Author: itsupport

Has the moral core of capitalism been lost in translation?

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When did capitalism become a dirty word? Despite what we are led to believe, it is not a political construct; it has absolutely nothing to do with politics. Adam Smith, the so-called ‘Father of Capitalist Thinking’ believed that free markets were not engines of extraction, but instruments of moral order, arguing that “humans were self-serving by nature but that as long as every individual were to seek the fulfilment of his or her own self-interest, the material needs of the whole society would be met.” In fact, he never even coined the term capitalism.

However, Smith’s simple explanation of markets has since been hijacked as we see business capital flow towards ‘engineering’ balance sheets rather than building factories, towards stock price rather than workers, and extraction instead of invention. This is more than a market distortion, it is an identity crisis, and with capitalism stripped of its moral core it risks becoming an economy of scraping value from value, rather than creating it.

Enterprise as moral progress
Smith didn’t see commerce as a cold machine, and believed, rightly or wrongly, that self-interest and sympathy could align to generate productivity and shared prosperity. In his ‘Theory of Moral Sentiments and Essays on Philosophical Subjects’ (1759), he argued that when individuals pursue their own gain within a moral framework, their labours often produce benefits beyond themselves, because we have in-built instincts that make us care about others’ well-being.

Buybacks only provide short-term stability. They mask any underlying issues

And this concept forms the basis of his ‘Invisible Hand Theory’ in his seminal work The Wealth of Nations about the unseen market forces that drive a free economy through self-interest and voluntary trades. The industrial revolutions that followed seemed to vindicate this ethos, and early capitalism wasn’t just about factories or markets, it was about harnessing innovation, trade, and employment to lift living standards and entire societies. Prosperity meant producing more, such as steel, textiles and railways, and the ‘real economy’ was capitalism’s moral anchor: enterprise equalled progress.

And for over 200 years, capitalism worked, on the whole, as Smith intended, with capital flowing into factories, infrastructure, and innovation, to create real wealth and shared prosperity. However, new financial tools, the rise of shareholder primacy, and a wave of financial deregulation in the 1980s redefined corporate priorities. Driven by financial investors who criticised managers for not focusing on shareholder interests during the economic challenges of the 1970s, this ‘shareholder value revolution’ shifted focus from building productive businesses and long-term growth to maximising short-term returns for shareholders, often at the expense of investment in workers, research, and tangible assets.

A pivotal moment in this transformation occurred in 1982 with the US Securities and Exchange Commission’s adoption of Rule 10b-18, which provided companies with a ‘safe harbour’ allowing them to buy back their own stock without risking accusations of market manipulation, provided they follow clear limits on timing, amount and price. Meanwhile the Depository Institutions Deregulation and Monetary Control Act of 1980 phased out interest rate ceilings on deposits and broadened the range of activities banks could engage in. In the UK, deregulation occurred through a series of legislative acts and market-driven changes, most notably the Big Bang in 1986, which freed London’s stock market by allowing foreign ownership of brokers, removing fixed commissions and automating price quotes.

Along with advancements in information technology, these developments facilitated the rise of financial markets and the prioritisation of shareholder value over traditional industrial growth, to fundamentally alter the landscape of capitalism.

The hollowing of enterprise
The use of stock buybacks has transformed from being a niche financial tool in the 1980s to a core mechanism for companies to return capital to shareholders. And while this can signal confidence in a company’s future, this diversion of funds from research and development (R&D), employee wages and business expansion has raised concerns about buybacks being used to boost earnings per share (EPS) and inflate stock prices. Unfortunately, this trend has been reinforced by executive pay, which often links CEO pay to short-term stock results. For example, in 2018, S&P 500 firms allocated a staggering 81 percent of extra cash from tax cuts to buybacks and dividends, but only 4.6 percent was spent on R&D.

In the technology sector, Apple announced a $110bn repurchase plan in 2024, while maintaining significant cash reserves, which raises questions about the allocation of resources between shareholder returns and investments in innovation. Similarly, Delta Air Lines repurchased $5bn of its stock in 2018, money, some would say, that would have been better spent on improving infrastructure or employee benefits. Even energy firms, despite record profits, have prioritised buybacks over investment in sustainable energy initiatives or projects that address environmental concerns. All of which illustrate the broader trend of financial engineering over investments to drive long-term growth and societal benefits.

Weakening markets and eroding society
For capitalism in the 21st century, this surge in stock buybacks has introduced a paradox. While companies may appear more profitable in the short term, the long-term health of both markets and society is increasingly at risk.

Wage growth has stagnated, which has only helped to widen the wealth gap

On the surface, by reducing share supply, potentially boosting EPS and making companies more attractive to investors, buybacks can stabilise stock prices. The 2021 US Chamber of Commerce report by Craig Lewis and Joshua White, ‘Corporate Liquidity Provision and Share Repurchase Programmes,’ which studied a large sample of more than 10,000 US companies over 17 years found six key benefits associated with buybacks: greater liquidity, reduced volatility, economic benefit for retail investors, proactive repurchase activity to stabilise stock price, responding to uncertainty by strengthening buyback activities, and using stock buyback as a strategic liquidity supplier.

But buybacks only provide short-term stability. They mask any underlying issues. With buybacks, companies risk diminishing their long-term competitiveness, as they divert capital investment away from R&D, infrastructure and workforce investment. This can lead to a decline in productivity and increased vulnerability during economic downturns, as firms may lack the necessary investments to adapt and innovate.

The societal impact is equally concerning. Prioritising shareholder returns over capital investment means that for many workers wage growth has stagnated, which has only helped to widen the wealth gap. And with companies allocating more funds to buybacks rather than paying income tax, according to a report by Americans for Tax Fairness, it raises questions as to their true commitment to societal welfare. As profits flow towards mostly shareholders and executives, workers are left behind, eroding trust in companies and challenging capitalism’s fairness and moral legitimacy.

Rethinking capitalism in 2025
As we move into the second quarter of the 21st century, capitalism, or rather what it has morphed into, is in desperate need of a makeover. But with the whole world seemingly in a financial mess, how can we realign economic incentives with long-term societal well-being?

In terms of policy reforms, one suggestion is to restrict excessive stock buybacks either through increasing the tax on repurchases or treating buybacks similarly to dividends and taxing accordingly. One other crucial measure to implement is realigning executive pay from short-term results to long-term performance.

However, policy tweaks alone won’t restore faith in capitalism. There is a growing push to rethink how companies invest, grow, and define success through a combination of stakeholder capitalism and patient capital. Valuing workers, customers, and communities, instead of shareholder returns, and investing money for the long term rather than a quick win, will, invariably, give businesses room to innovate and grow. Additionally, by implementing green industrial policies, governments can steer investment into clean energy, new technologies, and infrastructure to speed the shift towards a low-carbon economy.

Rediscovering capitalism’s moral core
Was Adam Smith right? Is self-interest only justifiable when it serves society? If recent social commentary is anything to go by, economic systems without this alignment risk inefficiency and moral erosion. And, like Mr Darcy’s good opinion, trust in the system, once lost, is hard to get back, while markets based purely on extraction instead of creation are unstable.

Capitalism with a moral core provides more than ethical reassurance; it encourages people to act responsibly and predictably, creating stability in how businesses and markets operate. And companies that embed social purpose into strategy often foster loyalty, spark innovation, and encourage responsible risk-taking, with studies showing that those committed to ESG often outperform others, proving that profit and purpose can coexist.

Building businesses and creating wealth is not, as social media would have you believe, inherently evil. But without an ethical anchor, rewarding short-term gain at the expense of collective welfare is what has given capitalism its bad name.

With that moral anchor, people can see economic success as serving society, and it is a win-win all round; companies become stronger and more resilient, communities trust those companies to reinvest, workers feel valued, and investors gain confidence that profits are sustainable in the long term.

Women take the lead in wealth

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Over the next two decades, the largest intergenerational wealth transfer in history will take place. Baby Boomers and the Silent Generation are expected to pass down roughly $124trn by 2048, a tidal wave of capital that will reshape families, philanthropy and the financial services industry. The numbers alone are enough to grab headlines. But behind the dollars lies a deeper story about who will inherit this wealth and what they will do with it. For the first time in history, women are positioned not as ‘plus ones’ in financial planning, but as primary inheritors and decision-makers.

Statistically, women live longer than men, meaning they are more likely to control assets for longer stretches of time. That reality shifts the centre of financial gravity. “With women holding more wealth for longer periods of time, their decisions have the potential to shape our economy more than ever before,” says Megan Wiley, CFP of Badgley Phelps Wealth Managers. This historic handoff is more than just a matter of economics. It is a social and cultural inflection point that is already reshaping the way families talk about money, how advisors work with clients, and how women see themselves as stewards of wealth.

Generational divide in wealth’s purpose
A recent Harris Poll report, The Great Wealth Transfer, sheds light on the attitudes shaping this moment. According to the findings of this American market research and analytics firm, older Americans – those 55 and up – see wealth primarily as a source of security (42 percent) and lifestyle or enjoyment (35 percent). By contrast, younger heirs emphasise legacy-building (22 percent) and personal fulfillment (18 percent), alongside far greater interest in ESG and impact investing.

This generational divide signals a profound change in how capital will be deployed. Millennials and Gen Z are less content with simply holding and growing wealth; they want their money to work in service of values and social change.

Families that talk about wealth transfer create heirs who thrive, not heirs who guess

Confidence, however, tells a different story. Sixty-four percent of older Americans say they trust their heirs to manage wealth responsibly, while 83 percent of heirs say they feel confident themselves. But beneath the surface optimism lies unease. Younger inheritors cite concerns about taxes, legal complexities and the possibility of mismanaging assets. They also carry an emotional load: guilt, grief and anxiety that older generations often underestimate. These cross-currents will have a direct impact on financial firms. Nearly half of heirs – 43 percent – say they plan to switch providers after receiving their inheritance, citing mismatched values and a lack of personal connection. For wealth managers, the message is clear: retaining the next generation of clients will require more than investment performance. It will demand trust, transparency and alignment with values.

One of the biggest hurdles women face in this transition isn’t financial – it is cultural. For decades, daughters were often excluded from wealth conversations. Many grew up hearing, ‘Dad handles the finances,’ a phrase that subtly reinforced the belief that money was not their domain.

“All too often, heirs are looped in at the 11th hour, when the will has been written or after someone’s death,” says Michelle Taylor, a financial advisor at GFG Solutions. “The fear of making a wrong move with family money can paralyse them into inaction.”

Nancy Butler, a financial planner with 40 years of experience, has seen how silence perpetuates unpreparedness. “If your great-grandparents didn’t teach sound financial habits to your grandparents, and your grandparents didn’t pass them down, then your parents may not have been equipped to teach you,” she explains. “Without this chain of knowledge, each generation finds itself repeating the same mistakes.” By contrast, families that talk openly about money tend to raise more confident heirs. “Families that talk about wealth transfer create heirs who thrive, not heirs who guess,” says Allison Alexander of Savant Wealth Management.

