Good afternoon, everybody. My name is Bill Dudley. I'm the chairman of the Bretton Woods Committee. It's my job here, first of all, to welcome you, give you a few housekeeping tips in terms of how this is going to run. We're going to run this continuously, so no breaks. There'll be some short interruptions to rearrange some furniture, but that's it.
In terms of where we are today in the world, I think it's reasonable to say that this is a very challenging time. The rules-based international order is under increasing strain, and at the same time, the important issues that would benefit from international cooperation and coordination are actually growing in number and in significance, not just in the traditional realm: international capital flows, macro and economic stability, project finance, but also in relatively newer areas like digital finance, AI, and some old standards like climate and financial regulation, just to name a few.
Asia obviously has a politically critical role to play in all of this. I think it's really noteworthy what's going on in Asia in terms of, especially, innovation and digital finance, also commitment to international trade, and really a benchmark for regional cooperation.
The Bretton Woods Committee, as you all know, is dedicated to fostering international cooperation and coordination because we think we can do a better job collectively than we can do each country operating on its own. And we have three really major agendas currently. First is IFI reform. We think we can strengthen IFIs to be even more effective and nimble to address some of these new challenges that are emerging.
The second is innovation. One example is digital finance. We do need common frameworks. We need to have mutual regulatory recognition. We need to ensure greater interoperability. There's all places where we can make a tremendous amount of progress. The third area I think that's very important is macroeconomic coordination and a continued focus on financial stability. That means strengthening resilience, improving access to capital, and fostering greater economic integration.
The newest policy initiative of the Bretton Woods Committee is really about modernizing multilateralism, how international cooperation can be adapted to new challenges. And we're publishing this week a new paper, Governing Digital Infrastructures: Gaps in a Framework for Growth, which we think really focuses on a key area of challenge internationally. The BWC Multilateral Reform Group took this on. Sedarth Toara held the pen, and so we're very thankful for you for bringing this to conclusion.
Now I think we'll be addressing many of the issues that I've just raised today. But given that today's venue is in Bangkok, I think the best place to start is to start with the Bank of Thailand to give some open remarks. It's my pleasure to introduce Chani Cha Ununan, who's the assistant governor responsible for the Bank of Thailand's corporate relations group.
She's had a very distinguished career before her tenure at the Bank of Thailand. She was a senior adviser in the office of the prime minister, and earlier in her career, and this is like, you know, we're all from the same tribe, was a senior research person at the BIS representative office in Hong Kong. Governor, the floor is yours.
Chair Dudley, Managing Director Georgieva, distinguished guests, ladies and gentlemen, good afternoon and a very warm welcome to Bangkok. On behalf of the Bank of Thailand, it is my absolute pleasure to welcome you to the 2026 annual meeting of the Bretton Woods Committee. I would like to express my appreciation to Chair Dudley and the committee for convening such an esteemed group of policymakers, leaders of international institutions, and financial sector executives.
It is especially meaningful to have this conversation here in Asia. Our region has benefited greatly from an open and connected global economy. We have also learned from past crises that resilience depends on sound policies, strong institutions, and cooperation across borders. These lessons matter even more today. We meet at a difficult time for the global economy. Geopolitical tensions are rising, debt is high, technology is changing rapidly, and climate events, cyber threats, and financial market volatility are becoming more frequent.
These challenges are very different, but they have one thing in common: their effects do not stop at national borders. This means that resilience can no longer be just about responding when a shock happens. We need to prepare before it happens. We need strong institutions, good policy frameworks, and the capacity to adapt when circumstances change. And more importantly, we need countries to keep working together. This is becoming harder. We live in a world that is more fragmented and where agreement among major economies is not always easy to reach.
So the question is, how do we keep cooperation moving forward even when we do not agree on everything? I believe this is where emerging economies can make an important contribution. We can help bring different perspectives together. We can focus on practical areas where there is common ground, and we can help keep dialogue open. This is not about choosing sides or creating new blocs. It is about finding ways to keep working together where we can.
The same practical approach is important for our international institutions. The IMF is reviewing several of its key policy frameworks this year. These reviews are timely because the world in which the Fund operates is changing quickly. From an emerging market perspective, the real test is whether these frameworks work in practice. Good analysis matters. Common frameworks matter. But countries are different. They have different levels of policy space, different financial markets, and different institutional capacity.
This is where the Fund's surveillance can be especially valuable, fostering dialogue that builds a deeper understanding of each country's specific circumstances and constraints. In turn, this can yield more relevant and tailored policy advice as the nature of global risk continues to evolve. Digital finance is a good example.
