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Year: 2026
Politics of the personal
Gary Stevenson is agitated. Leaning forward in his chair, the self-styled social economist gesticulates animatedly and says to his counterpart, serial entrepreneur Daniel Priestley, “I don’t need to be here. I am a multimillionaire just like you. Sometimes we have to do things not because they are easy, but because they are hard; that is what makes a rich country rich.” Stevenson and Priestley are guests on a two-and-a-half-hour special edition of the number one Diary of a CEO podcast. We are almost an hour into the conversation and both guests are presenting passionate, well-researched points offering different views on the solution to increasingly severe inequality in the west and what Stevenson sees as the imminent collapse of the UK economy.
What is striking about the debate is not only that both men make excellent arguments for how to approach the undeniably urgent problem, but that the nature of the discussion, although heated and frustrating to listen to at times, remains curious, understandable, and crucially, respectful throughout. Against the current political backdrop, that is impressive. There are no easy answers and, refreshingly, neither guest is pretending otherwise.
Influencer politics
It is almost impossible to consume any mainstream or social media in 2025 without being sucked into highly adrenalised, even dangerously oversimplified arguments. DOAC and other online broadcasts deliberately play into this, using ‘urgent’ graphics and inflammatory language. But stick with this episode and the nuances are allowed to unfold – one of the benefits of longform podcasting, albeit one that does warrant some scrutiny as many of host Steven Bartlett’s guests (and some controversial viewpoints) do go largely unchallenged.
A media controlled by ‘wealthy elites’ will naturally attempt to shift public debate away from itself
The algorithms and clickbaity nature of social media has shaped public discourse to the point of entertainment and agitates people into commenting, following, and pouring fuel on the fire. Not only that, but the issues of the day – increasing poverty, environmental disasters, geopolitical emergencies – naturally lead people to seek simple solutions; someone to blame. You have only to look at recent political events in France, the US, the UK, and elsewhere to sense that political and social polarisation is posing a genuine threat to democracy.
A recent episode of Stevenson’s ‘Gary’s Economics’ videos helpfully explains this phenomenon: he goes into 25 minutes of detail outlining how to control a media narrative by using techniques such as salience and storytelling. All of this to address the question of why the working class and the media have been swept into overwhelming public debate about migrant hotels, protests and counter-protests, flag flying and so-called ‘illegals.’ Stevenson believes it was deliberate. “At the end of June, the economy and inequality and taxation of the rich were being discussed every single day on every single news show; we had massive salience. And now if you look at the TV, what you see is immigration and asylum seekers and refugee rights. Refugee protests outside hotels are being spoken about much, much more, and the issues of inequality, taxation, distribution have kind of been put on the shelf.” In other words, a media controlled by what Stevenson calls ‘wealthy elites’ will naturally attempt to shift public debate away from itself and onto an ‘easy’ answer: immigrants. It is a tale as old as time.
If you are engaged in business and economics in 2025, you will be aware of the many disruptors who have emerged across industries, but Stevenson’s disruption, rather than getting rich, cashing out, and retiring somewhere tropical, is to take aim at the very structures and systems that enable people to do that without paying their fair share.
Stevenson’s path is an inspiring one: he is a ‘working-class boy done good’ who studied hard, got into LSE and literally won his way into an investment banking job. He became fantastically successful at trading, which almost broke him, and has now written a book about his experiences and vlogs about economics ‘for normal people.’ And it is this new outlet where things swiftly get political. With a quick mind, a sharp tongue, and a penchant for winding himself up, Stevenson is compulsively fascinating to watch – he has created a YouTube channel with 1.49 million subscribers featuring nothing more than him chatting at his kitchen table with the occasional scribbled line graph on a pad of paper. A member of the lobby group Patriotic Millionaires, which campaigns for governments to tax them and others like them, Stevenson uses his growing platform to talk to the working class that he came from, but he is taking aim at his new peers: “I come in here because I come from a poor background and it is ordinary people like my family, like the kids I grew up with, whose kids are gonna be in poverty. Tackling wealth inequality is difficult, but it is necessary.”
Why a wealth tax?
So, to the core argument. Having made his millions betting on the economy never recovering after the 2008 crash, Stevenson believes that the solution is to implement a one to two percent wealth tax on wealth above £10m. Crucially, he is not interested in raising income tax in basically any scenario but focuses solely on curbing the compounding of existing wealth at levels far beyond even the highest salaries for everyday corporate work.
