and Associate Professor of Economics at the University of São Paulo.

The closure of the Strait of Hormuz has triggered what the International Monetary Fund calls a “global yet asymmetric” rupture, disrupting the flow of roughly one-quarter of oil, one-fifth of liquefied natural gas, and one-third of fertilizer supplies. Energy and fertilizer prices have risen, supply chains have rerouted, and financial conditions have tightened unevenly around the world.

Import-dependent economies in Asia, Africa, and parts of Europe have been hit hardest, with many facing higher bond spreads and credit downgrades. As central banks weigh their responses to surging fuel and food prices, the rise in global interest rates is squeezing what little fiscal and policy space developing countries still have.

But if the “Hormuz shock” has laid bare economic vulnerabilities, it has also illuminated something else: the stark differences in how countries absorb turbulence. One of the most salient fault lines in the world nowadays is not simply between oil-exporting and oil-importing countries, but between countries whose energy systems leave them exposed and those who began building energy resilience long before the crisis arrived.

Spain’s renewables revolution offers the starkest illustration of what is possible. Its rapid wind and solar growth has cut the share of hours in which gas sets the domestic electricity price from 75% in 2019 to just 19% in 2025—the sharpest reduction among Europe’s major gas-reliant power markets. While wholesale electricity prices in Germany and Italy have been well above €150 ($177) per megawatt-hour during the Hormuz shock, Spain’s average wholesale price for 2026 is projected to be €60–70/MWh.

Brazil’s extensive biofuels infrastructure has provided a similar buffer, though by a different route. Tens of millions of Brazilian drivers can choose between 100% sugarcane-based ethanol or gasoline blended with 30% biofuel, supported by one of the world’s largest fleets of flexible-fuel vehicles. Because domestic gasoline includes a substantial biofuel share, fuel refined by the state-run energy major Petrobras has remained dramatically cheaper than imported gasoline equivalents, cushioning consumers from global oil volatility. Brazilian gasoline prices rose just 5% in March, compared with roughly 30% in the United States, and Mexico’s president has publicly expressed interest in Brazil’s ethanol technologies, including agave-based production.

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China, too, has proven more resilient than many would have guessed. After a decade of investment, renewables account for nearly 40% of its electricity generation, up from 26% a decade ago, and it has amassed strategic petroleum reserves of more than 1.2 billion barrels. As a result, Goldman Sachs has revised China’s GDP growth forecast down by only half as much as that of the US, identifying renewable-energy dominance as one of the “shields” protecting its economy.

No wonder energy analysts are describing the Iran war as “Asia’s Ukraine moment.” Just as the Russian invasion of Ukraine in 2022 compelled Europe to reduce its reliance on natural gas, the Hormuz shock is pushing Asian countries to cut their oil dependencies. Moreover, cleaner alternatives are now significantly cheaper and more readily available than they were in 2022.

The lesson is clear: vulnerability is a function of structural and policy choices, not just of trade balances. Every country must ask how much of its energy system it controls, how diversified its supplies are, and whether it has built sufficient insulation between global commodity markets and ordinary people. For fossil-fuel-dependent economies that neglected the energy transition, there is an additional warning: if this crisis accelerates other countries’ shift to renewables, stranded assets and shrinking export markets may compound the pain of future shocks.

As many governments wait for multilateral institutions to respond, realities on the ground are changing fast. At the same time, oil and gas producers have a rare window of opportunity. As the University of Massachusetts Amherst economists Isabella M. Weber and Gregor Semieniuk have argued, fossil-fuel price shocks are redistribution episodes: costs are imposed on the entire population while profits flow only to shareholders. That is why windfall profit taxes, such as the one recently championed by five EU finance ministers, are so urgently needed.

The additional revenues could serve two urgent priorities. The first is consumer protection. Higher energy prices are a regressive tax on the poor. Without active intervention, this crisis will deepen inequality within oil-exporting countries, just as it does elsewhere. Short-term subsidies, targeted energy vouchers, and price-stabilization mechanisms are legitimate uses of windfall receipts, precisely because the shock is temporary and the revenues will not last.

