The International Day of Bank is observed on 4th December every year across the world, meant to celebrate the appreciation of financial institutions. These institutions are considered the backbone of the financial system.
The global economy is facing heightened risks and financial volatility. In this regard, geopolitical factors also paved the way to stop economic growth for any development.
Furthermore, the global economy is shifting from the Atlantic to the Pacific Ocean and from the West to the East region. The world is moving towards multipolarity and China can be considered as a rising power in the current political order.
In such a scenario, the world is divided into two blocs; the Western and Eastern blocs. Few powers are confused about relying on a capitalist economy. In the recent past, the KSA (Kingdom of Saudi Arabia) agreed in Yuan currency for a strategic partnership with China. Some analysts termed this move a de-dollarization.
After World War II, the IMF (International Monetary Fund) and the World Bank came into being in this world. Its sole purpose was to maintain the global economy in developed countries and developing countries in particular.
In this sense, this sustainability has always been shattered due to structural constraints in the geopolitical landscape. In the context of UN-given goals, the achievement of the Sustainable Development Goals faces heightened risks due to weaknesses in the global financial system.
These risks encompass the volatility of international capital flows, driven by the short-term nature of many components in international capital markets, persistent global imbalances, challenges in debt sustainability across public and private sectors, and the growing dominance of monopoly power along with less effective competition policies.
The elevated levels of debt in both public and private entities, including highly leveraged financial market derivatives, create vulnerabilities and contribute to boom-bust cycles.
Inequality is further exacerbated by the compression of the wage share of income. While the rapid pace of technological change may offer new solutions, it also has the potential to worsen global systemic risks.
The Addis Ababa Action Agenda emphasized the significance of cohesive, nationally owned sustainable development strategies supported by integrated national financing frameworks. Many countries, in response to the 2030 Agenda, have revitalized their sustainable development strategies.
However, the majority lack concrete financing plans for the implementation of these strategies. The Addis Ababa Action Agenda highlights the need to complement the reflection process with efforts to enhance coherence within the global system and improve the inclusivity of global economic governance.