One counterargument to this is that such a tax would lead to an exodus of the super-rich, and the number of millionaires leaving the UK is often used to back this up. Stevenson believes that millionaire entrepreneurs are leaving the UK because its spending power is so weak – middle- and working-class families are struggling and so spending less money. A wealth tax would stop the super-rich being able to simply stockpile assets and squeeze out the poor and middle classes, opening up opportunities to buy homes, have a family, and become more economically active.
It is also the case that ultra-high net worth individuals (UHNWIs) are essentially globally mobile, as are the businesses that they run. One of the joys of the technology age is the ability to start an online business from anywhere, but this makes it difficult to trace and track profits and wealth, especially when it is so easy to shift where these are held to tax havens. This begs the question of traction – it almost feels as though for this to work, it is not enough for one country to implement it, it would need to happen the world over. In a time when places like Dubai are cutting taxes there is something systemic and far-reaching here that may very well be beyond the scope of one economic influencer. What is interesting though, is that this ‘millionaire exodus’ is already happening to some degree, without the UK implementing any wealth tax of the type Stevenson supports. And truly, he does seem to care about the 99 percent of the population that aren’t millionaires, so when challenged with this, he remains committed to the cause he knows he is likely to lose.
Politics and polarisation
In a striking shift toward progressive economic reform, the Green Party’s newly elected leader Zack Polanski is also calling for a wealth tax. Not dissimilar in attitude, Polanski himself made well over 100 media appearances and interviews in the first week after his leadership announcement in September, and among the first guests on his new podcast was one Gary Stevenson. Since then, the Green Party has increasingly echoed the call for a comprehensive wealth tax, calling for a two percent tax on wealth above £10m.
A wealth tax would stop the super-rich being able to simply stockpile assets
It is too reductive to say that influencer politics have shaped the Green Party’s approach to wealth taxation, but in a summer of identity politics overtaking almost all nuance of complex issues, they have surely been emboldened by it.
With the next election approaching, Stevenson is keen for other voices to take up the message and spread the idea of wealth taxation, particularly among the working classes. The challenge will be to keep enough salience – to churn out enough content, command enough of the narrative, and present ideas accessible enough that people understand them and are prepared to vote for them over identity. Thanks largely to social media amplifying increasingly extreme viewpoints, both the right and left in the UK have never felt so stark, and the traditional parties of Labour and Conservative have scarcely been more similar. Stevenson’s influence not only appears to be shaping grassroots politics, but if the next UK election really does become a choice of either Reform or the Greens to oust Labour, the question becomes which way the country ultimately swings. Both sides of the debate will need to capture the hearts and minds of the working class; it is a question of exactly which issue will capture the public imagination more. No doubt, Stevenson has his work cut out.
Slowing down to stay ahead
This article was written over a period of several weeks. As I started it, Stevenson’s DOAC debate had just aired. During its development time, Polanski announced his wealth tax plan in an almost perfect echo of Stevenson, and the two men were backing and complimenting one another online. By the time it was finished, Gary’s Economics had a new video out titled ‘Goodbye and Good Luck.’ Not an announcement of Stevenson quitting, but of taking an extended break, essentially because he has recognised that he is exhausted and fighting a very difficult battle. A marathon, not a sprint, for the ideals he champions. No doubt those who are against him will hope that the idea dies down, but this doesn’t feel likely. In the show notes for the video, Stevenson lists several individuals and organisations his followers can support in the meantime. The first on the list: Patriotic Millionaires. The second: Zack Polanski.
Blackrock: why ETFs have new heights to reach
Exchange-traded funds (ETFs) have new heights to reach. That is the view of Blackrock’s Dhruv Nagrath – director of the firm’s iShares Fixed Income Strategy team – who said in August 2025 that the ETF market is both large and still in its early stages of growth. While there have been ups and downs over the last five years, $200bn a year has been invested in the fixed income industry despite the market volatility that has existed since the year 2000, and even though 2024 was a record year ($280bn).
In fact, Investment News reported that Nagrath revealed they had reached a record $12.5trn Assets Under Management (AUM) and declared that this was only scratching the surface to the extent that 2025 was expected to be yet another headline year. Miguel Ramos Fuentenebro, Co-founder of Fair Oaks Capital, also declared that from its own perspective growth is far from over.