Financial literacy isn’t enough
Today’s young women may be more financially literate than any generation before them, but that doesn’t mean they are prepared to inherit. “You can have all the content in the world, but unless you understand it and implement it, the confidence gap will still be present,” says Taylor. Srbuhi Avetisian, Research and Analytics Lead at Owner.One, argues that the real gap is inheritance literacy. “Only seven percent of heirs in our global survey knew they typically have a three-to-six-month window to act before assets freeze,” she explains. “That window determines whether heirs – often daughters – retain access to their families’ lifestyle or lose it.”

Joyce Jiao, CEO of Herekind, a digital estate administration platform, points to another overlooked challenge: the administrative burden. “Financial literacy teaches you how to manage money, but it doesn’t teach you how to navigate the nightmare of probate, bank negotiations, funeral costs and dependent care – all while grieving,” she says. “Most often, the eldest daughter is the executor. Even highly educated women can feel overwhelmed and unprepared.” Money is never just money, especially when it arrives through loss. Inheritances often come tethered to grief, guilt, or a sense of unworthiness. “An inheritance can carry grief as well as opportunity,” says Alexander. Without support, those emotions can drive poor financial choices.

For many women, the emotional undercurrents run deep. “Impostor syndrome is huge. Survivor’s guilt is common. And wealth, for many women, still feels dangerous – like it comes with a cost and can be taken away,” says transformational wealth coach Halle Eavelyn.

Jiao sees the same dynamic in her work with executors: “They are the emotional bridge – grieving, paying estate costs out-of-pocket, and making financial decisions that affect the entire family – all before they can even access their inheritance.”

Advisors are slowly adapting
The advisory industry is beginning to take note. Where once women were treated as secondary clients, they are increasingly recognised as the lead decision-makers. “Women are happy to know the desired result will be achieved and give that more weight than the return they will achieve in a particular strategy,” says Taylor. Wiley sees a similar trend: “Clients want to see a holistic plan before making portfolio changes, allowing them to align investments with broader goals such as charitable giving.” That shift toward holistic, life-centric planning is critical. Advisors who focus only on products and return risk alienating a generation that values impact, caregiving and legacy alongside financial growth.

As women inherit unprecedented amounts of wealth, they are also rewriting its purpose

Technology is also reshaping the landscape. Interactive dashboards, inheritance simulations, and women-focused peer networks are creating safe spaces to learn and practise decision-making before the windfall arrives. “Institutions that run inheritance simulations – showing heirs what the first 90 days after a death look like – will build more confidence than any investment seminar,” says Avetisian. As women inherit unprecedented amounts of wealth, they are also rewriting its purpose. Unlike earlier generations, they are far more likely to view money not as an end in itself but as a means to community impact, sustainability, and family legacy. “When women control the purse strings, priorities change,” says Eavelyn. “Leadership gets more nuanced. Entrepreneurship gets more inclusive. Philanthropy shows up more. This isn’t just a transfer of wealth – it’s a paradigm change.”

Kristin Hull, Founder and CIO of Nia Impact Capital, an Oakland-based impact investing firm that builds public equity portfolios with a focus on companies advancing sustainability, social justice, and gender diversity in leadership, argues that the $124trn wealth transfer is positioning women as key decision-makers who want transparency, purpose and investments aligned with their values.

She notes that while younger women are digitally fluent and eager for tools and peer networks, gaps remain in inheritance literacy and emotional readiness. Her most urgent call: to make gender-lens investing (GLI) the default, embedding equity and impact metrics into portfolio construction, estate planning and wealth transfer frameworks.

This shift is not confined to the US. In Asia, women are on track to control nearly a third of investable assets by 2030, while in Africa and the Middle East, rising female entrepreneurship is accelerating wealth ownership. Yet cultural and legal barriers remain: in some regions, inheritance laws still favour male heirs, and in others, daughters face resistance in assuming financial leadership. For global financial institutions, the implication is clear – this transfer is both an opportunity and a stress test, demanding new frameworks that respect regional differences while empowering women as primary decision-makers.

The overlooked opportunity
Across the experts, one theme recurs: timing. Too often, women are brought into wealth planning too late – after a death, when grief and confusion collide with financial responsibility. “The most overlooked opportunity is recognising that women need not just a wealth plan but a wealth identity,” says Eavelyn. “Until a woman sees herself as someone who is worthy of holding, growing and enjoying her money, she stays stuck in fear and silence.”

Practical steps can shift this trajectory. Inviting heirs to annual family meetings, creating mentorship spaces, offering just-in-time educational tools, and reframing conversations around values instead of just numbers all help prepare women for stewardship. These early interventions turn inheritance from a disruptive windfall into a natural extension of life planning.

The $124trn wealth transfer is more than a reallocation of assets – it is a cultural and economic turning point. Women, poised to inherit and manage more wealth than ever, face both challenges and opportunities. For financial institutions, the path forward is clear: survival in this new era requires transparency, education, and treating women as the lead decision-makers they are. Whether this transfer becomes a burden or a breakthrough will depend on how well families, advisors, and institutions rise to the moment.

Can Armenia’s tech boom free it from Russia’s grip?

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Samvel Khachikyan’s career path may seem unusual, but in many ways, it is quite typical for Armenia – a small Caucasian country of fewer than three million people. His personal journey mirrors the challenges and achievements his homeland has experienced in recent years.

At 17, through hard work and determination, Khachikyan earned a place at the United World College on nearly a full scholarship. But just six months into his studies, he was forced to pause his education to complete mandatory military service. In 2020, he joined the army and served in Nagorno-Karabakh – known as Artsakh by Armenians, a mountainous region at the southern end of the Karabakh range within Azerbaijan.

That same year, after decades of sporadic clashes, Azerbaijan launched a large-scale military operation that became known as the Second Karabakh War. In just 44 days, it broke through Armenian defences and regained seven surrounding districts along with about a third of Nagorno-Karabakh itself. At least 6,500 lost their lives in the conflict.

Having witnessed one of the hardest chapters in his country’s recent history, Khachikyan completed his service with a renewed sense of purpose. “I was a guy with little experience, no knowledge, nothing in my background – just a big desire to do something and a strong hunger to learn,” he says.

Today, Khachikyan is the Director of Programs at SmartGate, a venture capital firm based in both California and Armenia that focuses on tech investments. The company connects Armenian founders with Silicon Valley and Los Angeles, helping them build networks with leading US companies and investors.

Between Russia and the West
When Khachikyan was serving in the military, he recalls vividly that he never once encountered a Russian soldier – yet Russian forces have long maintained a strong presence in Armenia. The Russian 102nd Military Base in Gyumri, under the command of Moscow’s Southern Military District, stands as a visible symbol of the Kremlin’s enduring influence. For decades, Armenia has been regarded as Russia’s closest ally in the South Caucasus.

Armenia appears to be turning its back on its long-time political and economic partner

Natalie Sabanadze, a Senior Research Fellow with the Russia and Eurasia Programme at Chatham House, says the relationship was “historically determined – shaped by security and geopolitical priorities.”

She explains, “You choose an ally to balance threats and reduce risks. Historically, the greatest threat to Armenia in the region came from Turkey. Later, as a result of the Karabakh conflict, Azerbaijan also became a threat. To minimise the risks, Armenia chose to maintain its alliance with Russia after the collapse of the Soviet Union.”

As a result, two geopolitical axes emerged in the Caucasus: one reinforcing Russia’s dominance – Russia, Armenia and Iran – and the other, comprising Turkey, Georgia and Azerbaijan, aligning more closely with the West. Now, however, Armenia appears to be turning its back on its long-time political and economic partner.

In a historic moment, the Armenian president stood at the White House alongside his Azerbaijani counterpart to sign a peace deal brokered by US President Donald Trump. The move signals a bold realignment – and leaves Prime Minister Nikol Pashinyan with a daunting challenge: convincing Western partners that Armenia is ready for closer cooperation.

“Compared to previous years, Pashinyan is actively trying to shift from a balancing policy to one focused on moving out of Russia’s sphere of influence,” says Natia Seskuria, an Associate Fellow at the Royal United Services Institute (RUSI). “It is not easy to make Armenia a compelling case for investment – especially given the ongoing geopolitical turbulence.”

Armenia’s bet on technology
Technology has emerged as Armenia’s niche – a route to greater political and economic independence. The country’s quiet digital transformation is now drawing the attention of global players. Among the most ambitious projects is an AI data centre by US tech giant Nvidia, slated to open in 2026 – a development few could have imagined just a decade ago.

According to Minister of High-Tech Industry Mkhitar Hayrapetyan, the initiative will be the region’s largest technological undertaking: a $500m investment, the deployment of thousands of Nvidia Blackwell GPUs, and the construction of infrastructure with more than 100 megawatts of capacity.

The country aims to strengthen its technology sector and position itself as a regional hub. But this is not purely a technological ambition – it is also a strategic one. Technological progress could play a crucial role in helping Armenia grow into a more independent and influential state on the global political and economic stage.

Seskuria believes the strategy is logical, given Armenia’s lack of natural resources and limited geostrategic importance. “The niche it is trying to occupy can make Armenia attractive not only to European but also to Asian countries,” she says. “This has an economic dimension first and foremost, but also a political one, since the two are interconnected.”

Armenia’s goals are considered largely realistic, given other successful examples in the wider region. Soon after gaining independence from the Soviet Union in 1991, Estonia decided that building a digital economy and investing heavily in technological innovation would be the best path forward for a small nation with few natural resources. Substantial investments in computer networking and digital infrastructure followed – and today, this former Soviet republic stands as one of the most technologically advanced countries in the world. Perhaps it is a path Armenia is determined to follow.

Inside Armenia’s push for innovation
Khachikyan believes that the driving force behind Armenia’s recent technological pivot is its people. “People started building tech start-ups without any support from inside the country,” he says. “They understood that this could become something important – something that could position Armenia as a regional hub.” According to him, both the Armenian government and the public are now paying unprecedented attention to the country’s tech ecosystem – largely because Armenia has the intellectual capacity to compete globally.

Technological progress could play a crucial role in helping Armenia grow

There are already companies proving that Armenians have the ability to achieve ambitious goals in technology. ServiceTitan – an Armenian-founded, cloud-based tradesperson software company – became the first Armenian tech firm to list its shares on the Nasdaq stock exchange when it went public last December and was valued at over $10bn. The company was founded in 2012 in California, by Armenian entrepreneurs Ara Mahdessian and Vahe Kuzoyan. Over the past 12 years, it has grown into a leading developer of software to help HVAC businesses solve the challenges they face.

Khachikyan’s SmartGate VC is another example of an Armenian tech company that has found success abroad. The firm has been investing in artificial intelligence, brain–computer interfaces, cybersecurity and other emerging technologies. Khachikyan notes that their work began long before the current AI boom. “We were investing back in 2018, when AI wasn’t a hype,” he says. “We are not just investing in start-ups that use ChatGPT – we are investing in the fundamentals of AI.”

