On March 18, Peoples’ Friendship University of Russia (RUDN) hosted the Financial System and Economic Growth national conference with international participation. Professor Artem Genkin (CEO, Consulting & Analytical Union) presented a report, Can the Global Monetary and Financial System Achieve Inclusivity?
There are a number of commonly known factors causing digital inequality, including inequitable access to infrastructure, economic barriers such as high cost of devices and internet services, varying degrees of digital literacy, socio-demographic factors (age, gender, etc.), and geographical disparities.
However, the expert noted that the global financial system cannot become truly inclusive at this point due to several new factors emerging, such as social ratings, blockchain technology, digital platform ecosystems, cancel culture, and the ‘sanctions baton.’ Those create unequal access to financial services for both individual economic agents and entire nations, Artem Genkin empahsized.
According to him, a technology that could further restrict inclusivity is programmable, or ‘purpose-driven,’ money. These are digital currencies that can be programmed to behave in certain ways based on pre-established criteria. For instance, such technology could be used to block children from accessing harmful products or services. The economist pointed out that this tool serves as technological base, including for central bank digital currencies.
There are some alarmists who warn about the potential creation of a ‘digital concentration camp,’ where certain participants in the economic system could lose access to essential financial services. This could occur either due to technological failures or through government actions, Artem Genkin emphasized. For instance, Chinese authorities imposed certain restrictions on individuals and businesses with low social ratings, affecting their ability to make payments and conduct financial transactions.
The expert believes that the era of total globalization is coming to an end. He pointed out that hyperglobalization effectively ended back in 2008, and since then, world trade has entered a period of stagnation, referred to as slowbalization. And more recently, since 2020, the trend of de-globalization has gained significant momentum.
As a result, we are now seeing a new phase of capitalism – discriminatory protectionism, whose primary tool is sanctions, particularly in the financial sector. The economist noted that the escalation of sanctions, much like the decline in global trade volumes, began around 2008.
Nevertheless, Artem Genkin does not support the idea that globalization is dead.
“A full reversal of globalization is unlikely, while regionalization is certainly on the horizon. The world is not evolving into a single global village; instead, it is splitting into several blocs with favorable trading conditions,” the expert believes.
At the same time, de-globalization ultimately results in higher transaction costs for everyone.
“Additionally, we see the global financial system shifting away from a dollar-centric model towards a more polycentric and/or decentralized structure,” Artem Genkin concluded.