Fuentenebro said, “In Collateralised Loan Obligations (CLOs), for example, ETF adoption is only at the very beginning in Europe: US CLO ETFs already represent over three percent of their market, whereas in Europe ETFs and UCITS funds together account for barely 0.2 percent of a €311bn CLO market.
“Investors are looking for floating-rate income and robust underlying assets and CLOs match that criteria. By providing those exposures in ETF format, we have democratised access into an asset class previously accessible only to the largest credit buyers,” Fuentenebro continued. The rate cut by the US Federal Reserve in September 2025 and the impact of market volatility caused by tariffs have nevertheless stirred up ETFs.
Subsequently, there has been an increase in trading volumes, and a shift from passive to active ETFs. This is because investors, with an eye on containing risk, are now drawn to diversified and fixed income solutions.
Market competitiveness
To encourage market growth, Vanguard has also slashed its fees on six equity ETFs that are domiciled in Europe by three and five basis points to counter fee pressure within core market segments. A fee drop may also be to respond to the fact that Blackrock leads the ETF haul, reports DL News, to the value of $3.5bn, while Vanguard currently sits in second place with $2.4bn. This may also be because Vanguard’s SPLG is 20 years old, while Blackrock’s IBIT started in January 2024.
As for Blackrock’s BINC – its iShares Flexible Income Active ETF – Seeking Alpha reports that it is seeing, “astounding growth in a decreasing rates environment.” The conclusion to that article by Binary Tree Analytics says: “The fund has seen a massive growth in AUM, with the assets now reaching an astounding $13bn figure. We like the risk-reward proposition here and the active management, and are of the opinion that BINC is a good choice for a macro environment where much lower Fed Funds are priced in.”
Speaking about ETFs, Hugh Morris, Senior Research Partner, Z/Yen remarks that ETFs are quite trendy at the moment. His company is seeing significant investor interest in ETFs and fixed-income ETFs. He therefore comments: “One strongly suspects that this has a fair way to go yet because there are a number of factors at play. I would say that, first, there has been interest from retail investors as ETFs are relatively simple to understand, and that combined with institutions’ desire for liquidity management and tactical asset allocation have produced a surge in demand.” He suggests this is against a background of market volatility, where fixed-income products look quite attractive because of their yield, and they provide a diversification option. On top of this, there are more trading platforms out there, and “the regulatory landscape has changed to make it easier to manage and launch ETFs and ETF markets also have greater transparency than previously,” Morris continued.
There are also niche ETFs targeting sectors in particular, such as green bonds and cryptocurrencies, Morris says before adding: “Combine all these trends together with a rise in actively managed fixed-income ETFs, then investors have more options than before.”
Growing interest in ETFs
As for the future, there is growing interest in fixed-income ETFs that focus on emerging market debt. Alongside this, he reports that there is huge growth in the corporate bond market for ETF offerings as ETFs can be used as a hedge against inflation. They can also function as a hedge against volatile interest rates too. As for CLO ETFs, Fuentenebro says they began in the US. Despite this, the same forces are at work globally. His company launched the first AAA CLO ETF in Europe 12 months ago. “The reception shows there is clear global demand – we have seen interest from European investors but also from investors in Latin America, the Middle East and Asia, often into the USD-hedged share class.” So, while he finds that the US is ahead in scale, he suggests that the global investor base is increasingly comfortable with ETF wrappers for specialist fixed income exposures.
Morris adds: “ETFs have lower management fees compared with mutual funds, and the structure of ETFs allows for tax-efficient trading. Looking into the future, there are lots of untapped segments – such as the corporate bond world and emerging markets debt.”
“You name it, you can do an ETF in it. While ETFs have been US and Western markets focused; there is increasing traction in Asia. It is for the same reasons – people have suddenly discovered them as they are easy to put together and launch,” Morris noted.
He therefore agrees that fixed-income ETFs are only just scratching the surface because they have shown, in his opinion, “great resilience.” This robustness is attracting investors’ interest. Fluctuating interest rates and concerns about inflation, he stresses, are making fixed-income ETFs attractive because they deliver yield. This trend is also driven by the levels of economic uncertainty. However, ETFs are also tax efficient, subject to favourable regulation, cost-efficiency and lower management fees, and they are easily and increasingly accessible via digital trading platforms.
