g20

Climate change can negatively affect macrofinancial stability and amplify sovereign risk. By raising the cost of sovereign borrowing for climate-vulnerable countries, it limits the fiscal space available for scaling up investment in adaptation and resilience to climate change and can threaten debt sustainability. This policy brief proposes actionable policy solutions for mitigating and managing the effects of climate change on macrofinancial stability and the cost of sovereign borrowing.

The formal arrangements for the governance of international monetary and financial crises have remained reasonably stable over the past 40 years, but the identity of the leading actors, has changed. Over this period, the role of the largest central banks – first and foremost, the US Federal Reserve (Fed), currently the most important central bank due to the international role of the US dollar, the European Central Bank (ECB), the Bank of England (BoE), the People’s Bank of China, and the Bank of Japan – has increased substantially.

The IMF estimates that State-Owned Enterprise (SOE) assets totalled US$45 trillion in 2018, close to 50% of the global GDP, and calculated the debt of the largest SOEs to be US$7.4 trillion. Clearly, SOEs have a direct bearing on the global economy. The most systemically important SOEs are the State-Owned Multinational Enterprises (SOMNEs) since they are focused on cross-border financing and business.

This policy brief warns about the risks of discontinuation of the policy responses to the COVID crisis by pursuing exit strategies too early and/or too sharply. It outlines a comprehensive strategy for limiting such risks at a global level, and offers an in-depth discussion of the EU situation. In our view, the Euro Area could be left with long-lasting scars, so that its situation requires special treatment. We therefore present some policy proposals designed to preserve and strengthen the recovery in this area.

With Environmental, Social and Governance (ESG) investing becoming mainstream, it is urgent to develop a standardised set of information that investors and companies can use in their decision-making process. Information consistency, integrity and trustworthiness, and appropriate evaluation of the impact of the ESG-related efforts are essential to ensure positive spill-over in societies, countries and the environment. We urge the G20 to play a proactive role in defining standardised disclosures and narrative, and assessing companies’ ESG policies.

Since the pandemic began, the debt situation in Sub-Saharan Africa (SSA) has been further exacerbated as the pandemic has constrained the ability of many countries to mobilise revenues; it has also raised public sector financing requirements. To close the financial gap, countries in SSA need short-term and long-term liquidity from a wide range of financiers. The G20 assumes a crucial role in resolving debt problems in SSA as the only forum that encompasses the governments of Africa’s most important creditors among industrialised countries and emerging markets.

As they fight the Covid-19 pandemic, countries across the world are pushed to spend big to weather the crisis. Due to their limited fiscal capacity, many low- and middle-income countries are facing debt distress which might lead to a future debt restructuring process. With the current conventional instrument of sovereign debt, debt restructuring is a painful process and sometimes hurts the economy more than is necessary.

The Token Economy presents revolutionary digital solutions to the traceability and certification of sequential transactions. Beyond financial markets, tokenisation has the potential to multiply all types of transaction exponentially and to develop customised investment options to suit almost any interest. Due to its universality and increasing applications, there is a need for wider supervision and a regulatory approach as we gain a better understanding of the token economy.

Throughout 2020, the Covid-19 pandemic caused massive human and economic casualties. The pandemic has been a major blow for developing countries, especially low-income countries, from many perspectives. These countries experienced a sudden dry-up of external financing in March 2020, against the backdrop of a rapid pile-up of sovereign debt during the last few years, coupled with a surging need for finance to combat the public health crisis (Figure 1).

Ultimate Beneficial Owners (UBOs) are defined by complex legal rules that differ across countries. Identifying UBOs is increasingly costly and time consuming. Gathering more data and refining already complex domestic legal arsenals is not the solution. We therefore propose a risk-based approach to identifying possible UBOs, which is enabled by recent theoretical advances in economics and corporate finance. The proposed methodology is robust, rigorous and cheap to implement.

While only one African member is formally part of the G20, Africa remains severely underrepresented in the most important multilateral group regarding global economic and financial cooperation. This policy brief argues that a greater degree of global integration and regional representation is key to ensuring the long-term legitimacy of the G20 itself. For this to be achieved, the G20 needs to become more inclusive, particularly by systematising its relationship with African multilateral institutions.

Haphazard efforts to renationalise economic activity after the recent economic and financial crisis and during the ongoing pandemic have fragmented the global economy. To correct this, we propose that the G20 call for the elaboration of Global Legal Standards (GLS) as a framework of convergence. To begin, such standards could apply in areas like global value chains, finance and taxation, and corporate governance. Once consolidated in these three areas, GLS could foster positive externalities capable of providing new impetus to multilateralism, and reshape the global order of tomorrow.