Technology has made financial services faster and more accessible. But greater connectivity also brings new risks. Cyber incidents, digital fraud, and operational disruption can spread quickly across institutions and across borders. And when these problems become large enough, they are no longer just technology problems. They can become financial stability problems.
The need for practical cooperation is clearly illustrated by the Bangkok Blueprint, which has been jointly developed by the IMF, the World Bank, and Thailand. We are deeply grateful to the MD for her leadership and support, and to colleagues from both institutions for working closely with us on this initiative. The blueprint will be launched tomorrow, so I will not preempt that discussion, but let me simply share the thinking behind it.
Technology alone cannot make our financial systems resilient. We also need good governance. We need institutions to share information and work together. We need to prepare for crises before they happen. And above all, we need to maintain public trust. The blueprint is not intended to prescribe a single model for every country. Rather, it brings together practical lessons that countries can adapt to their own circumstances.
We look forward to sharing it more fully tomorrow and hope it can complement the broader work of the IMF and other international institutions in addressing emerging financial risk. This brings me back to the broader point about building resilience collectively. We cannot predict every shock. We cannot prevent every crisis, and no country can manage these challenges alone.
But we can be better prepared. We can build strong institutions. We can make our policy frameworks more responsive to change, and we can strengthen the cooperation and trust that allow us to act together despite some differences.
Thailand is honored to contribute to this effort as host of this year's IMF World Bank annual meetings, as an emerging market, and as a committed partner in regional and global cooperation. But above all, we are here today to listen and learn. There is extraordinary experience and expertise in this room. So I hope today's discussion will help us think not only about what the risks ahead are, but also about the practical steps we can take together to become more resilient. With that, I wish you all a very fruitful meeting. Thank you.
Good afternoon. I'm John Lipsky, vice chair of the Bretton Woods Committee, and I have the great pleasure and honor of introducing our guests and, I guess, a host for the annual meetings, the managing director, as well as, of course, the Bank of Thailand and the Thai authorities, Kristalina Georgieva, managing director of the International Monetary Fund.
This is always one of my favorite bits of the year. I get the pleasure of having a discussion with the managing director about issues of importance to all of us and to discuss the role of the Fund as well in dealing with the challenges before us. Well, and we know how busy your schedule is. Thank you so much for taking the time to join us at the Bretton Woods Committee annual meeting. We really appreciate it.
John, this is also one of my favorite moments at the meetings. You and I have built a partnership. I think for those who have been watching us, we become more symbiotic every time we sit together.
You are too kind. But now moving to the substance here. Here we are in Asia. And if we think back to the last time we were together in the spring in Washington, the Fund's view on Asia was that the year began with Asian growth on a strong footing but with significant challenges, among other things, from the threat of higher energy prices. The WEO is out. We'll talk about that later. But from the point of view of the Fund, how is Asia doing and how is it dealing with the challenges, and what do you expect in the immediate future?
Well, Asia has proven to be worthy of the expression of admiration for what they have done for themselves, their own people, but also the world economy. As you have probably seen, we upgraded our growth projections for Asia. They were 4.4%, now we are at 4.8%, and that is in a context in which our global projection remained exactly the same: 3.1 in April, 3.1 today.
Asia this year has managed to do better in terms of contribution to global growth than it has done in past years. On average, Asia contributes about two-thirds of global growth. This year, 68%. And the question is, how did Asia manage it? And there are three parts of the answer.
First, countries in Asia that are highly dependent on energy imports, many of them highly dependent on imports from the Gulf, were very fast to reorient towards purchasing from other parts of the world. In other words, they diversified their imports.
Second, Asia in this world of AI has proven to be very fast to integrate in the AI value chain. And third, what we have seen over the last year is that that notion that it is the private sector that drives growth is demonstrably strong in Asia. And let's not forget, Asia has done well to build buffers for times of shock. And these are the buffers that are backing them up.
Now when I say Asia, I'm somewhat misleading because behind the average there is a significant difference across countries. We have a small number of countries that are lifting up the average growth for Asia that we are upgrading, and these are the countries integrating in the global AI chain. Aside of China and India, that together with the US are AI producers, we have countries like Thailand and Malaysia and Korea that are producing key components necessary for AI to deliver, and that is quite amazing to see.
The five countries in Asia that are integrated in the AI chain, we have on average seen growing four and a half percent faster than we anticipated beforehand. So it is quite an impressive performance. Now, does it mean that Asia is free of problems? No.