So, what made 2024 a record year? Morris responds: “All of the things we have talked about really kicked in during 2024; a story that is still driving in 2025 and even into next year. It is all about ETF products becoming easier to buy and more regulated (allowing funds that couldn’t buy ETFs now being able to do so as a result of the changes in regulations), which means that institutions can use them for tactical asset allocation and liquidity management purposes.
“Part of investors’ portfolio management is the search for yield, which you get from fixed-income ETFs. They are going to continue to grow. It is slightly unusual to get retail and institutional interest combining to provide additive demand for an asset class, and that is a major factor affecting ETFs that I believe will continue into next year,” Morris added.
Rate hike shocks
As for rate hike shocks, and perhaps even reductions, he claims there are often immediate market reactions, which lead to market volatility. The impact is often short-term, and he finds that investors are getting used to them. However, there are two types of investors to consider. Morris says that they are the ones that “believe in the longer-term potential of ETFs who see the short-term shocks as being part of life’s rich pattern, and so short-term volatility doesn’t deter them from holding ETFs.” Then there are arbitrageurs for whom volatility is an opportunity; they will seek to take advantage of short-term movements.
The ETF market is both large and still in its early stages of growth
So why has $200bn a year been invested in the fixed-income ETF industry, despite market volatility since 2020? Fuentenebro responds from a AAA CLO ETFs perspective, declaring that the answer lies in the floating nature of the asset class. He claims these securities are far less exposed to the “sharp swings in government bond yields we saw around Liberation Day.” He adds that this ‘insulation,’ combined with the structural strength of AAA CLOs, has meant CLO ETFs offered investors differentiated exposure to fixed income.
Morris underlines that fixed-income ETFs provide risk mitigation. This is because they are a more stable investment option than bonds. “They provide diversification benefits, helping to manage exposure to bond markets, and when interest rates fall, they provide a source of income – our famous yield,” he explains. As they are liquid, they are easy to trade – coming with a lower cost of ownership in terms of management fees compared to mutual funds.
He adds: “There are new offerings out there, as well as active management ETF options now available. They don’t just affect young investors because older investors are looking for risk management and they are looking for income generation as they approach retirement. ETFs appeal to younger investors as they look exciting, and to older investors for the factors of risk management, income generation and lower fees.”
Fuentenebro says tax efficiency is not the main draw in Europe. Other factors include transparency, daily liquidity, and UCITS governance. However, he also comments: “It is also worth noting that, for European investors, US-domiciled ETFs are often less efficient due to both tax leakage and access constraints. By contrast, a UCITS ETF such as ours provides the right regulatory format, efficiency, and accessibility for European and global allocators.”
A bright future ahead
As for iBonds, Morris thinks they are an interesting concept – adding another dimension to the market. He therefore concludes that they will play their part in the ETF landscape, and so he’s “absolutely optimistic about fixed-income ETFs reaching new heights.”
In his view they will become a broader and deeper market, and he believes iBonds will be one of the instruments that will help ETFs provide an inflation hedge and predictable cashflows. While he won’t predict what will happen over the next five years, he assumes that volatility and economic uncertainty will remain, and so ETFs – particularly fixed-income ETFs – have a bright future ahead.
The dollar will remain king – but only of a smaller hill
Few economists can claim a résumé as eclectic as Kenneth Rogoff’s. Before he was advising governments and lecturing at Harvard as the Thomas D. Cabot Professor of Public Policy and Professor of Economics, he was outthinking opponents as an internationally ranked chess player, even achieving the title of grandmaster. His career includes serving as Chief Economist at the International Monetary Fund (IMF), where he played a pivotal role in navigating economic challenges of the early 2000s. Rogoff has now turned his analytical mind to the future of the US dollar. In his latest book, Our Dollar, Your Problem, he explores how America’s currency shapes – and sometimes destabilises – the world economy in an era of shifting global power. Blending economic insight with a strategist’s instinct, Rogoff unpacks the risks and realities of a financial system still ruled by the greenback, but increasingly undermined by rivals such as the renminbi and stablecoins, as well as political polarisation in the US.
Is the dollar still an exorbitant privilege or an exorbitant burden for the US?