The second priority is structural investment. State-owned enterprises like Petrobras have already begun investing in biofuels and low-carbon technologies, and the Hormuz crisis could provide them with additional resources for this purpose.

Likewise, sovereign wealth funds offer a proven mechanism for institutionalizing the link between windfall revenues and long-term energy-transition goals. The Malaysian sovereign wealth fund, for example, has committed RM1.5 billion ($378 million) to decarbonize industrial parks and is building green investment platforms targeting renewable energy, storage, and e-mobility. Indonesia’s new Danantara sovereign wealth fund has struck agreements to develop renewable energy and green hydrogen facilities, directly linking resource wealth to clean-technology value chains.

Even Senegal, a relatively small producer, has established the Renewable Energy and Energy Efficiency Fund through its sovereign vehicle FONSIS. It is mobilizing equity investments in renewables across the West African Economic and Monetary Union, as well as positioning itself to channel future gas revenues into green industrialization.

This is how countries shift from exposure to autonomy: by transforming yesterday’s rents into tomorrow’s capital base. Seizing this moment means converting temporary windfalls into durable assets and treating green industrial strategy as necessary for national resilience. The countries that act now will be glad they did when the next crisis arrives.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

Profile of CEOs at Armenia’s Top 200 Taxpayer Companies

Tue, 21 Apr 2026 08:00:00 +0400

At the Fast-Forward 2026 conference held on April 6, 2026, Sevada Baghdyan, Partner at Boyden Armenia, presented the results of a study on directors from 200 large taxpayer companies in Armenia, which we had promised to present in a separate article.

Below is the Boyden Armenia publication, provided to Banks.am on an exclusive basis.

***

"Boyden Armenia has conducted a comprehensive analysis of the profiles of CEOs leading Armenia's top 200 taxpayer companies. Going forward, this study will be conducted annually. For us, this is an important opportunity to formalize and share one of the most compelling aspects of our daily work with the broader professional community," notes Sevada Baghdyan, Partner at Boyden Armenia․

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The leadership landscape in Armenia remains heavily male-dominated, with 95.3% of CEOs being men. There is also a notable age gap: female executives are generally younger, with an average age of 46, compared to 49.8 for their male counterparts.

The data reveals that 66.9% of these companies opt for non-shareholder executives, while in 33.1% of cases, the shareholder personally holds the CEO position. Notably, shareholder executives tend to be older, averaging 52.8 years of age, compared to 48 years for non-shareholder executives.

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In companies where the CEO is not a shareholder, the selection of a new leader is primarily driven by internal resources:

• 53.5% were promoted from within the organization.
• 46.5% were recruited externally.

In developed economies and established corporations, this ratio typically stands at 70/30 in favor of internal appointments. This discrepancy suggests that leadership development and succession planning processes in Armenian companies still have significant room for improvement.

Prior to their current appointments, the non-shareholder CEOs of the top 200 taxpayer companies gained their primary experience in the following sectors or roles:

• Sales: 29%
• Finance: 27%
• Director: 16%
• Civil Service: 7.5%
• Deputy Director: 6.5%
• Engineering: 4.3%
• Other: 9.7%

According to Boyden Armenia’s observations over the last three years, there is a surging market demand for directors with financial backgrounds and those with prior CEO experience. Consequently, these percentages are expected to shift in future rankings of the top 200 taxpayers.

The most significant disparity is found in the duration of tenure. Currently, shareholder executives have held their positions for an average of 17.2 years. In contrast, this figure drops sharply to 6.4 years for non-shareholder executives. Regarding gender, men have been at the helm for an average of 10.3 years, while women average 6.3 years.

About Boyden

Founded in the United States in 1947, Boyden is a global leader in executive search and leadership consulting, operating in more than 45 countries. The Armenian office supports local and international organizations in identifying top-tier executive talent, forming boards of directors, and providing leadership advisory services to drive long-term business growth and sustainability.