First, the energy shock is not behind us, and Asia is more energy intensive than on average the rest of the world. Too many countries in Asia are very vulnerable to climate shocks, and this year El Niño is particularly profound. Three, Asia is not free from the force of fragmentation. And when we say Asia, it doesn't mean that this is one happy Asian family.
Within Asia, where I see more a trajectory of integration is ASEAN. And we at the Fund are very committed to support ASEAN to increase that interdependence by strengthening especially trade and being more effective in using digital platforms to speed up this integration.
So to the hosts, Thailand is a country that has always been very, a place where you think about hospitality, you think of Thailand. I want to say that I'm also impressed by the way you think about integrating in a fragmented world with your neighbors, building bridges to others. Today we talked about building bridges to Europe. So when we think about Asia, we shouldn't limit the economic opportunities only to Asia.
So one of the secrets to the resilience is continued open trade flows, especially within the region. Are trade barriers going to be a problem when looking outside the region and for the largest countries of Asia?
What is very interesting is to look at the data on what is going on with trade. We still have most of trade, 72%, done under WTO rules, and the small economies in nature are big promoters of playing by these rules.
We also see the trajectory of regional integration, trading with each other more as a somewhat compensatory mechanism to global trade being more restricted. But we cannot hide from the fact that trade frictions hurt, and they hurt in terms of impact on growth, on GDP, on trade.
But the biggest negative impact comes from the foregone opportunities that would have come if we were to be working more together. And it demonstrably gets into two things, and we see more and more of it. One is duplication. Things are done here, they're done there. More of a notion of, well, maybe we should double down on producing things ourselves.
And we also see it in just less of a notion of we believe that trade would continue to lift us up. That worry that maybe we cannot put anymore our eggs in the trade basket leads to self-restriction. I'm not going to do more.
The reason I remain still more, you know, more optimistic on this issue of trade is because at the same time we see trade agreements, bilateral, plurilateral, increasing. So there is that duality. On one side, there is this worry: trade is not going to be the driver of growth, maybe we should think of self-sufficiency. But there is also that recognition that, of course, we are much better off to seek like-minded, work with them more.
Now, this week we've had two, actually started last week, two important events: one, your curtain-raiser speech, and today, the release of the World Economic Outlook. Could you, on the one hand, synthesize the message of the WEO with regards to the outlook, and also your message about how to deal with the challenges going forward?
So if you distill from the outlook what it says, it is the following. We have been resilient, but this resilience is becoming more fragile. We are being pulled in two opposite directions. The energy shock brings growth down. The big enthusiasm about AI is lifting it up. So we end up with 3.1.
But behind the 3.1, growing divergence in economic fortunes, the countries that benefit from this enthusiasm and those that don't. But actually the most significant message that in my view comes out of the WEO is that after so many shocks that did not push the world economy into recession, there is a real risk of complacency.
And we see a little bit of the manifestation of this risk with some advanced economies being negligent about their fiscal position, not taking action the way emerging markets have done in the past when they would be faced with the same fiscal burden.
And so if you project the next year, what are the two biggest risks? Number one, that high inflation pushing interest rates up with high level of debt of some systemically important economies may create some negativity in the outlook.
Two, we now have a world economy that is standing on one leg, the AI leg. If you look at the rest of the economy, it's not so great. But AI, very good. What if it wobbles? What if there is disappointment and that leads to potentially a more difficult environment? And both risks are very real.
Now, are we to a point in which we predict there would be some negativity in the world economy? No. But there is a part of the WEO that simulates what would happen if these risks were to materialize. Read it carefully. Doesn't make a fun read, though.
So near-term resilience, differentiation, and some significant challenges going forward. Let me take the focus back to the Fund itself because there's also been some important developments with regard to the work of the Fund. Some important reviews: the review on conditionality, on surveillance, and some other points. If you could synthesize, I'm sure this audience understands these things and is interested in these things, but basically synthesize what have been the important messages from these policy reviews and what is the lesson for the Fund going forward.
The three important messages are: first, the world is changing very rapidly. The Fund has to change, lean forward into recognizing what our responsibilities in this changing world are. Our most important contribution to the world is in our surveillance. And surveillance can only be effective if we learn lessons and we look into what the expectations of our membership are.
And there we heard from our Thai host, there is a very strong expectation that we would be more granular, that our engagement is not going to be a cookie-cutter, you have the same recommendations, that we would be much more country-specific, and two, that we would gradually build a regional level surveillance because of the importance of regional cooperation and integration in some parts of the world.
