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Opinion

Global financial outlook 2023


Published : 19 Jan 2023 09:18 PM

 The overall global picture is set to be gloomy for 2023, with the majority of chief economists anticipating moderate or strong growth in the Middle East, North Africa, and South Asia, while many more think growth will be weak in the US and Europe. According to a survey by the World Economic Forum, almost 20 per cent of the respondents see a likely chance of a global recession, nearly double the number in the previous survey in September. Nonetheless, some top global powers have planned positive financial outlooks to pursue financial growth for 2023. 

Among them is the European Nation pursuing a "Strategic Autonomy" agenda in 2023. This is the EU's attempt to lessen exposure to foreign partakers and promote homegrown solutions leading to politically solid momentum behind issuing the digital euro and sweeping regulatory measures with broad extra-territorial effect. The efforts of such can be seen with the EU's Digital Operational Resilience Act (DORA), which includes MiCAR and the DLT Pilot Regime, intended to tackle cyber risk in the sector, entering into force this year.

The EU is currently pushing through a transformational digital regulation package, including the Digital Services Act, the Data Governance Act and the second Directive on the Security of Network and Information Systems. These developments are designed to go beyond data protection and cyber security challenges presenting a step-change in the compliance challenges for those operating in the EU in hopes of seeking growth in its financial sector.

The top developed nations are focusing on digitalising their financial

 services despite the foreseen setbacks and push for financial 

growth. Their visions are mainly focused on future of digital 

currency and a better extensive crypto framework with more

outstanding legislative guidance and regulation

Meanwhile, China's authorities' renewal of its fintech plan, declaring a vision for a "digitalised, intelligent, green and fair" fintech sector, is en route to create exciting opportunities in the ESG space. As the country moves into the second year of its refreshed Fintech Development Plan, it will continue to improve digitalisation in the finance industry and strengthen the prudential regulation of fintech in efforts to bolster its economic and finance industry

 The People's Bank of China (PBOC) has already set eight specific missions in motion to accelerate fundamental changes in infrastructure, industry application, fintech innovation, fintech governance, data capability, digitalisation of financial services, reg tech and talent development. Moreover, China is all set to explore applying the digital yuan in cross-border payment scenarios, with China's central bank digital currency (CBDC) playing an active role in the "m-CBDC Bridge" digital currency project.

 The US has also stepped up with its Federal Reserve proclaiming its interest in introducing a US central bank digital currency as a digital dollar. The nation envisions an estimated adoption timeline between 2025 and 2030. This year, the deliberations concerning the potential risks and benefits of what would be a fundamental transformation of the world's most widely used reserve currency might be seen. The nation also has its attention set on a comprehensive crypto framework, particularly following the FTX crisis. 

 Additionally, more brands from the land of liberty are expected to expand into the metaverse, emphasising digital assets that could prove key to the interoperability of payments and digital identity between metaverse platforms. Furthermore, the constant tensions between personal privacy, monetising data and freedom of speech would likely continue to challenge US regulators contemplating on best ways to regulate AI to protect consumers while promoting innovation in the financial services sector.

 Overall, the top developed nations are focusing on digitalising their financial services despite the foreseen setbacks and push for financial growth. Their visions are mainly focused on future of digital currency and a better extensive crypto framework with more outstanding legislative guidance and regulation. 

It is widely accepted by Economists around the world that the effects of the three of the world's significant powers being down are far and wide. Even for countries not inside the economic zones of the top dogs, their innovation during economic outbursts expected in 2023 can significantly affect hundreds of millions of people.