SmartGate also supports early-stage founders through community initiatives. “We are organising lots of events and programmes for start-ups,” Khachikyan explains. “One of those initiatives is the Armenia Start-up Academy, which we launched in 2018 with one simple goal – to help Armenian founders understand what a start-up really is and give them the resources to build one.”

Collaboration and mutual support have long been essential drivers across Armenia’s different sectors. According to official data, around seven million Armenians live in more than 100 countries worldwide. The diaspora – diverse, far-reaching and active across 24 time zones – plays a vital role in connecting Armenia with the rest of the world and amplifying its influence. “Armenia has always maintained strong connections with both the West and the East, largely thanks to its diaspora. The diaspora factor is very significant, as Armenia has a highly influential global community that closely follows developments in the country,” says Sabanadze.

Armenia’s path forward
As Armenia aims to become a hub for innovation and investment, being a neighbour of Russia presents significant challenges – especially given Moscow’s long-standing role as a close ally in economic, political and military matters. The central question now is whether Russia will step aside and allow Armenia to successfully attract Western investments and establish itself as a technology hub in the region. The answer is far from straightforward, particularly in light of the Kremlin’s aggressive actions in both recent and more distant history. While many believe that Russia lacks the capacity to block Armenia’s Western path, Seskuria holds a different view.

“Militarily, Russia’s resources are quite limited due to the enormous expenditures in Ukraine,” she says. “However, if we look at other hybrid warfare methods in the region – not just in Armenia – Russia has become more active since the war in Ukraine began.”

Seskuria warns that Armenia’s upcoming elections warrant close attention. “Elections are a politically vulnerable moment,” she explains. “Russia often sees them as an opportunity to intervene and influence the outcome using its resources.”

Despite these risks, Khachikyan remains optimistic. He believes that growing international interest and investment signal a bright future for Armenia’s technology sector. Nvidia’s forthcoming project, along with other major initiatives, will provide local researchers and engineers with access to advanced technologies and greater computing power. Yet, he emphasises that one factor will determine whether Armenia’s ambitions can truly take root: peace. “If people feel safer – free from wars and conflicts – growth will be stronger,” Khachikyan says. “Because the most fundamental requirement for developing any economy, or any field, is security.”

Politics of the personal

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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.

Former financial trader and author Gary Stevenson

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

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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

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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

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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.

Andriy Pyshnyy, Governor of the National Bank of Ukraine

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.

Alina Golubieva, CEO, Co-founder at Karpatia Benefits

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.

People block Khreshchatyk Street for a minute of silence in memory of fallen Ukrainian soldiers

‘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.

The race to build a mind

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Over 20 years ago, I sat in a lecture hall while a professor talked excitedly about artificial neural networks (ANNs) and their potential to transform computing as we knew it. If we think of a neuron as a basic processing unit, then creating an artificial network of them would be akin to multiplying processing power by several factors and replacing the traditional view of each computer having one central processing unit, or CPU.

I found the concept of modeling the neurons of the human brain compelling, but frustratingly inaccessible. For one thing: how? How exactly do we translate the firing of neurons, a complex electro-chemical event that is not yet fully understood, and apply it to computing? This is before we even get into neural communication, the coordinated activity of neural networks and the even more complex questions surrounding consciousness. How exactly do we get computers to ‘think’ in the same way that we do? Back then, I had a laptop that was an inch thick and capable of a relatively limited number of tasks. It seemed almost unfathomable to think that these ideas could be put into practice alongside the current incarnation of silicon-based chips.

It would take 10 years before a research paper from Google changed everything. In 2017, a team of researchers at Google published a paper with an unassuming title: Attention Is All You Need. Few could have predicted that this work would mark the beginning of a new epoch in artificial intelligence. The paper introduced the ‘transformer’ architecture – a design that allowed machines to learn patterns in language with unprecedented efficiency and scale. Within a few years, this idea would evolve into large language models (LLMs), the type of which was popularised by OpenAI’s ChatGPT. It was the foundation of systems capable of reasoning, translating, coding and conversing with near-human fluency. But this was not the first step.

The cost of developing AI is, by any measure, extraordinary

A year earlier, Google’s Exploring the Limits of Language Modeling had shown that scaling artificial neural networks – in data, parameters and computation – yielded a predictable, steady rise in performance. Together, these two insights – scale and architecture – set the stage for the era of generative AI. Today, these models underpin nearly every frontier of AI research. Yet their emergence has also brought about a deeper question: could systems like these, or others inspired by the human brain, lead us to artificial general intelligence (AGI) – machines that learn and reason across domains as flexibly as we do?

There are now two distinct paths of research for AGI. The first are LLMs – trained on huge amounts of text through self-supervised learning, they display strikingly broad competence in several key areas: reasoning, coding, translation and creative writing. The suggestion here – and a giant leap from lecture hall discussions about ANNs – is that generality can emerge from scale and architecture.

Yet the intelligence of LLMs remains disembodied. They lack grounding in the physical world, persistent memory, and self-directed goals. And this is one of the central philosophical arguments that hampers the legitimacy of this path for AGI. Our ability to learn is arguably grounded in experience, our ability to perceive the world we live in and actively learn from it. If AGI ever arises from this lineage, it may not be through language models alone, but through systems that combine their linguistic fluency with perception, embodiment, and continual learning.

The other path
If LLMs represent the abstraction of intelligence, whole brain emulation (WBE) is its reconstruction. The concept – articulated most clearly by Anders Sandberg and Nick Bostrom in their 2008 paper Whole Brain Emulation, A roadmap – envisions creating a one-to-one computational model of the human brain. The paper describes WBE as “the logical endpoint of computational neuroscience’s attempts to accurately model neurons and brain systems.” The process, in theory, would involve three stages: scanning the brain at nanometre resolution, converting its structure into a neural simulation, and running that model on a powerful computer.

If successful, the result would not merely be artificial intelligence – it would be a continuation of a person, perhaps with all their memories, preferences, and identity intact. WBE, in this sense, aims not to imitate the brain but to instantiate it.

Running from 2013 to 2023, a large-scale European research initiative called the Human Brain Project (HBP) aimed to further our understanding of the brain through computational neuroscience. AI was not part of the initial proposal for the project, but early successes with neural net deep learning inarguably contributed to its inclusion.

A year before the project started, in what is often referred to as the ‘Big Bang’ of AI, the development of an image recognition neural network called AlexNet rewrote the book on deep learning. Leveraging a large image dataset and the parallel processing power of GPUs was what enabled researchers at the University of Toronto to train AlexNet to identify objects from images.

As the 10-year assessment report for the HBP concludes, researchers realised that “deep learning techniques in artificial neural networks could be systematically developed, but they often involve elements that do not mirror biological processes. In the last phase, HBP researchers worked towards bridging this gap.” It is this, the mirroring of biological processes, which the patternist philosophy wrestles with. It is the idea that things such as consciousness and identity are ‘substrate independent,’ and are held in patterns that could successfully be emulated by a computer.

As Sandberg and Bostrom noted, “if electrophysiological models are enough, full human brain emulations should be possible before mid-century.” Whether realistic or not, this remains one of the few truly bottom-up approaches to AGI – one that attempts to build not a model of the mind, but a mind itself.

It is perhaps no surprise that LLMs have taken off when WBE still seems to be in the realm of science fiction. It is undoubtedly a harder sell for investors, no matter how alluring to egocentric billionaire types the idea of being able to copy yourself may be.

The price of intelligence
The cost of developing AI is, by any measure, extraordinary. The Wall Street Journal recently reported that Google will invest $15bn in India for AI infrastructure over the next five years. The Associated Press indicated that Meta has struck a deal with AI company Scale and will invest $14.3bn to satisfy CEO Mark Zuckerberg’s “increasing focus on the abstract idea of ‘superintelligence’” – in other words, a direct pivot towards AGI.

These are big numbers, especially considering that the EU awarded Henry Markram, co-director of the HBP, just €1bn to run his 10-year mission to build a working model of the human brain. Beyond corporate announcements, research institute Epoch AI reports that “spending on training large-scale ML (machine learning) models is growing at a rate of 2.4x per year” and research by market data platform Pitchbook shows that in 2024 investment in generative AI leapt up 92 percent year-on-year, to $56bn.

For investors, the risk profile of AGI research is, to put it mildly, aggressive. The potential ROI depends not only on breakthroughs in model efficiency, but also on entirely new paradigms – memory architectures, neuromorphic chips and multimodal learning systems that bring context and continuity to AI.

Bridging two hemispheres
Large language models and whole brain emulation represent two very different roads towards the same destination: general intelligence. To my mind, it seems that neither one can do it alone. LLMs take a top-down path, abstracting cognition from the patterns of language and behaviour, discovering intelligence through scale and statistical structure. WBE, by contrast, is bottom-up. It seeks to replicate the biological mechanisms from which consciousness arises. One treats intelligence as an emergent property of computation; the other, as a physical process to be copied in full fidelity.

Yet these approaches may ultimately converge, as advances in neuroscience inform machine learning architectures, and synthetic models of reasoning inspire new ways to decode the living brain. The quest for AGI may thus end where both paths meet: in the unification of engineered and embodied mind.

Spending on training large-scale machine learning models is growing at a rate of 2.4x per year

In attempting to answer what makes a mind work, we find that the pursuit of AGI is, at its heart, a form of introspection. If the patternists are right and the mind is substrate-independent, a reproducible pattern rather than a biological phenomenon, then its replication in silicon will profoundly alter how we view the ‘self’ if we ever do replicate the mind in a machine. That said, if the endpoint of humanity is being digitally inserted into a Teslabot to serve out eternity fetching a Diet Coke for the likes of Elon Musk, then it might be more prudent to advise restraint.

Jensen Huang, CEO of Nvidia believes that “artificial intelligence will be the most transformative technology of the 21st century. It will affect every industry and aspect of our lives.” Of course, as the man leading the world’s foremost supplier of AI compute chips, he has a vested interest in making such statements.

Perhaps it is best then, to temper such optimism and leave you with the late Stephen Hawking’s warning: “success in creating AI would be the biggest event in human history. Unfortunately, it might also be the last, unless we learn how to avoid the risks.”

Fintech fortunes

Posted on by itsupport

In the mid-2010s, Europe’s fintech sector was booming. A novel band of financial technology companies were rewriting the script on everything consumers thought they knew about banking. Buzzy names with swelling valuations stole the spotlight from traditional lenders – in fact, in the second half of the 2010s, fintechs raised record capital. Venture capital funding grew from $19.4bn in 2015 to $33.3bn in 2020, according to a report by McKinsey & Company.

In recent years, the feverish rush to fintech has cooled slightly. But one company that remains as ambitious today as it was in its exhilarating early years is Revolut, the app-based bank and current holder of the title of Europe’s most valuable fintech. Revolut has successfully made the leap from start-up to unicorn to profit-turning institution. In 2024, its profits more than doubled to £1bn, and more recently customer numbers have surged to 65 million. It is clear that Revolut CEO and co-founder Nikolay Storonsky is doing something right.