So we now have bilateral surveillance and we have multilateral surveillance, with the exception of the Eurozone. We don't really have regional surveillance, but we must, and that we have to think about surveillance in a way that reflects that rapidly changing environment.
And three, that in our programs, in our action on debt, we should be very candid with our membership as to what is required for success. You ask me what are our policy recommendations? Well, number one, get your macro in shape, and that means bring your debt down, your deficit down, for central banks, make sure that inflation doesn't run loose.
And in that sense, to get, I mean, we are then saying work more together. You know, boys and girls play in the sandbox. So when we think about the reviews, what they're doing for us is to make us integrate what we have learned on programs. For example, we learned something that is actually not so dramatic: that when reforms are necessary and done early, and they are deep reforms, the impact is stronger.
So don't go all over the place with all possible reforms that come to your mind. Concentrate on two, three, but then do them deeply. And this is, by the way, the topic that created most commotion outside of the Fund. People saying, oh, but wait a minute, you are saying do the reforms early, do the adjustment, but adjustments are painful. You need to think about the political economy of reforms.
And we're saying, yeah, of course we would think about it, but we also know that if you are slow to adjust, your people suffer more, your economy suffers more. So in a sense, the reviews gave us a chance to synthesize our experience in surveillance and in programs, to look into our financial sector assessment reports, look at the latest DSA, and then say how can we, for this world of today and tomorrow, bring the lessons from the past to make the Fund stronger.
Great. So you came away from these reviews with some specific conclusions about how the Fund can be more impactful in helping its members. We're in an environment in which there's, as the Fund likes to call it, fragmentation, the risk of fragmentation. What is it that you think the Fund and other institutions can do to foster a return toward a more cooperative international environment?
Well, our most important duty to our members is to hold the mirror so they can see how their policies and institutions look like. And holding this mirror is becoming harder because nobody wants to be told what you do is wrong. So one thing that we need to learn is how we engage with our membership, what we say publicly and what we say in our private conversations.
And then make sure that we are candid when it matters, but not necessarily we create antibodies in our public communications. The second thing I see is do our absolute best to create space for our members to engage, to talk with each other, to have a good candid dialogue.
Recognize that in this more fragmented world we have 191 members. Sometimes it feels like herding cats, and sometimes the cats scratch. But hey, that's the job. And make it so that we help trust to be built at a time when this is more difficult than it was in the past.
I also have a very honest message to everybody saying, I hear you. I mean, obviously we want to improve the Fund. We want to continue to reform, absolutely. But cherish the institutions you have because they are keeping the world together.
And I don't know about you, but I am not 100% sure that we can today create these kinds of global institutions with fairness and even-handedness of the work we do. What do you think, your Bretton Woods, can we create a world cybersecurity organization? How many of you think that we can do it?
Some. Excellent. Excellent. And everybody would be signing in. It can be a world cybersecurity organization with 80% of the world or 100% of the world.
Okay. So that is the issue that I'm a big believer that we have a wonderful family of 191 members and we have to make full use of this family.
Indeed. Well, Managing Director, I think you can sense that this is an audience that is hugely supportive and wishes you great success. Thank you for sharing your time and best of luck in fostering the kind of cooperation, dialogue, and addressing issues this week here in Bangkok.
Thank you very much, everybody. Thank you very much for having me.
Thank you, John. Thanks you. And now we're just going to rearrange the furniture and move on to our next panel.
Your name is like silent J. Thank you. So pronunciation. My name is Qu. Thank you. So if we can, everyone take their seats, we will begin with the second installment of the annual meeting.
And today, this panel, as you've seen from the title, is addressing the rather daunting and broad issue of operating in a fragmented world. And we're in luck of having a wonderful panel to discuss a broad range of issues under this topic. In the interest of time, let me just introduce our panelists. You should have available to you their distinguished biographies.
First to my left is Laura Cha from Hong Kong, formerly head of, well, I get into telling what everybody has done, it'll go on a long time. So to her left is Han Quay Schwan from DBS Bank in Singapore. Next is a friend and old colleague, Sedar Tawari, currently with Chatham House but previously with senior positions in the IMF and elsewhere. And then finally from the World Bank, Anna Breda, who's glad that you could join us today.
So, and my understanding is you have limitations on your time, but I think we're going to be just fine. So, let us begin. A set of issues that can be interpreted very broadly and narrowed down a bit. We're going to start with a very broad question.