There are some burdens, the biggest one being that you need to remain a dominant military power. The cost is far in excess of most other numbers we are talking about. The idea that the big problem is that demand for the dollar makes it overvalued and hollows out our manufacturing might have a grain of truth, but it is a small issue. The dollar is strong because we are good at technology, engineering, services and intellectual property. Manufacturing jobs have been hollowed out mostly due to automation. In fact, manufacturing as a share of GDP has risen. So there is some truth to it, but it is one of a dozen factors. Saying that it is the dominant one is polemical nonsense.
What is the biggest threat to the dollar’s dominance?
My book envisions a slow decline of the dollar’s share. It will still be first, but in a more multipolar system where the euro expands its footprint and the renminbi becomes a regional currency in Asia and maybe parts of Africa and Latin America. Not long ago, the dollar’s share was smaller. It grew because of the euro crisis and because China made its economy dollar-centric. In 2015, the dollar reached a level higher than it had ever been at, but it has been in decline since then. If you look at countries’ exchange rate systems, the share of reserves, the dollar has been gradually losing market share, going back to the pre-euro-crisis equilibrium. Also, the promiscuous use of sanctions has made countries wary of being over-reliant on the dollar. The US is the world’s back office, which allows us to spy on everyone. So it is not just the Chinese, but also Arabs, North Koreans, Russians, Europeans, even Latin Americans, who are looking for ways to diversify their back office so they are not reliant on dollar plumbing.
Is there a point beyond which rising US public debt will make foreign investors lose confidence in the dollar and Treasuries?
I don’t think so. Gradually the interest rate will rise, and that puts pressure on the government to find other means to free resources to pay for spending in the case of Democrats, for Republican tax cuts, for military expenditure in the case of both parties. For a large country that issues and borrows in its own currency, debt crises don’t have the suddenness they have for countries that borrow in other currencies. But that doesn’t mean that it is not a problem.
The US is the world’s back office – which allows us to spy on everyone
Carmen Reinhart and I wrote a paper in 2010 where we divided countries into buckets and found that countries with high debt tend to grow more slowly. It was claimed that there were myriad errors and it was completely wrong. There was one error that didn’t affect things that much. We have a 2012 paper that has no errors and gets the same results. More than a decade later, many other people found this. High debt slows growth. You have less money to spend on infrastructure, to react to financial crises. But there is no known upper limit on debt that leads to a crisis. Japan has a 240 percent debt-to-GDP ratio. It hasn’t had a crisis, but it has grown spectacularly slowly. Japan was the second richest country 35 years ago. Now it has an income per capita similar to the poorest US state, Mississippi.
Could the renminbi threaten the dollar’s status as the global reserve currency?
In 100 years, sure. In the near term, the renminbi is likely to become a regional currency in Asia. As China breaks free from its dollar peg, it will hold fewer dollars. Its Asian partners, who will be stabilising their currencies against both the renminbi and the dollar, will be holding fewer dollars. We are not going to be using the renminbi in New York, not unless the US badly loses a war to China! But will the renminbi become used in Indonesia, even India? Of course it will. It is not necessarily going to replace the dollar, but its footprint will grow significantly in a multipolar system.
Is the digital yuan part of China’s strategy to undermine the dollar?
Yes. Both the EU’s and China’s central bank digital currencies (CBDCs) are directed at undermining dollar dominance. This is part of building a back office, replacing the plumbing. It also makes it more convenient to hold. Now a large share of settlements are done in dollars. China has already built alternative systems; even Brazil and Europe have. New digital technologies allow ways for them to compete more effectively. The US has launched stablecoins to counterattack, but that will not stop the rise of CBDCs. They help facilitate the move away from dollar dominance.
Why do you think that the US under Trump has embraced stablecoins and banned a digital dollar?
There are two ways to look at it. One is that the US is far ahead on stablecoins and behind on CBDC, so it is leaning into its strengths. Alternatively, this is an example of extreme corruption. The crypto industry made a quarter to half the donations to both parties in the last election, and it is being paid off. The financial industry had a similar profile in the 2008 election, and we saw what happened. Some positive things were done in trying to define crypto regulation, but the government allowed the industry to write everything without any discussion from outside. We will get an underregulated crypto industry that competes with dollars. That undermines the ability of the Treasury to take in tax revenues and makes it easier to evade regulations and engage in criminal activity. When all is said and done, this will be viewed as a colossal over-reach.