Founded in 2015, Revolut started its days as a pre-paid card with free currency exchange. After years of experimentation in new verticals, alongside steady growth of the bank’s main operations, Revolut now offers everything from cryptocurrency trading to in-app eSIMs for travellers. Indeed, Storonsky has stated he wants to create the “Amazon of banking.” While Revolut has taken a ‘jack of all trades’ approach, the caveat is that Storonsky expects to be master of all.

While Revolut’s success so far is undeniable, global banking domination is not a given. Banking licences have not been easy to come by, and, as with many ambitious, fast-growing tech companies, ex-employees have complained of an excessively demanding workplace culture. What’s more, after a secondary share sale bumped the firm’s valuation up to $75bn over the summer from $45bn the year before, some critics are calling Revolut’s price tag into question.

Yet Storonsky continues to set his sights high, targeting continued innovation in new verticals and plans for geographic expansion, too. Does he have what it takes to build the world’s leading financial services provider?

A start-up is born
The collapse of Lehman Brothers in 2008 sent shockwaves across the global financial services sector. For Storonsky, it had a significant, personal impact. Born in Russia, Storonsky moved to the UK in 2004 with a degree in general and applied physics from the Moscow Institute of Physics and Technology and a degree in applied economics and finance from Moscow’s New Economic School. There, he soon began working for the lender as a derivatives trader. When Lehman Brothers filed for bankruptcy, Storonsky was stunned. “It was a big and powerful investment bank, so the announcement came as a shock,” he told CNBC. “We were told without much warning, and it seemed to happen quite quickly.”

Banking has historically avoided disruptions by technology, but that is all about to change on a big scale

Storonsky told the Financial Times in an interview that the crisis not only cost him around half a million pounds, but it also taught him the value of backing every decision with data and logic. After moving to Credit Suisse, where he worked from 2008 to 2013, Storonsky began to hatch an idea to simplify financial services through an easy-to-use app that would reduce fees when spending in different currencies. In 2015, he co-founded Revolut with British-Ukrainian Vladyslav Yatsenko, a software developer who cut his teeth at UBS and Deutsche Bank, and who remains the company’s chief technology officer today.

Outside of Revolut HQ, similar innovations in financial technology were unfolding. The global financial crisis shook consumers’ confidence in the biggest banks, leading to an upswell in support for a new generation of tech-forward digital banks – not only Revolut, but also Germany’s N26 and Fidor, Brazil’s Nubank and America’s Chime. These firms promised convenience, improved user experience and the agility needed to chop and change their services as required. Many of them were founded by the very employees who were left high and dry after the collapse of Lehman Brothers – and who, like Storonsky, dreamt of something better. As he told CNBC, “A number of successful entrepreneurs rose from the ashes who were pretty disillusioned with the financial system.”

Bet on it
Following its launch, Revolut experienced rapid growth. In 2018, Storonsky announced a cash injection of $250m that propelled the fintech’s valuation to more than $1bn, making it Britain’s first digital bank unicorn – and one of the fastest tech companies in Europe to reach unicorn status.

Even then, he hinted that Revolut was nowhere near finished. “Our focus, since we launched, has been to do everything completely opposite to traditional banks,” he said in a statement at the time. “We build world-class tech that puts people back in control of their finances, we speak to our customers like humans and we’re never afraid to challenge old thinking in order to innovate.

“Banking has historically avoided disruptions by technology, but that is all about to change on a big scale,” Storonsky said, taking aim at the banking establishment. His vision for an alternative global banking system – one where, “Anyone in the world can just download the Revolut app and set up a local bank account to access any services they need,” as he told Business Insider in 2017 – is grounded in an approach that ensures the company never stands still. This is most evident in Revolut’s engine for growth in new verticals: its ‘new bets’ division.

‘Move fast and break things’ is the Mark Zuckerberg-coined ethos that tech companies have long lived and breathed, and Revolut is no different. The lender is known for its ability to quickly launch into new revenue streams – everything from mobile phone plans to an air mile points offering.

These have the potential to become quick moneymakers for the business, with cryptocurrency trading being a case in point. The division helped to boost Revolut to its first annual profit in 2021 as retail traders jumped at the chance to join in the crypto boom. “Nikolay Storonsky’s leadership of Revolut highlights how speed and adaptability can really define success in fintech,” Ed Gibbins, co-founder and CEO of ChaseLabs, an AI sales development system, told World Finance. “His approach reflects a deep understanding of tech disruption: launch quickly, scale globally, and then refine using real user feedback. This ability to treat global markets as testing grounds means Revolut can adapt features faster than rivals and align its offerings closely with consumer demand.”

Each ‘new bet’ at Revolut begins with a small team of around 10 people led by an employee with a strong entrepreneurial background, as reported by Sifted earlier this year. With a budget of around £2m to £3m, they work to build experimental products on tight timelines of just 18 months, though many have been launched even more quickly.

By moving faster than traditional banks, and even many challengers, Revolut has built a reputation for agility that resonates with tech-savvy consumers, Gibbins explains. “The strategy of rapid feature deployment and constant iteration allows the company to test ideas across markets and double down on what works. This cycle of innovation and responsiveness has enabled Revolut to outpace competitors and strengthen its position as a leading player in global fintech,” Gibbins said.

If a new bet makes money, it’s scaled up; if it doesn’t, it is either tweaked, scaled down or ditched. To date, 45 ‘new bets’ have been approved, with some of these still in the development pipeline, a Revolut spokesperson told Sifted. They described the unit as operating “on a venture capital-inspired model.” Storonsky is no stranger to VC. In 2022, he started up his own VC firm, QuantumLight, which uses an AI model to fund fintech and related start-ups.

Revolut’s agility and its comprehensive offering are key selling points among customers. “Revolut’s rise has been driven by a clear focus on tech-savvy consumers who expect more than traditional banking can deliver,” Michael Foote, founder of Quote Goat, an insurance comparison tool, told World Finance. “By combining everyday money management with trading and payments inside one app, the company positions itself as a lifestyle tool rather than a conventional bank. This multifunctional approach has given it strong appeal among younger customers who value speed, convenience, and variety without juggling multiple providers.”

As of September 2025, Revolut said it had surpassed 65 million customers worldwide. Its success has driven financial winnings for Storonsky, too, who is thought to own around a 25 percent stake in Revolut. According to Forbes, he has a net worth of $7.9bn.

Growing pains
While Revolut can boast growing customer numbers and profits, the firm’s financial success may disguise challenges that have dented its reputation. For example, Revolut’s aggressive corporate culture has come under intense scrutiny in recent years, with some former employees claiming they were set unachievable targets, forced to do unpaid work and put under enormous pressure.

For many years, the company’s tough culture was an open secret. “We are not about long hours – we are about getting shit done,” Storonsky explained to Business Insider in 2017. “If people have this mentality, they work long hours because they want it.”

The company has thousands of reviews on Glassdoor, an employer review site. Even with an overall rating of 4.0, as of October 2025, reviewers frequently mention a lack of work-life balance and management’s prioritisation of targets above all else. However, many reviewers appear to recognise that while the environment at Revolut is not for everyone, some thrive in its high-pressure conditions.

“No one is sitting there telling them they have to work long hours,” Storonsky continued telling Business Insider. “They are really motivated, really sharing the vision of where we want to go and as a result, they work long hours – they work at least 12 or 13 hours a day. All the key people, all the core team. A lot of people also work on weekends.”

Since that interview, Storonsky has claimed that changes have been made. “We are a different company than we were two to three years ago,” he said in a 2019 interview with Reuters. “We have learned lessons.” But in 2023, still seeking to address the feedback, the firm assembled an internal team to track whether its employees were being ‘inclusive,’ ‘approachable’ and ‘respectful,’ the Guardian reported, encouraging a more ‘human’ approach.

Francesca Cassidy, editor of Raconteur, a business news website, questioned whether change would really be effective if it wasn’t happening from the top. “Storonsky wants Revolut to be the ‘Amazon of banking.’ In pursuing this objective, he works tirelessly and expects much the same from his colleagues. With such a dedicated, driven character at the helm, it is little wonder that Revolut’s culture has developed as it has,” she wrote in an opinion piece.

Yet the company’s plans to revamp performance reviews and launch a recognition and reward programme, “do little to address the high-performance culture that seems to be the source of much of the negative feedback,” Cassidy wrote. “How can employees be expected to pour their energy into being pleasant, collaborative colleagues if they are overworked, under stress and burnt out?”

In addition to a thorny working culture, Revolut has for years battled with a slow approval of its full UK banking licence. In 2018, the company gained its EU banking licence through Lithuania, but after a three-year application process that finally resulted in approval in July 2024, Revolut’s full UK banking licence was still being held up by regulators’ concerns at the time of publishing. The Bank of England has highlighted concerns over the start-up’s ability to maintain its risk management controls in line with its rapid international expansion, the Financial Times revealed.

Storonsky has admitted that not prioritising securing a full UK banking licence in Revolut’s early stages, and instead going all-in on growth, was a rare misstep for the business. A full UK banking licence will allow Revolut to offer a broader range of financial products and services. For example, it will finally be able to enter the UK lending market, allowing it to compete more directly with traditional banks in areas like mortgages and savings accounts.

Equally as importantly, the approval could open the door to further licences in countries including the US, Australia and Japan. It could also be seen as a stepping stone to the company’s stock market flotation, which is likely to be in London or New York.

Storonsky’s side hustles
While Storonsky has global ambitions for Revolut, his focus isn’t narrowed to the digital bank alone. QuantumLight, his venture capital firm, this year announced the close of its inaugural $250m fund. Created with an aim of backing ‘exceptional’ founders across AI, web3, fintech, software as a service (SaaS) and healthtech,

QuantumLight is further evidence of Storonsky’s obsession with data. The VC is described as, “on a mission to bring scientific precision to venture capital.”
“Our ambition is to build the world’s best systematic venture capital and growth equity firm,” Storonsky said in a statement. QuantumLight is also a handy promotional vehicle for Revolut. The business releases public ‘playbooks’ that promote Revolut’s expertise in order to help founders replicate its successes.

Its most recent launch was Hiring Top Talent. Co-authored by Storonsky, the playbook is designed to share the operating principles Revolut developed to ‘systematically scale world-class teams.’ It promises to offer a ‘blueprint’ for implementing the structured recruitment approach behind Revolut’s ‘hiring engine’ that helped the company scale to more than 10,000 employees in just 10 years.

“Our goal is to make the invisible operating systems behind iconic companies like Revolut visible and replicable,” said Ilya Kondrashov, CEO of QuantumLight. “Founders shouldn’t have to reinvent the wheel when it comes to building high-performing teams. By sharing these tools and frameworks, we’re helping scale-ups move faster from day one.”