What has really fundamentally changed, or have there been fundamental changes in the global operating environment? In the sense we've talked about fragmentation, but the global economy has always operated with geopolitical competition, with financial shocks, with technological disruption. Is there something genuinely different about the current environment, or is it a real structural break in the global order, or just an adaptation, a bumpy adaptation to new realities?
And if I'd ask the panelists, open this to all of them, we'll just go in order of what do you see as the most consequential pressures on the global economy from geopolitics, technology, demographics, debt, energy, or something else? What is different and what is important? Laura first.
I think, you know, we are indeed in a very fragmented world. As you said, you know, the world and the different sectors of market have seen all these changes before: geopolitical tension, which now we call geopolitical competition, technological disruption, these are nothing new. Are there today a break from the past? Personally, I don't think so. I think we are indeed, all these forces are much more complex, more interrelated, interconnected.
But the world in terms of the business world, the finance world will continue to evolve and adapt. So it is not a break from the past, but we do have new forces that make the situation more complex than before. I think the geopolitical competition has made, we now are seeing the weaponization of trade policy, which is much less so than before, the politicizing of the financial market, which was not as much before. I think these are new elements that we face today.
As far as technological disruption is concerned, I think AI just brings in a completely new environment. Whereas before, when we have internet, when we have, you know, the series of different innovations, there is disruption. But I think now AI, in addition to being a disruption, it is also a force of growth. It brings, it adds value. It is also an absorber of huge capital.
Back in, you know, this year I think alone, the AI-related investment is expected to reach two trillion US dollars. Just think about that in terms of the capital that it is absorbing from the developing, you know, that could be deployed elsewhere. So it is both an engine of growth, it is both a disruptor of many systems.
So I think for people who operate in the financial market, in the government sector, policymakers, these are new elements, but not that different from the past, but they are much more complex. And I think the world will adapt to it, will evolve and adapt.
Right. I think from what we observed in amongst our customers, trade has certainly become more diversified. Right. So one of the indicators that we were tracking is the trade outside of the US, and, you know, we call it TOTUS. End of 2025, it is at about 89%. And when we recently tracked it again, it's gone up to 92%. So that shows that trade outside of the US continues. So rather than saying it has disappeared, it hasn't.
The second thing that we also notice is clearly from Singapore's perspective, and what we've also seen in other smaller economies, countries are coming together to look at where they're complementary so that they can then work together to supply what they need. And I think that network itself has been quite instrumental in shifting some of these trade.
Because if you take a look at ASEAN-6 economies, for example, the entire goods and services export is about 30% of GDP, and it's been growing quite nicely at about 6.8% annually between 2000 to 2025. So it's been growing very well.
And then the third one that we observed is rather than saying supply chain is disrupted, and that's since COVID, it is a case of supply chain becoming more intentional for resiliency, for strategic advantage that it can create, and also for more purposeful addressing of markets that are there and the needs.
And what we have seen companies doing is they've adapted it to a local-for-local strategy, meaning if a market is big enough, be it India, be it China, be it the US, they're creating supply chains within these large economies. And then for the smaller ones, like in the case of ASEAN, then it's really region-for-region, where the supply chain is for the region, and the resiliency that they create is the capacity in each of these can then supply each other depending on needs.
So rather than a global supply chain, it's becoming more intentional, and that creates a need that is different in terms of how they would then have to navigate the entire way of managing risk as well as the liquidity that they have. So that's something that we're seeing as a change. I think we can talk more about the financial impact of tokenization and so on and so forth, leave that to later on. But I think that's in general, trade has transformed in that manner, but it hasn't disappeared.
So three changes and one blind spot, and the work that the Bretton Woods Committee is focused on the blind spot. So the first change: for forty years, the system was stabilized by the countries who anchored it. Today, the source of instability is coming from the anchors. One.
Second, and we've all talked about it, the shocks are compounding. Geopolitics hits energy markets, energy markets hit inflation, inflation hits debt, and countries who are on the edge, they get into crisis.
Third, the timing of the technology shock. I think in history it's never happened that it is coming at a time when the major paths are diverging. Technology is moving the fastest, and standard setting is fragmenting.
What's the blind spot? The blind spot is that in the last six months, the discussion everywhere here, spring meetings, outside, has been about AI. There's been almost no discussion about the infrastructure that generates the data on which tomorrow's AI models will be driven, and that's what the work is about. We'll come back to it hopefully later.