Armenia’s banking system records growth across almost all indicators in 1Q 2026

Mon, 20 Apr 2026 11:05:00 +0400

We are presenting to your attention the summary of the results of the Armenian banking sector for 1Q 2026, prepared and published exclusively on Banks.am by a specialized consulting company RUMELS Management Solutions.

Ruben Melikyan has more than 25 years’ experience as a successful c-level executive (CEO/CFO), with a successful track record leading diverse management teams in different areas, like audit, micro-finance, retail, FMCG and banking. Ruben Melikyan is an ACCA member; he graduated from Oxford University (EMBA) and received a Certificate on “Advanced Corporate Valuation” from NYU.

The purpose of this study is to analyze the main financial indicators of the Armenian banking system in 1Q 2026.

Net Profit

The total net profit of all Armenian banks during 1Q 2026 is equal to 103.5 bln AMD, which is by 2,7 bln AMD, or by 2,6% more than it was recorded in the same period in 2025.

The largest profit was recorded by Ardshinbank, amounting to 33.1 bln AMD.

All banks registered a profit during the mentioned period.

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Total loan portfolio

The total loan portfolio of the banking sector during 1Q 2026 increased by 4,1%.

As of 31.03.2026, the total loan portfolio amounted to 8.011 bln AMD and its share in total assets is 61%.

The mentioned total loan portfolio includes retail and corporate loan portfolios.

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Market share of 5 largest banks (Ameriabank, Ardshinbank, Acba bank, Amio bank and Inecobank) by total loan portfolio is 64.5%.
Ameriabank has the largest market share – 22%.

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Bonds

During 1Q 2026, the total balance of bonds issued by Armenian banks increased by 296 bln AMD, or 56,3%.

As of 31.03.2026, the total balance of issued bonds amounts to 823 bln AMD.

13 out of 17 banks have issued bonds.

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Total Equity

During 1Q 2026, the total equity of the Armenian banking sector increased by 123 bln AMD, or 5,6% and amounts to 2.299 bln AMD.

This increase is mainly due to generated profit in 1Q 2026, amounting to 103.5 bln AMD and increase of share capital of Amio bank, amounting to 20 bln AMD.

During 1Q 2026, only Armeconombank declared dividend amounting to 220 mln AMD.

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The comprehensive analyses of the RA banking system’s results for 1Q-2026 and previous periods are available at the following link․

Is Economic Forecasting Still Possible?

Sat, 18 Apr 2026 08:29:00 +0400

Morten Nyboe Tabor is Co-Founder and Director of the Institute for New Economic Thinking Center on Knightian Uncertainty

The war in Iran has upended the global economic outlook overnight. Oil supply routes have been shut down and prices have surged. Every central bank, finance ministry, and economic forecaster is scrambling to answer the same question: What happens next?

But before rushing to produce new numbers, we need to know what kind of uncertainty we are facing. Are our standard forecasting tools up to the task, or do they offer false comfort?

From the mid-1980s until the pandemic, the global economy was remarkably stable. Inflation was low and predictable. Central banks had credible targets. Supply chains functioned smoothly. Geopolitical arrangements, while never static, evolved gradually. The mechanisms by which disruptions propagated through the economy remained roughly constant.

In that world, the standard approach to forecasting worked well: produce a single baseline projection and wrap it in a fan chart showing the range of uncertainty around it. The fan chart said, in effect: we know how the economy works, we just don’t know the exact numbers. The future would resemble the past, give or take some noise.

That world is gone.

The pandemic disrupted supply chains in ways no fixed model anticipated. The post-pandemic inflation surge was the most significant forecasting failure in central banking in decades. And now, the war in the Middle East is wreaking havoc with the energy sector.

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Each of these events is not just a large disturbance hitting an otherwise stable system. They herald a change in how the system works.

The economist Frank Knight grasped the implications of this distinction in 1921. Risk, he argued, is uncertainty that you can quantify: while you can’t predict the outcome, you know the range of possibilities and can assign probabilities to them. True uncertainty—nowadays called Knightian uncertainty—is different: you cannot assign it a probability, because the situation itself may be changing in ways you have not seen before. The economy undergoes structural shifts that, because they are genuinely novel, rule out using the past to estimate future outcomes.

