Finance firms may not have caused the covid-driven economic crisis but will
nonetheless bear the brunt of it in 2021. Debt is already soaring and bankruptcies will
rise. American lenders are well placed to withstand even the severest of scenarios. By
contrast, European banks will brace themselves for consolidations, with lenders in
Greece and Cyprus particularly vulnerable. Indian banks’ non-performing loans will
near 15% of all credits. China’s lenders will also struggle as bad debts near $500bn.
Countries with the weakest financial systems, including Syria, Lebanon and Yemen, will
navigate sovereign-debt crises.
Banks will scramble to increase loan-loss provisions, while central banks and
governments juggle low interest rates and deflation risks. Regulators will keep close
watch, but will also be tested by new payment platforms (think WhatsApp Payments),
as the lines between banks, tech firms and retailers blur. Digital currencies will add a
further challenge: Russia will allow their free circulation from January and China is
launching its own.
Stockmarkets that suffered in 2020 will rebound, as those in Hong Kong and London
weather political upheavals. Trading will widen as mobile apps like Robinhood allow
novice investors to dabble, bolstering stockmarkets in developing countries. Insurance,
too, will widen its appeal as it recovers from 2020’s setbacks, with China leading the