The Banking Executive Magazine - July 2024 Issue

Eurobonds Global Market holders, particularly banks, bought bonds, bringing the total owed to for- eign creditors to $16 billion, hoping to profit from the Eurobond price in- crease if reforms are implemented and an agreement is reached with the International Monetary Fund (IMF). In Lebanon, the risks incurred by the state and Banque du Liban (BDL) in connection with the Eurobonds on which Lebanon defaulted in March 2020 are high. The risk of legal ac- tion by holders of Lebanon Eu- robonds is increasing. Since Lebanon defaulted, the holders of Eurobonds have a straightforward debt claim against the state for non-payment. I MPACT OF EU ELECTION ON EUROBOND MARKET French bonds and bank stocks were rocked by political turmoil following European Union Election in June 2024. French markets endured an- other brutal sell-off as political un- certainty unleashed the biggest jump in the premium investors demand to hold French government debt since 2011 and bank stocks tumbled. France's Finance Minister Bruno Le Maire warned the euro zone's sec- ond-biggest economy faced the risk of a financial crisis with the far right winning of parliamentary. French banks were hit hard. The country's biggest three banks, BNP Paribas, Credit Agricole and Societe Generale, have lost between 12-16% in value, the highest loss since the banking crisis of March 2023. The recent European parliamentary elections have brought despair for some parties after a substantial shift to the right shook the political foun- dations of the European Union. A stunning defeat of the Green Party, which had performed so well in the 2019 elections, also shows European voters’ declining enthusiasm for the Green Deal and other climate poli- cies. Fundamentally, the center right and far right achieved significant victories in EU Elections and this will shape European policy for the coming five- year term. It is worth mentioning that the EU is the second-largest economy globally in nominal terms (after the US) and third-largest by purchasing power parity (after China and the US). Its GDP in 2024 is approximately $18.98 trillion (nominal) and $26.64 trillion (PPP). Key sectors include services (70.7%), industry (24.5%), and agriculture (1.5%). Exports and imports play a crucial role, with major trading partners like the United States US, China, and the United Kingdom UK. EU DIGITAL FUTURE TOWARDS FINANCING DEFENCE TECHNOLOGIES To move away from a technosolu- tionist approach, it is important to envision a future where technology serves humanity, democracy, and the planet. The European elections in 2024 raised concerns over the con- tinuous progression of the far-right within EU democratic institutions. With over twenty years of experience advocating for a free, fair, and open digital environment in Europe, a shift to the right poses a grave threat to Eu- rope fundamental rights. Looking ahead to the next mandate of EU institutions, there is anticipa- tion of a rise in the market domi- nance of large tech corporations and the implementation of draconian state surveillance practices. Much discussion surrounding the elections has focused on how tech- nology could potentially address complex sociopolitical issues such as climate change, job insecurity, and the militarisation of public spaces. Technology is seen as the fastest route to profit and growth, yet its so- cial and environmental impacts are ignored. In light of the European elections, the conservative majority forming the new European Parlia- ment is expected to prioritise backing defence technology, especially for immigration and border control. This will be manifested in the politi- cal push for age verification, under- mining encryption, and the mass surveillance of digital lives. DEFENCE EUROBOND RISING During the eurozone crisis, the EU created a legal instrument, the Euro- pean Financial Stability Facility. This allowed to issue bonds with a lend- ing capacity of € 440 billion. With the COVID pandemic, this was repeated as the EU adopted a recov- ery fund with a firepower of € 750 billion, financed through common debt issuance. ISSUE 187 JULY 2024 the BANKING EXECUTIVE 13