The Iran war is a case in point. We knew a Middle East conflict was possible, and previous oil crises and energy-price surges offer some guidance about the consequences. But the specific combination of actors, escalation dynamics, and consequences for global energy markets has no precedent—and the differences from previous episodes are precisely what matters most.

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A fan chart cannot capture this. It assumes that future uncertainty can be quantified by past forecast errors. It says: I know the story, but not the numbers. But when the story itself is in question, a wider fan chart is not the answer.

If we cannot reduce the uncertainty to a single probability distribution, what should we do instead? The answer is not to abandon economic forecasting and seek an oracle. It is to change the format. Roman Frydman of New York University and I recently proposed a rigorous approach that aims to guide forecasting under Knightian uncertainty.

Instead of one baseline with a fan chart, forecasters should present a small set of scenarios—not as hedging, not as decoration, but as structured reasoning about genuinely different futures. Each scenario should include a narrative explaining the economic logic, a conditional forecast showing what follows if that scenario plays out, and a specification of what incoming data would shift the assessment toward one scenario or another. Designing good scenarios is the hard part—it requires practical economic judgment, not just statistical technique.

For the Iran war, this could mean two or three scenarios. In a containment scenario, for example, the conflict remains localized, oil supply disruption is temporary, and energy prices return toward pre-war levels within months. In an escalation scenario, the war spreads, energy infrastructure is damaged, oil prices settle at permanently higher levels, and second-round effects on wages and inflation expectations change the policy calculus—or even trigger a fundamental restructuring of global energy trade.

Each of these implies different trajectories for inflation, interest rates, and growth dynamics. No single baseline with a fan chart can capture these qualitatively different futures. Scenarios can.

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Some of the world’s major central banks are already moving in this direction, driven by the hard lesson of the post-pandemic inflation surge, which blew through every fan chart they published. Ben Bernanke’s landmark review of the Bank of England recommended eliminating fan charts and publishing scenarios instead.

In March, the European Central Bank did just that, replacing its fan charts with three alternative scenarios and explicitly stating that its standard probabilistic tools would not “provide a reliable indication of the high uncertainty.” As ECB President Christine Lagarde put it: “We find ourselves yet again in a different world, whose contours are not yet clear.”

The ECB is not alone. Sweden’s Riksbank now publishes alternative scenarios without attaching probabilities. The Bank of Canada has gone further, dropping its baseline forecast altogether in early 2025, when no single projection was credible.

The tools for forecasting under Knightian uncertainty exist. Scenarios are not a second-best substitute for a single forecast with a fan chart. When the economy is undergoing structural change, they are the intellectually honest format—able to represent what we can and cannot know about the future.

In a changing world, credibility does not come from being right all the time—no one will be. It comes from being transparent about the possible futures you consider relevant, adjusting your views as new data arrives, and doing what you said you would do when a specific scenario materializes.

While some central banks have led the way, much of the forecasting profession—and the economic theory that underpins it—still defaults to single baselines that treat the future as a probabilistic replica of the past. But when the structure of the economy changes in unforeseeable ways, forecasters must acknowledge that many futures are possible. The right response to Knightian uncertainty is not wider fan charts, but scenarios that take seriously that we can know only that the world has changed, not how.

This article is presented on Banks.am in partnership with Unibank.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org

Women’s entrepreneurial environment in Armenia: problems and opportunities

Fri, 17 Apr 2026 10:01:00 +0400

On April 15, 2026, representatives of the public and private sectors, civil society, and women entrepreneurs gathered on one platform in Yerevan to discuss how to make the entrepreneurial environment for women in Armenia stronger and more inclusive.

The public-private dialogue, titled “Entrepreneurial Ecosystem and Women’s Economic Empowerment,” was held within the framework of the Women’s Economic Security Program “Her Power, Her Future,” funded by the U.S. Department of State and implemented by the CARE Caucasus organization.