Can the Fed withstand political pressures and how will they affect the dollar?
Both sides want to undermine Fed independence. If Harris had prevailed, we also would have had an assault on central bank independence with different goals, but similar effects. We will end up with more bouts of high and volatile inflation and higher and volatile long-term interest rates. All the benefits of central bank independence will be weakened. Not overnight; it will take years. To say that this is a mistake by Trump isn’t accurate, because in the short term, he could benefit. Often, populist policies work for a while. He may succeed in holding interest rates lower for a while, but in the long run, we will get higher inflation, especially if there is another big shock. That undermines the dollar. Europe faces the same problem. More volatile and higher average inflation makes safe assets less safe, and weakens demand for them, not just the dollar.
It is often argued that one advantage the dollar has is the rule of law. Given the current political climate, is that still true?
Trump’s assault on the rule of law undermines the US’s competitive position. If you were a foreign investor, you could depend on a non-political court system. The US was exceptional. You didn’t have to worry about what the President thought about some court case involving, say, default in Argentina. Now the President takes an outsized role over Congress and the courts. One thing Republicans are short-sighted about is that they won’t always be in power.
In the future, it could be Ocasio-Cortez or Gavin Newsom who assumes these same powers. So it will weaken the appetite for US assets. The subtle change, which many investors overlook, is the US tariff wall. Many countries are retaliating, which weakens demand for US assets. If you make tariffs high enough, it collapses demand for US assets. You can’t easily get your money in and out. Some argue that geopolitical fracturing and the rise of AI will inevitably require a more autocratic government, and Trump sees ahead the need for that. If that is true, fine, but it is also going to lead to a more fractured system where the dollar is no longer quite as dominant, but king of a smaller hill.
If Europe invested in its defence, would that help the euro compete with the dollar?
One reason the euro can’t fully compete with the dollar is Europe’s lack of geopolitical heft. If it became a military power, that would benefit the euro. It allows you to have a security umbrella over friendly countries that might be more inclined to hold the euro. But it also helps you in international negotiations. Not just Trump, but also Nixon, Reagan and Johnson used military power to get their way in financial negotiations. The shape of the IMF, SWIFT’s design, the way clearing houses are set up. All that has roots in US military power, not just dollar dominance and the US’s economic size. So if the US forces Europe to become a military power, it may find to its chagrin that the euro will become more important.
Is a world currency possible?
It is not possible in the foreseeable future, unless we have a world government. Look at the trouble the eurozone has coordinating countries that share similar values and income levels, and compare that to differences between African countries and Norway. It is simply not possible, unless you are willing to massively redistribute income. I favour that, but a world currency will not gain traction. Take the IMF’s Special Drawing Rights; there are people like Joe Stiglitz and Janet Yellen who believe that it is free money we can give out. It is not free money; it is just like any other loan. For the foreseeable future, we will not have a world currency until we have a dominant country globally.
How Ukraine’s financial sector fought back
There are the obvious operational challenges of running banks, insurers and financial advisors when the bombs are falling: staff safety and availability is a constant challenge and Russian attacks on infrastructure mean blackouts, energy supply uncertainty, communications disruption and physical damage to premises are frequent occurrences. Many firms have also been subject to Russian cyber-attacks and, as a result, have some of the most robust systems in the world for dealing with those. The success of Ukraine in maintaining a stable financial system was highlighted in a recent report from the Organisation for Economic Co-operation and Development (OECD): “Three years into Russia’s war of aggression, Ukraine continues to show strong resilience. Despite the ongoing hostilities, policy makers and regulators are continuing to work hard to ensure the stability and resilience of the financial system, and to support households and businesses. At the same time, they are progressing reforms to increase transparency, accountability, and efficiency in the regulatory framework for financial markets and corporate governance, in line with international standards and in partnership with multilateral organisations and partner countries.” Behind this there is an impressive story of innovation in redesigning operational models, especially moving customer contact and service online. This a matter of great pride to Ukrainians.
Keeping the lights on
Olena Sotnyk, Managing Director Rasmussen Global Ukraine, policy adviser to Ukraine’s deputy prime minister for European integration and a former member of Ukraine’s national parliament, told a recent event in London that the war accelerated the pace of digitisation of much of Ukrainian society and business, something that was happening already as the country invested in modernisation to shake off the legacy of the Soviet-era bureaucracy.