Beyond venture capital, Storonsky has also shown a penchant for the finer things with Utopia Design, a luxury travel company that Forbes revealed he had quietly set up in 2023. Building on a personal passion for kite surfing, the project includes high-end luxury villas in destinations including the Dominican Republic, Brazil and Barcelona.

While these passion projects have the potential to line Storonsky’s pockets, his main moneymaker continues to be Revolut. In fact, he is said to have set up a multibillion-dollar payout if he can catapult the fintech’s valuation to $150bn, the Financial Times revealed. The deal, similar to one approved by Tesla’s board for Elon Musk, would offer Storonsky shares in Revolut, paid out in stages, that could be equal to a further 10 percent stake.

Next stop: global domination
Back in 2019, Storonsky said Revolut’s success would hinge on whether it could gain enough customers. “The whole idea was we provide the product for free, then we cross-sell other services. So we just need to have large customer numbers,” he said in an interview with CNBC.

This year, he set out his aim to hit 100 million retail customers globally by mid-2027 and to enter more than 30 new markets by 2030, becoming “the world’s leading financial services provider.”

“Our mission has always been to simplify money for our customers, and our vision to become the world’s first truly global bank is the ultimate expression of that,” Storonsky said. Alongside the announcement, Revolut noted that it had earmarked $500m to accelerate its operations in the US. The company’s US CEO confirmed reports that it is looking into whether to apply for its own banking licence in the US or acquire a US bank, which would allow it to expand more quickly.

Overall, Revolut is investing $13bn over the next five years in its global expansion – which continues apace. The firm’s launch in Mexico is expected in early 2026, and an opening in India is also on the cards in the not-distant future. A new global tech hub in the Philippines was set up to support operations in Australia and New Zealand, where Revolut is seeking to obtain banking licences. The company is also beginning to make its first push into Africa, with South Africa in its sights, and it has received an in-principle licence in the UAE to facilitate an expansion into the Middle East. Reports have even surfaced that Revolut is mulling a move into China.

Meanwhile, Revolut’s ‘new bets’ unit is likely to continue cooking up new financial products to explore, but what those will be, exactly, is less clear. In September 2025, a company announcement revealed that the main areas of focus would include AI and private banking. However, if Storonsky’s plans to continue opening in new markets is successful, these new verticals may need to be tailored to the countries in which they are launched, as regulatory requirements could vary region to region. While this could create opportunities for unique products, it also has the potential to take the wind out of the division’s sails as more red tape arises.

“Nikolay Storonsky’s strategy has centred on rapid global expansion and aggressive feature rollout,” Foote said. “The combination of constant innovation and international reach has set the business apart, showing how fintechs can compete with traditional banks by being faster to market and more responsive to customer demand.”

Despite Revolut’s boundless appetite for growth and its achievement of profitability, there are still worries in some corners that the company’s $75bn price tag is too high. However, if Storonsky can pull off his ambitious plans for global expansion and continue to bring to market exciting new products, there is no doubt he will silence the critics.

The great big stablecoin bet

Posted on by itsupport

On election night in November 2024, the US crypto industry enjoyed a rare moment of euphoria, with investors celebrating the arrival of the first truly crypto-friendly administration in American history. Bitcoin climbed to a record high of over $75,000. Crypto-linked equities rallied sharply. Donald Trump was hailed as the first American leader who wholeheartedly believed in digital money – and with reason. “If crypto is going to define the future, I want it to be mined, minted and made in the USA,” he had declared on the campaign trail.

Only a few months later, President Trump would deliver on that promise, taking the crypto community to the promised land. Last July, he signed the ‘Guiding and Establishing National Innovation for US Stablecoins Act’ – dubbed the GENIUS Act – which ushered in the first comprehensive federal framework for stablecoins: dollar-pegged digital tokens that underpin the crypto economy. It was a landmark moment for digital money, signalling both opportunity and risk.

Private money, public worries
The Act lays down strict rules for issuers of dollar-backed digital tokens, requiring full, verifiable reserves held in cash or short-term government bonds (Treasurys), monthly attestations of these holdings, clear redemption obligations, and compliance with anti-money-laundering and consumer-protection rules. Crucially, it treats stablecoins as payment instruments rather than securities, putting an end to regulatory strife and removing litigation risk for issuers. “We are witnessing a shift of stablecoins from simply being ‘crypto’ or ‘digital currency’ to being core payments infrastructure,” says Mike Hudack, co-founder of Sling Money, a crypto-enabled money transfer app that leverages stablecoins.

Central bankers warn that a widespread shift to stablecoins could reduce their control over money creation

Underneath the exuberance lies a deeper strategic calculation: a nod to innovation, but also a deliberate alternative to a central bank digital currency (CBDC). One of Trump’s first actions in his second term was banning US authorities from issuing a digital dollar. By rejecting a government-run digital dollar, a project largely seen as a legacy of the Biden administration, Washington effectively outsourced digital money to the private sector – a move that blends ideology, market pragmatism and politics in equal measure. White House officials have argued that a digital dollar would have placed the government too close to citizens’ wallets, risking accusations of financial surveillance. By contrast, stablecoins offer a market-driven model for digital payments while maintaining the global dominance of the dollar and preserving US financial hegemony in a fast-digitising world. Roughly 99 percent of stablecoins are currently denominated in dollars, meaning that every transaction in them reinforces the greenback’s global reach.

The choice also reflects the administration’s ideological aversion to expanding federal control over money – an issue that galvanised both libertarians and the business community during the campaign. “A CBDC would concentrate financial power within the government, something this administration was never likely to endorse,” says Maghnus Mareneck, co-CEO of Cosmos Labs, a US blockchain firm behind a blockchain interoperability protocol used by banks. “The administration recognises that stablecoins can modernise the dollar without replacing it.” The legislation was greeted with enthusiasm by crypto firms, long frustrated by years of regulatory ambiguity. Many argued that the Securities and Exchange Commission (SEC) had crippled the industry with regulatory overreach. During his campaign, Trump had pledged to fire Gary Gensler, the Biden-appointed SEC chairman who had pioneered crypto regulation. Gensler stepped down in January, despite his term being scheduled to end in 2026, paving the way for a shift in the agency’s regulatory mindset. In the months following the Act’s passage, the stablecoin market exploded. Once a niche market, total stablecoin capitalisation surpassed $300bn last October, expanding twice faster than the crypto sector, while Citi analysts estimate that it will reach $4trn by 2030. Tether, the dominant dollar-based stablecoin issuer, is seeking up to $20bn of new capital in its latest funding round, which would bring its valuation close to the $500bn threshold.

Critics, however, have focused on the act’s lenient treatment of the risky aspects of stablecoins. “What the Act does is vastly expand the network effects that make it easier to launder money and operate in the underground economy. It is important for the government to be able to monitor and audit transactions, and the bill is very light on that,” says Professor Kenneth Rogoff, who teaches international economics at Harvard University and has served as Chief Economist of the IMF. “It does not guarantee timely redemption or provide federal insurance, and it lacks clear rules for dispute resolution, unauthorised transfers, or fraud recovery. Oversight is fragmented across state and federal channels, creating space for inconsistent enforcement and charter shopping,” says David Hoppe, founder of the US law firm Gamma Law, which specialises in cases involving digital assets.

Banks on guard
For the banking sector, the rise of state-approved stablecoins poses both opportunity and existential risk, notably through disintermediation. Few stablecoins currently pay interest, yet if issuers begin offering yield and businesses adopt them for payrolls, trade and settlements, deposits could drain from banks, weakening their traditional model of deposit-funded lending and threatening credit creation. Their balance sheets, already squeezed by digital payment platforms, could shrink further. Up to $6.6trn in deposits could leave bank coffers if crypto exchanges are allowed to offer interest payments or similar financial incentives, estimates a recent US Treasury report, a prospect US banks are urging policymakers to prevent.

Banks may look to position themselves as the infrastructure and control layer for stablecoin custody

Legacy lenders are taking a cautious approach, recognising they still retain certain advantages. “If banks issue their own stablecoins directly, they would be safer, because they have direct access to central bank reserves,” says Lucrezia Reichlin, an economist at the London Business School. JPMorgan Chase and Citi are exploring issuance of their own dollar-pegged payment tokens, while nine European financial institutions, including UniCredit and ING, have a euro-denominated stablecoin in the pipeline. “Banks may look to position themselves as the infrastructure and control layer for stablecoin custody, settlement, and on-chain treasury, providing KYC, segregation, and policy controls, so they can capture fee revenue as liquidity and payments migrate on-chain,” says Susana Esteban, Managing Director of the Blockchain and Digital Assets practice at FTI Consulting, a US business consultancy firm. Their end game, she adds, could be tokenised deposits while offering the same ‘24/7, programmable experience’ that stablecoins offer.

At stake is not merely efficiency but sovereignty. The growing role of privately issued dollars could diminish the influence of most central banks, transforming the architecture of international finance. “Stablecoins do not create base currency, so they don’t directly erode the Federal Reserve’s ability to set short-term rates or influence market liquidity,” says Jonathan Church from TransferMate, a fintech payments infrastructure firm. Yet central bankers warn that a widespread shift to stablecoins could reduce their control over money creation and interest-rate transmission, forcing monetary policy to operate through less predictable channels. As more money circulates outside the regulated banking system, interest-rate adjustments might take longer to filter through the economy. The governor of the Bank of England, Andrew Bailey, has recently warned that stablecoins could “separate money from credit provision,” as non-banks assume a greater role in financial intermediation.

Many in Europe appear to be focused on protecting banks rather than embracing technological innovation

International payments group Swift is also racing to adapt, building a shared blockchain ledger with Bank of America, Citi and NatWest to facilitate transactions, notably settlement of tokenised assets, including stablecoins. The rise of stablecoins threatens Swift’s traditional role by allowing instantaneous transfers that bypass intermediaries. Transactions that once took several days and required multiple compliance checks can now occur within seconds, disrupting decades of financial infrastructure building. Swift’s fight for survival serves as a metaphor for the whole financial system. In a world of programmable, borderless money, legacy institutions must evolve or risk irrelevance.

The Trump effect
As with much of the Trump presidency, the boundary between public policy and private interest is blurred. Members of the President’s family have launched crypto ventures, including World Liberty Financial, issuer of the USD1 stablecoin, and American Bitcoin, a mining company co-founded by Donald Trump Jr and Eric Trump. A meme-token, $TRUMP, is named after the President himself. Such interweaving of political and commercial interests is hardly new for the Trump administration, but the stakes are higher in this case. Stablecoins, unlike hotels or golf courses, touch the foundations of the financial system.

For supporters, the symbolism is potent: the self-styled deal-maker who once built skyscrapers now aims to anchor American influence in digital money. Critics argue that this alignment of public policy with private profit risks eroding confidence in the neutrality of US financial regulation. Lawmakers and ethics experts have called for clearer safeguards, including restrictions on digital-asset ownership by politicians and senior officials and stronger blind-trust requirements. “The president directs agencies responsible for implementing the Act, while his family benefits from a company whose success depends on those same regulations,” says Gamma Law’s Hoppe. “Even if lawful, such circumstances create the perception that private gain could influence public policy, which risks undermining confidence in fair enforcement and market integrity.”