The discussion was moderated by the WINNET Armenia Network of Women’s Resource Centers, ensuring an open, inclusive, and substantive exchange of ideas.

“CARE Caucasus unites and empowers women across the Caucasus region by expanding economic opportunities, fostering collaborative networks, and promoting cross-border cooperation.

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Women are often advised to combine their skills, present their projects more confidently, and strengthen their technical capacities to succeed in business. However, data collected over the past five years in four regions of Armenia within the framework of the ‘Her Power, Her Future’ initiative tells a different story. Women are already significant and influential contributors to the economy, and the core issue is not a lack of skills, but an ecosystem that constrains their advancement. These challenges are largely systemic, including unequal access to capital, limited networking opportunities, and the disproportionate burden of unpaid care work borne by women,” said Nino Bolkvadze, Executive Director of CARE Caucasus, in her opening remarks.

According to her, CARE Caucasus is working to reassess and improve the pathways through which women achieve success:

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“Women’s empowerment is not only a moral issue, but also a strategic imperative of our time. When women succeed, they contribute to their families, communities, and the broader economy, fostering greater resilience. Ensuring women’s sustainable economic participation requires effective legislation, innovative solutions, and, importantly, stronger public-private partnerships.”

She also emphasized that the organization’s activities in Armenia are aimed at fostering an environment that promotes dialogue, knowledge exchange, and collaboration.

“By integrating technology, finance, and the creative potential of civil society, we aim to build a supportive, safe, and economically viable environment for women-led businesses. By empowering women entrepreneurs, we not only contribute to the growth of their businesses, but also to the creation of a more sustainable and inclusive future that benefits everyone,” she noted.

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According to Ruzanna Torozyan, President of the WINNET Armenia Network of Women Resource Centers, the dialogue marked an important step toward strengthening the link between institutions and communities in order to more effectively support women entrepreneurs in Armenia.

“Strengthening the entrepreneurial ecosystem means ensuring that women have access not only to resources, but also to networks and platforms that foster growth,” she noted.

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David Barseghyan, Head of the Entrepreneurship Department at the Ministry of Economy of Armenia, also emphasized that supporting women’s entrepreneurship is a key priority of the government’s economic policy: “The Government of Armenia is consistently working to build an inclusive and competitive business environment, which remains one of the central pillars of the country’s economic policy. This approach is also reflected in the draft ‘SME Competitiveness Strategy 2026-2030’ developed by the Ministry of Economy of Armenia.

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Empowering women entrepreneurs is a central priority of our economic agenda. To this end, we are continuously expanding support mechanisms, development opportunities, and access to essential resources to ensure that women-led businesses grow, strengthen their market positions, and enhance their competitiveness. Our goal is to fully unlock the economic potential of women, enabling them to become one of the key drivers of Armenia’s economic transformation and inclusive growth.”

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Responding to concerns raised by women entrepreneurs that access to SME support programs is often limited in regional, particularly remote communities, David Barseghyan noted that efforts are being made to organize outreach visits within available resources: “During these visits, we bring together SME representatives from different communities in one place, listen to the challenges they raise, systematize them, and try to find appropriate solutions.”

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Hakob Avagyan, President of the SME Cooperation Association, in turn raised concerns over the absence of a dedicated state-level SME development structure in Armenia.

“At the moment, there is no clearly defined SME development strategy in Armenia; in other words, the state has not articulated what kind of SME sector it aims to develop. The previous strategy expired in 2024, and a significant part of its key provisions has not been implemented. The Organization for Economic Co-operation and Development (OECD) has also addressed this issue, noting that one of the contributing factors is the closure of the national SME development structure that had been operating since 2002, which ceased its activities about four years ago, along with its regional offices,” he said.

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According to Hakob Avagyan, the former structure, though imperfect, played an important institutional role by responding to a wide range of entrepreneurs’ inquiries: “It was closed, but no other structure was created in its place. Under these circumstances, we are calling on the government to first clarify who will implement the new strategy, and only then proceed with its adoption.”