So in terms of structural adaptation, I think digital infrastructure has become an instrument of sovereign power. Those who use it and have embraced it are beginning to write the rules. Those who don't will follow the rules of those who do.
You ask for pressures. Geopolitics is obviously a multiplier, amplifier. Debt is a constraint, and it turns shocks into crisis. Technology is a swing factor. It allows countries to grow faster because it allows them to leapfrog. On the other hand, if they are left out of the digital state, they will be laggards forever.
Yes. So, what's different? So, in our institution, the World Bank Group, and also the IMF, we are Bretton Woods institutions that turned eighty just a few years ago. And we actually did a lot of reflection on these eighty years and found that our founding rationale, sadly, is still with us today.
As you know, we're called the International Bank for Reconstruction and Development. It was initially all about reconstruction because we were founded to help rebuild Europe after the Second World War. We then turned to many decades of development, which was a good thing, and I would say now we're back into a lot of reconstruction because of war and conflict, but also because of the prominence and frequent occurrences of natural disasters, and then we're still in the development modality.
So when we looked back, we realized we changed all the time. Every decade there was a new theme that came out that we needed to deal with, whether it was corruption, climate change, gender issues, always something new. Right now we're extremely preoccupied with all the issues that you just mentioned, infrastructure, but also the incredibly high level of indebtedness in countries, which just keeps getting more severe because of all of these associated issues. But we've always kept changing.
So I think what's different is really that you start being created for something, you're still around eighty years later. Are you still relevant? And that's the question we ask ourselves today. What's the consequence? And the consequence is that while countries have been quite successful at reducing drastically extreme poverty, we still have a lot of poverty.
And even I would say extreme poverty in the last several years, with COVID, with other shocks, we've seen a climb up in some countries. So what we've been doing at the World Bank Group at the last few years is really to say, to see how do you best address poverty, and we have really come to the conclusion that we need to address poverty through job creation, because it's not sustainable to think about poverty as something that you can handle through public sector interventions or temporary fixes or cyclical episodes.
So we are all about jobs, and we've looked at this very carefully because we've always been about jobs. What's different this time around is that we've taken the jobs focus to everything we do. So the problem we have in front of us is about one point two billion people in the next ten to fifteen years will be of working age in the developing world. We estimate about four hundred twenty million jobs. So we have a huge gap, and this comes at a time of huge uncertainty and a lot of unrest among young people.
There's an impatience, there's a disenchantment, and there's a willingness and an interest to co-create solutions. So we really need to understand our target that we're trying to address. So we have really worked on an operating model that we believe needs to be put in place. It's ambitious and it's practical. Three pillars.
The first one is actually infrastructure. You can't do anything without infrastructure. But it's both hard infrastructure and soft infrastructure. So it's ports, roads, energy, digital, but it's also health and education. It's the policy regulatory environment that allows for a business environment that provides predictability, because the other reality is who creates jobs? It's the private sector, and governments and policymakers create the enabling environment.
So our job, in fact, my job, as I oversee the public sector side of the World Bank's operations, is to enable the private sector through good policies in countries, good investments, foundational investments that the private sector says, we'll come in and invest, but you have to do some foundational backbone infrastructure before we can come.
And then the third one is, of course, the private capital mobilization that comes if you've got infrastructure, you have the business environment, and then you can capitalize, you can mobilize capital. So this is what we're all about now. And I was intrigued by what you said, companies adapt and evolve. It's true.
Institutions can too, but we tend to be slow. And we can't afford to be slow because what we also have the motto of in our institution now is development delayed, development denied. You cannot take 10 years to build a school. You cannot take 10 years to build a road. You cannot take 10 years to change a legislative or policy framework to make it better for the private sector. So we're in a hurry. We're in a major hurry to transform our organization. And just to say, a couple of weeks ago, we announced that from 2022 to 2026, we mobilized capital from 35 billion to 112 billion, showing you that in three years' time, four years' time, it can actually be done. And we're not stopping here. We think this is the way we have to go. And that's really the journey that we're on.
Let me follow up on two aspects, if I could, on the bank. So what you're describing is this significant difference in the way the bank is operating, or it's doing the same things only much faster, or is it doing different things?