Yet for now, the administration appears unfazed. In Washington’s calculus, the digital future of money must be denominated in dollars – even if those are minted by private actors. In that sense, the GENIUS Act is a geopolitical statement. Both officials and Trump family members frame the policy as a response to de-dollarisation efforts led by China. “Crypto is actually going to be the thing that preserves dollar hegemony around the world,” said Donald Trump Jr at a crypto conference in Singapore, adding: “As stablecoins start becoming the markets and treasuries, that’s going to replace China and Japan and some of these places that say, ‘You know what? We don’t want America to have that power anymore.’”

China’s digital yuan gamble
One way China is seeking to undermine the dollar is by rolling out its CBDC, an effort intensified after sanctions against Russia targeted Chinese banks accused of helping Russia secure weapons parts. Beijing has also encouraged the use of its cross-border payments system, Cips, while overseas lending in renminbi has also increased dramatically, with outbound renminbi loans, deposits and bond investments by Chinese banks quadrupling since 2020. China is also a main driver behind m-CBDC Bridge, a multi-CBDC platform that facilitates cross-border payments, controlled by the central banks of China, Hong Kong, Thailand, Saudi Arabia and the UAE.

“China’s ambition is not to replace the dollar or make the yuan an alternative to it. They know that it would be unrealistic,” says Reichlin, the economist from London Business School. “But they want to defend the payment system in their financial ecosystem and one way to do it is to control the rails for cross-border payments via digital solutions.”

China approaches stablecoins with much more caution. Last summer, the Hong Kong Monetary Authority started accepting applications for stablecoin issuers, a move interpreted as China’s response to the US GENIUS Act. Chinese officials argued that China should respond to US promotion of stablecoins with a renminbi-pegged stablecoin that would boost the yuan’s use abroad. Since then, several Chinese regulators, including the country’s central bank, have poured cold water on yuan-based stablecoins, citing concerns that private stablecoins could undermine the CBDC. The regulatory crackdown forced Chinese tech giants such as Ant Group and ecommerce group JD.com, expected to participate in Hong Kong’s pilot programme, to pause their stablecoin issuance plans. “Beijing wants every digital yuan transaction, whether it is domestic or international, to move through systems it can oversee. Stablecoins inherently create alternative payment networks that the state cannot easily legislate, and that introduces risk and potential fragmentation of issuance for this government,” says Mareneck of Cosmos Labs, an expert on Asian stablecoins.

Europe accelerates its de-dollarisation efforts
The US drive for stablecoin supremacy has also unsettled European policymakers and the European Central Bank (ECB), which is pressing ahead with the introduction of the digital euro. Despite being the first major economic power to establish a comprehensive stablecoin regulatory framework with its Markets in Crypto Assets regulation (MiCA), the bloc does not currently prioritise stablecoins. Experts warn that Europe risks repeating past mistakes by over-regulating a nascent market, allowing American platforms to capture it. “MiCa has a number of restrictions and many in Europe appear to be focused on protecting banks rather than embracing technological innovation. Stablecoins enable easy access to US short-term government bonds from all parts of the world, which also diverts capital flows from the EU and the UK to the US,” says Gilles Chemla, who teaches finance at the Imperial Business School and is co-director of the university’s Centre for Financial Technology. Concerns over sovereignty are driving the EU’s CBDC programme, as it seeks to reduce reliance on US payment companies such as Visa and Mastercard.

However, experts question whether this goal is achievable if dollar-denominated stablecoins are widely used in Europe, and whether a digital euro is the most effective tool to address the issue. “The digital euro in its current design is narrowly focused on the euro area as a means of payment only for private households and with holdings limited to €3,000, while stablecoins offer an international payment scheme that can be used by global companies,” says Peter Bofinger, an economist at Würzburg University and former member of the influential German Council of Economic Experts. A better option for the EU, Bofinger adds, would be integration of its existing national payment systems.

If dollar-backed stablecoins are adopted by the public in the Eurozone, the ECB will be faced with stark choices. “There is a risk of dollarisation. Dollar-backed stablecoins could become what the eurodollar market is now: a big offshore dollar-based market,” says Reichlin from the London Business School, a former ECB director general of research, adding: “If Europe doesn’t develop euro-pegged stablecoins, the old payment system could be dollarised, especially large cross-border payments. Europe is complacent about this risk.” Others, however, consider warnings about dollarisation to be exaggerated. “The ECB is raising the risk of dollarisation to justify the need for a digital euro,” says Bofinger. “There’s no such risk, because currencies are like languages: to switch from a domestic currency to a foreign one, the domestic currency has to be in a terrible state, like in some Latin American countries.”

Another concern for the ECB is that dollar-backed stablecoins could erode the euro’s global role, while their widespread adoption in Europe might weaken the ECB’s control over monetary policy. “Every tokenised dollar transaction strengthens the dollar’s global position, even beyond US borders. A euro CBDC cannot match that momentum, and will likely be slower, more limited, and less compatible with global blockchain systems,” says Mareneck of Cosmos Labs. “It was a mistake of the ECB to think of CBDCs as an alternative to private stablecoins. These are two different things,” Reichlin adds. “CBDC is similar and complementary to cash, whereas stablecoin is complementary to deposits. There is no reason why CBDCs and stablecoins could not coexist.”

Bubbly stuff
Almost two decades after the 2008 credit crunch, policymakers are still haunted by its effects. Stablecoins are expected to be backed with safe, liquid assets and users will be able to redeem their stablecoins at par. “Because stablecoins are not lent out the way bank deposits are, you can argue that in some respects they are likely to be at lower risk than bank deposits, though governments are more likely to bail out banks than stablecoin companies,” says Paul Brody, a blockchain expert at professional services firm Ernst & Young. Yet economists warn that stablecoin issuers effectively function as shadow banks, but without the same capital requirements, access to central bank liquidity or oversight from regulators. Should confidence in their reserves falter, the unwinding could spill into bond markets and cause liquidity crises, echoing panic seen in 2008 and 2020, and once again forcing governments into politically unpopular bailouts. “If a major stablecoin issuer is unable to meet redemptions or discloses reserve weaknesses, trust could unravel quickly, prompting mass withdrawals. The impact would extend beyond digital assets, affecting wider financial markets that rely on tokenised instruments for settlement and liquidity,” says Krishna Subramanyan, CEO of Bruc Bond, a cross-border banking and payments provider.

One major concern is that speculation could once again outweigh regulatory caution. Although the GENIUS Act prohibits issuance of interest-bearing stablecoins, it does not explicitly ban third parties from offering interest-bearing financial products that involve stablecoins. Experts warn that the creation of such reward-based products could create a parallel deposit market that competes on yield with only a flimsy guarantee of one-to-one convertibility, making monetary control more difficult. “Because stablecoins are vulnerable to runs, a fire sale of their reserve assets – such as bank deposits and government debt – could spill over into bank deposit markets, government bond markets, and repo markets,” the IMF warned in a recent financial stability report. “A practical safeguard is integration rather than prohibition: preserve monetary control by including stablecoin flows in the liquidity toolkit using facilities such as the Standing Repo Facility and Reverse Repo Facility to absorb shocks while supervisors treat major issuers as systemically important payment institutions subject to stress testing and live disclosure,” says Susana Esteban from FTI Consulting.

Security remains a critical factor. Some experts warn that, like other forms of crypto, several stablecoins could be used for illegal activities such as money laundering and are also vulnerable to cyberattacks and technical glitches. Stablecoin issuers will need insurance to reimburse holders in the event of cyberattacks and to cover operational risks, which would add to their costs. Political uncertainty may also fuel volatility, as a future Democratic administration could impose stricter regulation on stablecoins. “Expect a revisit of the CBDC ban, stricter consumer protections, and tighter perimeter rules for issuers regarding resolution, interoperability and wallet safeguards,” says Maja Vujinovic, CEO of Digital Assets at FG Nexus, a digital assets holding firm.

By the next presidential election, however, America’s financial experiment with stablecoins may be too big to fail. The wager is bold: that the profit motive of dollar-denominated token issuers will align neatly with national interest. In this sense, the GENIUS Act represents a paradox: it enhances dollar supremacy while simultaneously weakening Washington’s control over money creation. Can this hybrid model of monetary sovereignty – one where Wall Street and Silicon Valley pull the strings of global finance, rather than the Federal Reserve – live up to the expectations of crypto enthusiasts, including the Trump administration, or will it sow the seeds of the next financial crisis?

The answer depends on the same forces that have long defined finance: confidence, liquidity, and the belief that the system, whatever its flaws, will hold.

Leadership lessons from building a platform for champions

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When Alex Feshchenko, CEO of the iGaming provider GR8 Tech, was named 2025’s CEO of the year in the technology industry by European CEO, it marked more than personal achievement. It signalled how boundaries between niche and mainstream tech are dissolving, and how visionary leaders are building companies that compete far beyond their original markets. Unlike peers recognised only within iGaming, Feshchenko’s award reflects that today’s most successful companies aren’t defined by verticals but by their ability to solve complex problems with scalable, elegant solutions. Here are five lessons from GR8 Tech’s journey for tech leaders aiming to expand beyond traditional boundaries.

Lesson 1) Master the B2B2C chain: While GR8 Tech operates in B2B, its strength lies in mastering the full B2B2C value chain. iGaming operators compete with each other and fight for people’s attention against streaming, social media and mobile entertainment. “Our clients need to captivate users in a world of infinite choices,” says Feshchenko. “To compete with giants, we must offer a stack that matches and beats them.”

That mindset drove GR8 Tech to adopt AI early, enabling real-time personalisation at scale. Competing with recommendation engines like Netflix required sophisticated user segmentation and personalised tools, now key to delivering better player experiences and stronger operator profitability.

Lesson 2) Borrow and contribute across industries: GR8 Tech believes innovation shouldn’t stay confined to one industry. Engaging with other fields brings fresh perspectives and sparks new solutions. This two-way exchange prevents tunnel vision: GR8 Tech adapts outside ideas to strengthen its products, while its own real-time iGaming technologies often find applications in other sectors. Such cross-pollination is a key advantage in the fast-moving tech industry.

Lesson 3) Build cross-industry partnerships: GR8 Tech’s partnership with Ready to Fight – the platform co-created by undisputed heavyweight champion Oleksandr Usyk – shows how tech can transcend industry boundaries by blending boxing, technology and community. Both brands embody resilience and excellence. Ready to Fight integrates Web3, crypto services and community tools – areas where specialised tech often leads mainstream adoption. From this collaboration came GR8 Tech’s Heavyweight Club, an exclusive community for operators who want to lead inspired by Usyk’s discipline.