He also recalled that in 2014, through joint efforts with the government, Armenia introduced a law on tax exemptions for family entrepreneurship, which particularly supported the development of guesthouses. Later, this framework evolved into a micro-entrepreneurship system, also encompassing self-employed individuals, but further amendments were introduced in 2022: “The changes over the past four years, in our assessment, have further worsened the situation. Today, more than 30 percent of active business entities operate as sole proprietors, while the share of joint-stock companies is only 1-2 percent, which indicates that institutional development is not being ensured.”

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He added that, given the pre-election period, the association plans to invite economic representatives of the four leading political forces to meet with members of the SME Cooperation Association in order to clearly present the reforms and policy changes they propose for the sector.

Arpi Jilavyan

Photos by Gaiane Yenokian

GABA bridges the Georgian and Armenian markets

Thu, 16 Apr 2026 17:36:00 +0400

The official launch of the Georgian-Armenian Business Association (GABA) took place in Yerevan on April 15, bringing together representatives of the Armenian and Georgian business communities, international organizations, state institutions, and private sector stakeholders.

The event was held within the framework of CARE Caucasus’ “Her Power, Her Future” program, highlighting the agenda of women’s economic empowerment and inclusive growth.

The initiative aims to deepen bilateral economic ties, promote trade and investment, and create a platform for structured business cooperation.

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GABA founder and director Lali Svimonia presented the background and mission behind the association’s establishment.

“The Georgian-Armenian Business Association was created with a clear vision: to bridge the Georgian and Armenian markets,” Lali Svimonia noted.

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Recently, a growing interest of Georgian companies in the Armenian market has been recorded, emphasizing the need for a more systematic and coordinated approach.

Highlighting the imbalance in bilateral business presence, Svimonia noted that around 600 Armenian companies operate in Georgia, compared to only about 10 Georgian companies in Armenia. She stressed that this gap represents a significant opportunity for growth and expansion.

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Lilya Sirakanyan, Deputy Minister of Economy of Armenia, noted that the establishment of a business association is an important step toward institutionalizing business relations.

“We are confident that it will become an effective platform to support market entry, promote partnerships, and develop small and medium-sized enterprises. The Government of Armenia will continue to take steps to improve the business environment, attract investments, and expand regional cooperation. Interconnected economies build trust and long-term partnerships. I am confident that the initiatives launched today will lead to new investments, new partnerships, and joint growth,” the deputy minister said.

One of the key highlights of the event was the entry of Helio.AI into the Armenian market.

The company’s co-founder and CEO, Ia Jikia, noted in her speech:

“We are currently present in seven countries, and we are proud that Armenia has become our eighth market.”

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She emphasized the attractiveness of the Armenian market, citing its technological potential and rapid growth. Ia Jikia added that the company has conducted in-depth market research and has already begun cooperating with local organizations, marking a strong start.

She also presented the company’s technological solutions, noting that Helio.AI automates the human resources recruitment process, enabling companies to reduce manual work and focus more on the human aspect.

“Today, many companies still spend most of their time on mechanical processes, and we help them focus on people,” Ia Jikia said.

Nino Bolkvadze, Executive Director of CARE Caucasus, emphasized the strategic importance of cross-border cooperation:

“It is essential for unlocking new economic opportunities and strengthening regional resilience.”

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She noted that CARE Caucasus has long supported women-led businesses by providing grants and encouraging their participation in economic processes. According to her, the establishment of GABA is a logical continuation of these efforts aimed at fostering regional economic integration.

The panel discussions covered topics such as cross-border trade, investment opportunities, workforce development, and access to digital tools.

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Elina Margaryan, Board President of the American Chamber of Commerce in Armenia (Amcham), highlighted that regional cooperation opens up new opportunities for businesses, particularly for small and medium-sized enterprises.

She noted that such platforms not only help expand markets but also facilitate the exchange of experience and knowledge, which is crucial for building a competitive business environment.