“I can see, because I work in this area, how even very old style institutions are ready to change quickly. They are ready to sacrifice their business-as-usual [models] and that has created momentum for Ukraine to switch from the heritage of Soviet Union legacy to a really western model.
The war accelerated the pace of digitisation of much of Ukrainian society and business
“We already have something which even the European Union doesn’t have with digitalisation as that has helped to digitalise the whole country, because when you can’t physically get services or when you can’t physically get documents, approvals etc, you look for more efficient ways in how to do that. Digitalisation is one of the answers we have.” This is not to underestimate the dislocation to business life that occurred when the bombs started falling in February 2022, as Alina Golubieva, CEO, Co-founder at Karpatia Benefits, a financial advisor and insurance firm based in Kyiv, described: “We had a few clients in Kharkiv, we had clients in Kherson and in Mykolaiv, which wasn’t invaded, but still badly affected. And we had a lot of clients with employees in Mariupol as well. So basically, they relocated to either other parts, or we just saw the numbers there drop drastically.
“So, for example, one of our clients, they had about 600 people in Kharkiv. Now it is only 50 people and 200 people are in other parts of Ukraine. Some of the people are relocated outside of Ukraine, but the war affected business immensely.” Golubieva says they had no idea what impact the war was going to have on their business: “We were expecting to lose about 80 percent of our portfolio, but we lost only 30 percent because we haven’t stopped working and we are a digital business. Every day we were online and we were answering clients’ questions.
“It was an amazing team effort. On February 24, 2022 we regrouped quickly. Some of our people relocated to safer areas of Ukraine if they were able to. We didn’t store any paper-based agreements or anything like that. So we closed the office for two months and it didn’t affect our work at all.
“A lot of our clients relocated their teams outside of Ukraine as well. Because mainly we focused on the IT sector, there were companies that could afford to create hubs outside of Ukraine, from Poland to Spain or Germany,” Golubieva explained. None of this would have been possible if major adjustments hadn’t been made to the way firms were regulated and the flow of capital maintained: in short, a rapid re-shaping of the whole financial ecosystem.
Banking under bombardment
The National Bank of Ukraine (NBU) immediately put the banking system on a war footing, implementing a range of controls on capital flows, as well as foreign exchange outflows. The NBU also relaxed some regulations around loan forbearance and grace periods, encouraging restructuring of loans where appropriate. This was against a background of rapid transformation of the country’s banking sector as the nation slowly emerged from the trauma of the Revolution of Dignity, also known as the Maidan Revolution, in early 2014. The banking sector was very fragmented, with many smaller banks that were not well capitalised. By the outbreak of the war there were still 71 banks operating in Ukraine. Five of the largest of these were Russian controlled with one, Alfa Bank, which had a 3.2 percent market share, attempting to rebrand itself as Sense Bank. This failed to satisfy the NBU, which nationalised it in July 2023 as it was still deemed to have too strong ownership ties to Russia.
We are sending a clear signal: Ukraine is actively looking for ways to reduce risks for business
The insurance sector was also impacted by the withdrawal of firms identified as being controlled from Russia. Providna, one of the largest insurance companies in Ukraine, couldn’t provide the proof of beneficiaries to the regulator and had its licence cancelled by the NBU in March 2023, along with that of another Russian-controlled insurer, Ingosstrakh. The insurance subsidiary of Alfa also had its licence cancelled.
Overall, 23 insurers have withdrawn from the market as the Ukrainian regulator, worried about the viability of firms potentially facing increased losses, accelerated plans to tighten capital requirements.
The greater state involvement in the banking sector has helped deliver stability but will need to be addressed once the war has ended, said Alexander Pivovarsky and Ralph De Haas from the European Bank of Reconstruction and Development (EBRD) in a recent report for the Centre for Economic Policy Research: “Deepening Ukraine’s banking sector will require the privatisation of most of its main state lenders, which will account for an even greater majority of all banking assets after the war. An important problem to be addressed urgently is that state banks remain reluctant to write off or restructure debt in a way that would reduce the value of any (collateralised) state assets. While there is no legal restriction on financial restructuring by state banks, in practice the perception is that any loan restructuring that entails a (partial) write-off may be challenged by law enforcement agencies and considered as misappropriation or damage to state property.”