The Heavyweight Club demonstrates how cross-industry partnerships can create new business opportunities. Operators who join aren’t seeking invitations; they are embracing a mindset that demands heavyweight performance and delivers heavyweight results.

Lesson 4) Maintain relentless ambition:
“What keeps me motivated is the discomfort of knowing how much more we could still achieve,” Feshchenko says. The most dangerous place for any organisation, the CEO argues, is satisfaction with current success. “The toughest competitor you can face is yourself.”

This ambition keeps GR8 Tech pushing past milestones, onboarding 60plus new clients and building tech that rivals any industry. The company treats each success as a foundation for the next. Intending to become the number one sports book provider by 2028, GR8 Tech shows how ambitious targets fuel innovation, prevent complacency and prove specialised tech can achieve mainstream recognition.

Lesson 5) Build technology that delivers results under pressure: Impact comes from tech that performs under business pressure. GR8 Tech focuses on heavyweight performance – scalability, speed, profitability – with geo adaptations. The results prove it: operators often reach breakeven in under 12 months (versus the three-to-four-year average), and one client hit $1m in gross gaming revenue within four months.

Real-world outcomes drive GR8 Tech’s expansion beyond a single industry. “Heavyweight ambitions deserve heavyweight solutions,” the company maintains – and proves this stance with technology that translates directly into business results. GR8 Tech understands that its clients’ success determines its own.

The broader application
Champions aren’t born in comfort zones – they are forged through the relentless pursuit of excellence and the courage to compete beyond traditional boundaries. As tech democratises, the winners will be those who pair deep expertise with broad vision. GR8 Tech’s recognition in the general technology category proves this balance is both possible and essential. For leaders, the champion’s playbook is clear: redefine competition, master value chains, build bold partnerships, stay relentlessly ambitious, and deliver tech that performs under pressure.

For iGaming operators aiming for the heavyweight division, the path is proven. GR8 Tech’s recognition and results come from refusing to settle for less than championship performance. Champions recognise champions. The question isn’t whether you can compete at this level – it is whether you are ready to step into the ring.

Europe’s dirty money problem

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Europe has big plans to combat money laundering, but its history of tackling the illicit flow of dirty cash through its financial system is decidedly checkered. Estimates vary wildly about how much money is cleared through the European Union’s (EU) banking and financial services industry every year: figures range from as low as €117bn while others go as far as suggesting closer to €750bn. Whatever the true amount, the fact that the EU is one of the world’s biggest financial markets means it stands to reason that it will be one of the biggest conduits for criminal funds.

Evidence suggests that some 70 percent of criminal networks based within the bloc use the single market’s financial system to launder dirty money, and around 80 percent use legal business structures to freely move cash. That means not only is Europe’s financial services system failing to identify, prevent or report suspected money laundering, but other professions such as accountants, tax advisers and law firms are also taking little preventative action. At the same time, crime agencies’ efforts to clampdown on money laundering are floundering: in fact, according to the EU’s Agency for Criminal Justice Cooperation (EUROJUST), on average only two percent of the assets from organised crime are confiscated by law enforcement annually, despite a 15 percent surge in cases.

The EU wants to turn the situation around and in July this year AMLA, the bloc’s Authority for Anti-Money Laundering and Countering the Financing of Terrorism, formally came into being. Though it will not begin direct supervision until January 1, 2028, the agency’s role is to co-ordinate the efforts of EU member states by ensuring they implement EU anti-money laundering (AML) rules properly, as well as take active steps to improve co-operation between the 27 countries’ financial intelligence units (FIUs).

As part of its remit, AMLA will directly supervise the EU’s highest-risk financial institutions with significant cross-border exposure and will exercise indirect supervision across both the financial and non-financial sectors. So far, AMLA has entered into memorandums of understanding with the EU’s other main supervisory bodies, the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), and the European Insurance and Occupational Pensions Authority (EIOPA), as well as with the European Central Bank (ECB).

Stemming the flow
Hopes are high for the EU’s new agency, especially as it could finally give the EU a strong, unifying voice in a system that has been plagued by fragmented national oversight and that has allowed several high-profile – and highly damaging – money laundering scandals to go undetected. But AMLA is not without its problems. While its remit is wide-ranging, its budget is not. It currently has funding of €119m set to last from 2024 until the end of 2027. When it is operational, 70 percent of its funding will come from fees (estimated at €65m for 2028) with a further €27m coming from the EU, providing an annual budget of €92m. By then, AMLA is set to have 430 staff. Additionally, the fact that it will not be fully operational for over two years means a lot of dirty cash is still set to flow through the EU’s financial system between now and then. And even when the agency does take effect in 2028, the existing executive board will only be in post for a year, which creates concerns over leadership and continuity.

The European Union’s uneven record

The EU has a mixed reputation regarding its efforts to curb money laundering. Over 34 years, the bloc has implemented six directives to combat money laundering and terrorist financing risks – the last three of which were agreed in the past 10 years as a succession of scandals were uncovered in several of the EU’s biggest financial institutions around 2017 and 2018 (Danske Bank; Latvia’s ABLV Bank; Versobank in Estonia; ABN Amro; and Commerzbank, among others.)

Last year the EU finalised its so-called ‘AML Package’ of new rules to counter ML/CTF risks. The package consists of the Regulation on Money Transfer Information, which covers information accompanying transfers of funds and certain cryptocurrencies; the AML Regulation and latest (sixth) AML Directive, which will both apply from July 2027 (the regulation will be an EU-wide rule, while the directive needs to be implemented into member states’ national frameworks); and legislation enabling the establishment of the EU’s Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA), which began operations this July.

Despite its willingness to beef up rules, the EU can’t seem to get a proper handle on the problem. An estimated $750bn in illicit funds flowed through the EU’s financial system in 2023 alone, according to a study released this March by financial crime tech software firm Nasdaq Verafin. The figure amounts to a quarter of the global total and is equivalent to 2.3 percent of Europe’s GDP.

While AMLA’s creation may be a bold step towards a unified European approach to financial crime, its effectiveness will hinge on execution. While the agency’s priorities of harmonising rules, strengthening cooperation, supervising high-risk cross-border institutions, and tackling emerging threats like crypto address the fragmentation and intelligence gaps that criminals have exploited for years, its objectives face key challenges, and problems are likely to persist.

For instance, non-financial sectors remain largely outside of AMLA’s direct remit, while geopolitical risks like sanctions evasion add complexity. Additionally, harmonising rules across 27 member-states (where differing national approaches are likely to be entrenched), coupled with directly supervising key entities, coordinating the efforts of multiple FIUs, and the buildout of IT and data systems is complex, resource-intensive, and requires skills, manpower and budgets that the agency does not yet have.

Many believe one of AMLA’s biggest challenges is that the agency faces fierce competition for experienced talent in an industry that is already fighting for experienced professionals, while there are also fears that AMLA’s operational start date of 2028 simply gives criminal gangs enough time to shift channelling dirty money through Europe’s financial services system to less-supervised sectors such as real estate, which remain outside the agency’s direct purview. There are also concerns that AMLA’s powers are defined less by laws and more by the level of political will in Brussels.

“AMLA is a powerful deterrent on paper, but its true test will come when it investigates a national champion bank,” says Willem Wellingoff, chief compliance officer at payments platform Ecommpay. “Will member states provide their full support or will national interests lead them to shield their own institutions?”

Ultimately, preventing money laundering in the financial sector is dependent on how capable – or willing – financial services firms are to combat the problem (as opposed to fulfilling box-tick compliance with current rules). According to Wellingoff, present delays in reporting and the separation of fraud and AML functions within financial services firms “still give criminals an advantage.”

Growth over compliance
These concerns are likely to be exacerbated as the fintech, regtech, and crypto sectors continue to grow in an environment where innovation outpaces governance. Europe’s main banking regulator, the European Banking Authority (EBA), fears that money laundering and terrorist financing risks may be going unchecked because of current weak controls and compliance among these new entrants. These fears are not helped by the fact that the risk-based approaches financial regulators take across the EU to police these firms are often inconsistent, lack clarity, and are ‘uneven’ in terms of their effectiveness.

The EBA has been issuing opinions on money laundering and terrorist financing risk (ML/TF) every two years since 2017. In its latest opinion in July, the EBA said the sector’s drive for innovation and growth may be outpacing its ability to manage them. It added that the ‘unthinking’ use of regtech solutions meant to improve anti-money laundering (AML) compliance – combined with the ‘spill-over risks’ from the increased interconnectedness between traditional financial services providers and the influx of emerging, innovative players such as crypto firms – are also a ‘particular concern.’ The EBA found that while fintech products and services are becoming more popular and mainstream, providers are prioritising growth over compliance. According to Alex Clements, global head of AML, CFT and sanctions at payments tech firm TransferMate, many fintech, regtech, and crypto firms prioritise fast onboarding at the expense of robust ‘know your customer’ (KYC) controls, leaving gaps that criminals can exploit. “Once inside the system, criminals leverage digital wallets, virtual IBANs, and instant cross-border payment schemes to layer and move funds in ways that make tracing illicit funds increasingly complex,” says Clements. “At the same time, the rise of privacy coins and decentralised finance platforms make verifying the source of funds even more difficult by providing anonymity that can shield illegal flows of funds,” he adds.

The number of staff meant to oversee ML/TF risks is often insufficient and those staff lack appropriate training. In addition, over half (52 percent) of regulators surveyed believe fintech institutions lack proper understanding of the level of such risks associated with their products and services. The EBA also highlighted as key areas of concern the sector’s over-reliance on third parties; their increased exposure to cybercrime; ineffective customer due diligence; and the high level of risk associated with cross-border transactions. The opinion found other worrying trends. One example is so-called ‘white-labelling’ – where fintechs provide the infrastructure for financial services firms to market the products under their own brand.

That’s an area that may lack proper oversight as regulators have assessed the risk as being low, but without realising how widespread the practice may actually be, the EBA warned. In terms of regtech, the EBA said while the technology “offers significant benefits in the fight against financial crime,” money laundering risks had increased because the solutions were not being adequately tested, nor used or implemented properly (partly due to a lack of in-house expertise.) The EBA also warned that financial institutions have become heavily reliant on a small number of regtech solutions, meaning that if vulnerabilities arise in one of the products, a significant number of firms could be at risk.

London: A problem of too many regulators

The UK has struggled to shed its reputation as one of the world’s biggest conduits for dirty money – despite having appropriate anti-money laundering legislation and a range of sanctions in place to punish corporate and individual offenders. Around 40 percent of the world’s total of dirty cash flows through the UK’s financial system, but experts believe progress to tackle the problem is hampered by the UK’s dependence on a multitude of poorly resourced, ill-equipped regulators and enforcement bodies. AML monitoring is in the hands of 25 different bodies and is co-ordinated by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), a division within the Financial Conduct Authority (FCA). But since OPBAS’ creation in 2018, the patchwork system of AML oversight and enforcement has been questioned for its ineffectiveness. “If you were designing a system of AML supervision from scratch, you would be unlikely to come up with the current regime,” says Colette Best, director of anti-money laundering in the legal services regulatory team at law firm Kingsley Napley. In September 2024 OPBAS found ‘weaknesses’ in how the 25 supervisors use enforcement powers to supervise members, and that – worryingly – none were ‘fully effective in all areas’ of anti-money laundering measures.