Yeah. So it's a bit of both, I would say. We introduced a new scorecard a couple of years ago, and what we found with this scorecard is we went from about 150 indicators. And for those of you in the private sector, you will say that's absolutely way too many. How can you focus on anything if it's 150? True. So we happen to have a president who came from the private sector who says you got to really bring that down. So we brought it down to 22. Then we looked at the actual indicator results and we realized, we joke about it but it's not so funny, that we mobilize money like an investment bank but our results are like maybe more like a smaller NGO because we were too fragmented. So one big finding is you have to focus, you have to be selective, you have to prioritize because if you don't, you get nothing done at scale. So our business is now scale. So we've become what we call mission-driven. And one of our first missions, one that I championed personally a couple of years ago, is what we call Mission 300. Mission 300 is to basically say in Africa you have 600 million people. Today it's actually more because of population growth. It's hard to keep up. 600 million people without access to electricity. It's the only place in the world where 50% of the population does not have access to electricity in this day and age. So we said that's unacceptable. We're going to cut it in half. Hence the name Mission 300. So by 2030 we want to achieve 300 million people with access to electricity. We're going to do 250. African Development Bank is doing 50. We're right now at about 59 and the African bank has another maybe five or so. So let's say we're at 65. I'm awake every night thinking who do I call to help me? Because we can't do it alone. So now we have a massive partnership around this including the private sector and other institutions that are working on this and I think we're going to get there and even if we get to 250 together we're going to be much better off than we otherwise would have been. So one is taking a more selective approach, being more ambitious, but also having practical tools. What Mission 300 has helped us do is get 40 countries in Africa to come up with our own compact for access and then our financing flows out of that compact. These five pillars across policy, regulation, investments, private sector particularly in renewable energy because that's been a game changer on technology. You can get access done in less than a year for so many people now through distributed renewable energy. And we've done this across health, digital, water. We're doing it now with the mining and minerals compact. We're actually doing something with that this week. So I think what's different is we're not admiring the problem anymore. We're not diagnosing it anymore. We have an operational tool much more like a private sector mentality. And then we have a scorecard that I call a mirror and a map because I don't measure my own results anymore. AJ took that away from me and gave it to an independent little arm who basically every month sends me my report card and then I have to accept that because they have a very rigorous outfit with data scientists and I don't even dare to question it. But it's very helpful for me because I see where I'm on track, off track, and then I need to get to work. So that's how we're working differently and I think it's been a fascinating journey for someone who's been almost 30 years in the institution.
Sounds like a significant difference in at least the operating procedures at the bank. Thanks for sharing that. Let's turn back to Asia. Where we started with the managing director was how not just resilient the Asian outlook has been despite the challenges, but in the latest WEO the fund has actually increased their growth forecast for Asia. For Laura and for Han, what are the elements that have been critical for that resilience? And looking forward, is Asia going to be able to, or what does Asia need to do to continue that growth leadership in terms of capital formation, etc.?
Laura, please. I agree completely with what the managing director just said about Asia. In Asia we have three major vibrant economies in China, in India, in Japan, and we also have very important economies like Thailand, Indonesia, Malaysia. These are really, we used to call them dragons, but no longer now, they are really big economies in their own right. At the same time we have three important financial centers. We have Hong Kong, we have Singapore, we have Tokyo. It really is this engine of growth. But what have we learned? I think our resilience, Asia's resilience, came from lessons learned in the Asian financial crisis. I think in the Asian financial crisis, we've seen the governments, the different Asian governments have really learned their lessons and have instilled discipline. We've seen that in South Korea. We've seen that in Thailand, in Indonesia, in Malaysia, the smaller jurisdictions like Singapore and Hong Kong, which are less affected. But overall, the lesson from the Asian financial crisis has really brought in the discipline that enabled in the last 20 years for these economies to grow and prosper. And what are we going to look ahead in terms of Asia for these economies to continue? I think it's one, the innovation that is happening in this part of the world. Two, and also the interconnectivity our friend mentioned about the regional within region. I think Asia in Asia, Asia for Asia, the trade flow part of it is driven by the global environment, the fragmentation or the fragmentation of globalization, and it makes regionalization much more important. And then within Asia because of the large economy we have seen the supply chains complement each other. So these are factors that have enabled Asia to sustain, to have grown and I think looking forward Asia will set the example in the digital area as well, not only in innovation but also in the adaptation and in digital infrastructure. So some of these are unique to Asia but some of them are not, but generally with the financial discipline we can see that it creates a good backdrop for the continuous growth.