The NBU also moved quickly to ensure access to banking services was maintained through an initiative called Power Banking, launched by the NBU Governor Andriy Pyshnyy, who described the initiative in a report to the International Monetary Fund: “This includes the creation of one network of branches of systematically important banks in Ukraine. We are talking about over 1,000 branches in 200 cities and villages. These branches are expected to function as one network. We are developing operational solutions to support this network, even under blackout conditions, with backup electricity, connectivity, and cash. Nothing comparable has ever been implemented anywhere in the world.”
This was supplemented with a drive to rid banks of dependence on software and systems developed by Russian or Belarussian companies, part of the building of greater resilience against the anticipated cyber-attacks. Financing investment by Ukraine’s already well-developed IT sector was deemed a priority to facilitate this process.
The Power Banking initiative is now being developed into a longer-term programme, looking beyond the war, which the NBU has labelled ‘financially inclusive banks.’ There are still regions near the frontline and re-occupied regions where the branches of most banks do not operate fully.
The NBU therefore intends to enable large retail and postal service companies that have branch networks near the frontline to create a bank with a limited banking licence that will be able to use the infrastructure available to a group, ensuring access to financial services for local residents and small businesses.
The world steps in
In the first year of the war the World Bank mobilised $38bn in emergency financing, commitments, and pledges, including grants, guarantees, and linked parallel financing from the US, UK, Canada, European countries and Japan. Much of this was used to ensure that state pensions and state employees were paid on time, with the target of 98.5 percent of pension payments easily met.
Meanwhile, the mainstream banks have continued to build greater resilience into their businesses. Loans as a share of bank assets dropped from 36 percent in December 2021 to 23.6 percent in 2024. Liquid instruments, such as cash, and deposits at NBU rose from 27.1 percent to 43 percent over the same period. This suggests caution and contingency planning are still the order of the day.
In August 2025, the Ukraine Ministry of Finance published a revised national financial sector development strategy that explicitly includes upgrading capital markets infrastructure and consolidation of accounting and trading infrastructure with a core aim of attracting foreign investors. It also commits the NBU to align regulation with the European Union and continue to improve transparency and eliminate any remaining pockets of corruption, a legacy of Russian influence according to the Ministry.
Alongside Western governments and institutions, western financial institutions have also stepped in to provide vital support.
Local insurers were struggling to access the international reinsurance market, so US insurance broker giant Aon and the European Bank of Reconstruction and Development put a scheme together to facilitate this for three local insurers: Ingo, Colonnade and Uniqa. Similarly, a marine insurance package to facilitate the grain shipments from Odesa was created, and new ways of raising capital through the wholesale banking sector global investment funds are being developed.
In March 2025, global (re)insurer MS Amlin set up a reinsurance scheme that can provide €1bn in war risk cover annually to Ukrainian SMEs insured by local Ukrainian insurers. This scheme aims to stimulate business activity with a view to a postwar Ukraine’s reconstruction. This was followed in August by a memorandum of understanding signed in Rome by the Ukrainian government and representatives of several leading insurance companies, with the aim of developing the country’s insurance market. Signatories included Marsh McLennan, Aon, MS Amlin, Fairfax insurance group and the National Association of Insurers of Ukraine.
First deputy prime minister and minister of economy for the Ukraine, Yulia Svyrydenko, who launched the memorandum, said, “We are sending a clear signal: Ukraine is actively looking for ways to reduce risks for business. This memorandum demonstrates our common intention to form a modern insurance market with flexible products that will provide comfort to investors.”
This is one of several measures seen as essential pre-conditions to attracting the international finance that will be needed to rebuild Ukraine after the war, however that may end.
‘Victory’ in sight
The expected recovery and reconstruction needs over a decade are estimated at $486bn, nearly three times Ukraine’s nominal GDP in 2023. As the war drags on and Russian attacks on Ukrainian infrastructure intensify, these financing needs will continue to grow. Well-functioning capital markets and financial institutions will be essential to attract much-needed foreign investment and grow domestic finance.
So will the determination of its people to rebuild their country. While there is the inevitable weariness from three long, brutal years of war, their belief in its future seems unshakeable. When Golubieva decided to re-establish a physical presence in Kyiv, she selected a co-working office in the centre of the city. In a typical show of Ukrainian defiance, the office complex is symbolically named Nepemora (Peremoha), which means ‘Victory’ in Ukrainian.