The report also found the number and value of fines issued had declined on the previous year, and that proactive information and intelligence sharing with regulators and law enforcement was ‘inconsistent.’ Following a two-year consultation to reform AML supervision the government announced in October 2025 that it will create a single professional services supervisor (SPSS), which will see the FCA assume responsibility for ensuring accountancy and legal firms comply with anti-money laundering rules rather than their professional bodies. However, the timescale for the changes – and how they will work in practice – are not clear.

Prosecuting AML cases has also historically been chronically slow: in the decade up to December 2021 the FCA opened only 23 criminal cases against individuals and corporates for failing to report suspicious money laundering-related activity. Part of the problem stifling the UK’s efforts to prevent money laundering is that its strategy encourages huge numbers of reports, including lots of false positives. Most of these reports, approx. 900,000 are generated each year, cannot be meaningfully investigated due to resource constraints. AML compliance is also hugely expensive, which pushes larger institutions to rely on automated systems that do not always work as well as they are meant to.

Controlling crypto
Meanwhile, money laundering and terrorist financing risks remain high in the crypto sector, fuelled in part by a surge in transaction volumes and a 2.5-fold increase in the number of authorised crypto assets service providers in the EU between 2022 and 2024.

But it’s also because crypto firms continue to act in much the same way as they always have – namely, that senior management fails to take compliance seriously; internal controls and governance arrangements are not fit for purpose; and firms deliberately try to bypass processes because they think the rules that apply to traditional providers do not/should not apply to themselves.

Experts believe fintech firms’ AML compliance is hampered by a lack of skilled staff

Marit Rødevand, CEO of AML tech company Strise, says that the sector’s failure to address these problems is “partly cultural, partly structural. Growth and speed to market are of greater priority to developers, leaving compliance as an afterthought.

“In crypto, there is an added reluctance to move until regulators force the issues. The result is a cycle of under-resourced compliance, insufficient controls, and firms playing catch-up rather than leading from the front,” Rødevand adds. Such views are backed up by research from UK professional accounting body ACCA. It found that fintech and regtech firms admit that internal mechanisms often fail to translate into meaningful action, which creates a ‘persistent misalignment’ between written policies and actual practices – a situation that is ripe for fraudsters to exploit.

AI is also exacerbating cybercrime, fraud and ML risks. According to a 2024 report by security tech firm Signicat, a staggering 42.5 percent of fraud attempts in financial services are now AI-driven. The report said criminals use AI for money laundering to automate financial schemes, conceal fund sources, and make high-risk transactions harder to detect. In addition, the technology can be used to generate fake documents, simulate legitimate operations and evade customer due diligence measures through deep-fakes.

The recent history of several new entrants, crypto and fintech firms is doing little to alleviate fears that financial crime will continue to grow as regulators across Europe step up monitoring and enforcement efforts. In 2023 Lithuania revoked the licence of banking platform Railsr’s European payments unit, PayRNet, for ‘gross, systematic and multiple violations’ of ML and terrorist financing laws. In May 2024 Germany’s financial regulator BaFin fined online bank N26 €9.2m over its late filing of suspected money laundering reports, and in July 2024 the UK Financial Conduct Authority (FCA) hit CB Payments – part of crypto-asset trading platform Coinbase – with a £3.5m fine for onboarding and/or providing e-money services to 13,416 high-risk customers. The previous year the firm had agreed to a $100m settlement with New York’s Department of Financial Services (DFS) over AML failings. In April 2025 Lithuania’s central bank fined British fintech firm Revolut €3.5m for AML failures.

According to Nick Henderson-Mayo, head of compliance at VinciWorks, a compliance eLearning and software provider, AML compliance is “butting against” the AI-enabled tech revolution. “Fintechs compress onboarding into minutes, regtech tools often operate as ‘checkbox tech’ rather than embedded risk management, and crypto still enables anonymous, borderless value transfer.” He added that nearly 40 percent of illicit crypto transactions are from sanctioned jurisdictions and entities. “Oligarchs use their speed, liquidity and borderless nature to slip past traditional compliance checkpoints. It is like watching a river of money disappear underground. When it resurfaces, you can never be certain whose hands it passed through.”

Some recent offenders

Danske Bank: In 2017 Denmark’s biggest lender found itself at the centre of allegations that have since given the organisation the dubious honour of being responsible for the world’s largest money-laundering scandal. Over the course of eight years, between 2007 and 2015, around €800bn of suspicious transactions flowed through the bank’s Estonian network, with little attempt to stop it. In December 2022 Danske Bank pled guilty and agreed to a $2bn fine with the US Department of Justice. Further fines worth billions of dollars are expected from other financial regulators.

ABN Amro: In April 2021 the Dutch bank reached a €480m settlement with the Netherlands Public Prosecution Service (NPPS) to resolve money laundering charges, two years after the agency said the bank was the subject of a criminal investigation relating to potential violations of the Dutch Anti-Money Laundering and Counter Terrorism Financing Act (AML/CTF Act).

Nordea Bank: In August 2024 the Finnish bank agreed to pay $35m to resolve an investigation by the New York Department of Financial Services (NYDFS) into ‘significant compliance failures’ in its anti-money laundering and Bank Secrecy Act (AML/BSA) programme. Nordea was discovered to be facilitating the creation of off-shore tax havens in the 2016 Panama Papers investigation. A subsequent NYDFS investigation found the bank was engaging in high-risk transactions through its international bank branch in Denmark. Nordea also formed relationships with high-risk correspondent banking partners without conducting adequate due diligence on them, the regulator said.

Multitude of challenges
Experts believe fintech firms’ AML compliance is hampered by a lack of skilled staff, coupled with a lack of specific requirements by regulators of what skills individuals in AML roles should have. Other factors may also make AML monitoring ineffective. For example, many firms are not fully licensed (instead, a licensed entity has agents and/or distributors who are able to conclude contracts and board clients without having a sufficiently skilled money laundering reporting officer) and criminals simply appoint nominees (known as ‘money mules’) to make transactions on their behalf to evade checks. Additionally, while AML detection technologies are useful, they require heavy integration to get sufficient data into the systems and are often outdated by the time they are embedded.

Around 40 percent of the world’s total of dirty cash flows through the UK’s financial system

While the EU may have identified the problem areas in its drive to curb money laundering, it is another matter whether the steps it is putting in place to tackle the issue will pay off: a lot of different factors need to come together. In the absence of better, more effective and more closely joined-up approaches from regulators to monitor activity, putting a stop to the flow of dirty money comes down to how willing and prepared industry players are to shoulder the costs of compliance rather than pursue clients and new opportunities. So far, taking the money has been a bigger inducement than spending it.

Leading Chile’s pension transformation

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AFP Capital has been recognised by World Finance magazine for its leadership and excellence in Chile’s pension market. CEO Renzo Vercelli shares insights on what this honour represents, the company’s journey toward achieving it and how AFP Capital is navigating the most significant pension reform since Chile’s system began.

Can you describe what it means for AFP Capital to receive this international recognition?
For us, it is a source of great pride, and this recognition validates the effort and dedication of the entire AFP Capital team, who work tirelessly, with innovation and focus, to build a very comprehensive and unique value proposition in the market, enabling us to advise our more than 1.4 million clients in building their pensions.

Chile is currently undergoing a major shift in its pension system. How did you achieve this recognition amid such significant change?
Indeed, this year saw the launch of a major pension reform, which acknowledges the importance of individual capitalisation, adjusts a universal guaranteed pension from the State, rewards the effort of saving for retirement with benefits, and implements a generational fund regime. Private sector administrators like AFP Capital are working with the utmost diligence and excellence to support this process operationally. In this context, amid all the changes required by the regulator to implement the reforms, we have also continued to develop an innovative value proposition for our clients.

Could you describe the key elements of that value proposition and why it might be so competitive in the local pension market?
Our value proposition is based on advisory services, with simple and accessible information, personalised attention, and clear services that make it tangible for each client throughout their accumulation and decumulation stages, so they can make the best decisions. We have seen that it is a differentiated value proposition, recognised and currently valued by our clients; this is reflected in our NPS, service and brand indicators.

What other factors do you attribute to AFP Capital receiving this award?
It has been recognised for its unique and innovative Interactive Streaming system, which is open and reaches more than four million people, including members, retirees and the market. AFP Capital also stands out for its strong focus on digitalising its services, currently offering advisory services through innovations such as remote video calls from anywhere in the country, appointment scheduling for members and retirees, and a website that will become the most comprehensive branch in the future. Additionally, for the third consecutive year, we have achieved international ISO 9001 and ISO 10002 certifications, which recognise the quality of our customer service model and our ability to resolve complaints and enquiries effectively. This makes us the only pension fund administrator with this double recognition, evidencing our ongoing focus on strengthening service channels to offer a people-centred experience.

It is also relevant to mention our leadership in generating returns for our members’ pension funds, which have consistently outperformed the rest of the industry over the past 60 months, thanks to the management of a highly experienced and specialised team in the various assets of portfolio management.

How does this recognition impact your relationship with members?
This award is not only a reflection of our internal work but also of the trust relationship we have built with our clients, who have chosen us to safeguard their future. It challenges us to keep improving, innovating, and responding to their needs with responsibility and empathy.

What challenges lie ahead for AFP in Chile, and how does AFP Capital plan to address them?
In March of this year, the 2024 Population and Housing Census revealed data confirming an evident reality: Chile is ageing. The percentage of people over 65 years old grew from 6.6 percent in 1992 to 14 percent in 2024. In the same period, the percentage of people under 14 years old fell from 29.4 percent to 17.7 percent. These figures not only represent a change in age composition but also raise fundamental questions about how we organise ourselves as a society, for today and also for the future.

Pensions are perhaps the most visible face of this phenomenon. The reform may help address this challenge to some extent, but further adjustments are needed. The retirement age in our country, currently 65 for men and 60 for women, seems insufficient in this context of greater longevity. We are facing a complex issue, considered politically incorrect to discuss, but inevitable to address. We must continue to tackle the low density of contributions by promoting a strong culture of long-term savings and moving toward a more formal labour market.

What are AFP Capital’s projections following this recognition?
This recognition drives us to redouble our commitment to excellence. We will continue investing in technology, training and service quality. We are part of SURA Asset Management, the largest Latin American manager of pension funds with more than 23 million clients, and from Chile, we want to keep contributing to our shareholder’s leadership with innovation, closeness, and solid results in profitability.

We also believe that being highlighted by World Finance at a global level is an incentive to continue strengthening trust and excellence in the Chilean pension fund industry, building on what we have demonstrated we do well.