Astghik Hovhannesov

Photos by Davit Ghahramanyan

Why Europe Is Unlikely to Face an Inflation Surge

Sat, 11 Apr 2026 08:20:00 +0400

Daniel Gros is Director of the Institute for European Policymaking at Bocconi University

Daniel Gros

The sharp increase in global energy prices since the start of the Iran war has revived memories of the 2022 spike, triggered by Russia’s full-scale invasion of Ukraine, and the energy sanctions that followed. At that time, central banks failed to recognize right away the scale of the inflationary pressures being generated. By the time they did, they had little choice but to launch an abrupt and aggressive monetary-tightening cycle. Today, they seem committed not to make the same mistake.

So far, this shock appears to be smaller than in 2022. Though the increase in crude oil prices is similar-around 60-70%-the starting point is different. Crude oil prices rose sharply over the several months before the Ukraine war, more than doubling from their spring 2021 low (a result of the COVID-19 pandemic) to reach $80 per barrel-twice the 2020 average-by the end of the year. This rebound was generating inflationary pressures well before oil prices peaked at $110-$120 per barrel (similar to today’s level) in the summer of 2022.

In Europe, these pressures were compounded by rising natural-gas prices, which grew by a factor of 5-6, from their May 2020 low, by the end of 2021. That December, natural gas reached €70 ($80) per megawatt-hour on the leading Amsterdam TTF exchange-higher than the €50-55/MWh recorded since the Iran war began. While consumers usually have longer-term heating and electricity contracts that shield them from short-run price fluctuations, contracts were gradually repriced, causing the consumer price index to rise.

By the time Russia launched its full-scale invasion of Ukraine, inflation was running above 5% on both sides of the Atlantic. But the US Federal Reserve and the European Central Bank (ECB) paid it little mind, because their models predicted that inflation would fall back toward 2% at the end of their forecasting horizon.

Modern central-bank models assume that agents are forward-looking and trust that monetary policymakers will ultimately deliver on the 2% target. As long as energy prices are expected to decline, central banks do not need to raise interest rates. The ECB’s staff projections reflected this fundamental optimism: in March 2022, they had inflation falling from 5.1% in 2022 to 2.1% in 2023, without any interest-rate hike. By the time the ECB raised rates, in July 2022, inflation had surpassed 8%.

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ECB President Christine Lagarde is well aware that the current energy-price shock is smaller than the one Europe faced four years ago. She said as much in a recent speech, noting that the increase in inflation should be temporary. ECB staff projections match this view, putting inflation modestly above target at 3.5% for 2026 even under an adverse scenario, and assume it will fall back to 2% next year.

But the ECB appears set to act, anyway. As Lagarde put it, a “large though not-too-persistent overshoot” of the institution’s inflation target should not be left “entirely unaddressed,” as this “could pose a communication risk,” with the public finding it “difficult to understand a reaction function that does not react.” Moreover, the expectation that inflation will “deviate significantly and persistently from target” warrants an “appropriately forceful or persistent” response.

Rising medium-term interest rates indicate that financial markets now anticipate monetary-policy tightening this year, not only in Europe but also in the United States. At the very least, the Fed appears to be slowing down its rate-cutting cycle. This is notable, given that the US is paying about a third as much for natural gas as Europe or Asia, thanks to its large domestic energy-production base, comprising mostly shale gas (its export facilities for liquefied natural gas are operating at or near full capacity).

Policy is driven not only by data and models, but also by experience. Central banks do not want to lose the last war again. As a result, inflation is likely to remain under control, despite the pressures generated by the Iran war. The immediate impact of higher oil prices has so far been modest, with inflation increasing by half a percentage point, up to 2.5%. The ECB should be able to deal with this.

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For Europe, the bigger risk lies elsewhere. Faced with higher natural-gas prices, industry is lobbying hard for subsidies and a relaxation of emission-reduction targets. And European policymakers appear to be buckling under the pressure. At the last European Council meeting, they called for a review of the European Emissions Trading System, which forms the core of Europe’s green transition. Italy’s government has already announced plans to neutralize the effects of the carbon price set by the ETS.

That is an alarming turn. Given the rapidly escalating costs of global warming, Europe will regret allowing its climate ambitions to become yet another casualty of the Iran war.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org