I think from my perspective it's quite obvious that as what Laura said, Asia has come out a lot stronger now having learned through the past crisis on having a strong balance sheet not just at the government level but also at each and every one of the enterprises that are operating in these markets. So with a stronger balance sheet and seeing the opportunity for local for local or solving for region for region within Asia that provides a very very important backdrop for companies to come in and invest and to grow. The second thing that Asia has which I think is obvious to everybody in the room is demographics. Asia continues to be very very young and I think that is a big difference because one has got the energy of youth to be able to go out and do the work. Two is got consumption and I think more importantly it also drives a lot of innovation. The third thing that plays to Asia's advantage is Asia has always been about trading. So Asia has been trading with each other quite well. I think right now the total trade within Asia is about 60% of what you would see and actually 18 of the 20 fastest growing trade corridors is in Asia. And I think that adds to the resiliency and the growing markets that you see provides the demand and the innovation that comes about because there's a lot of things that need to be solved. So the innovation that comes with solving little problems that they see that grows into businesses becomes one that creates that energy and momentum and I think this becomes a very attractive destination for private capital to come in. So we've seen private equity coming into the market. There are lots of Asian focused private equity funds. The private credit market in Asia is very healthy unlike what you see in the developed markets and that continues to reinforce for private capital to be able to invest, exit and reinvest. So I think all those are sort of the flywheel that exists with the demographics, the innovation that comes with it, the success that the capital gets and that whole thing just cycles through which then gives Asia the resiliency that we're seeing today but built by the foundation of very strong balance sheet from the government as well as amongst the companies to learn from the lessons in the past.
So basically what you're saying is more of the same is going to continue with the fundamentals and policies should produce resilience and sustained growth.
Yeah. But I think I'll put one caveat behind that. I think the caveat behind that is as Laura indicated earlier and the whole capital market that we're seeing in terms of the demand, it's really driven a lot in the developed markets world both from a public debt in the developed market I think they're hitting about 110% of GDP right now if you add in the Europeans and the US and that's a huge drain on the entire capital market where the money goes. The second one obviously is the entire data center build out that you see in the US again. So all those are competing the needs of what Asia would require and quite a lot of the global capital are directed in that direction. So capital scarcity in some sense in Asia could be the brakes that prevent Asia from going where the trajectory is supposed to be.
But do you see this as implying either sectoral changes in terms of the Asian economies and or changes in markets and market destinations?
Yeah. But I think sectoral changes again, AI is such a big theme throughout the whole world. And in Asia itself in every conversation that you have in every market it's about oh I need to build another data center but is it for Asia? Not necessarily because this is for global demand and they're looking for diversification of geographies or where they can locate the data centers and I think the current war in the Middle East shows that you really need diversification you can't depend on saying I'm going to put data centers in the Middle East and I think that's going to be safe that may not be the case as we have seen and so data centers are growing in Asia as well not in any specific country but we are seeing it right across in all countries and powered land then becomes really important for data center because without power you can't have data centers. So that's shifting a little in terms of where the capital investments are going into in Asia.
So there's going to have to be a lot of new innovation in investment in innovative infrastructure and energy in the region.
So that sounds like a perfect lead into Sedart to tell us everyone seems to have a version of the optimism about the future is a version of the same story. Technology is going to produce in the short term huge investment opportunities because in the longer term it's going to produce productivity gains and output. You've recently held a pen in a Bretton Woods committee report discussing as you discussed already mentioned the unment or the blind spot in this optimism. Why don't you tell us a little bit more about that and what you think is the right message here?
So the work that's been done has been on digital infrastructure and as everyone knows it serves three purposes. First it allows countries to leapfrog. We've seen it in Asia, in India, in Thailand, in Korea. Second, it gives countries a seat at the table. Those who embrace it define the rules of tomorrow. Those who don't will play by someone else's rules. And third, it determines how data is generated on which tomorrow's AI models will be met. So so far leapfrogging has been open to countries who can do what technologists call as a full stack model takes 50 to 200 million dollars to do it. That's about an 18 to 24 months period. Reality is about 100 countries in this world cannot do it. They don't have the capacity to do it. And that part has been solved by what is fast becoming digital infrastructure as a service. It's cloud-based. It can be downloaded. But deployment technology doesn't solve the governance problem. The paper that's been released today talks about essentially three gaps in the governance architecture. And all three gaps are three faces of the same problem. And the problem is that no one, absolutely no one, owns the responsibility for making these systems work together for everyone. There's a governance gap that there's no forum where countries can agree on standards. There's an adoption gap that for the 100 countries I mentioned institutions are lacking in helping them adopt and there's an accountability gap that when an accident happens there's a lack of a framework to determine its origins and how to deal with it. There is no reason to think that you need a new institution to attack this. The same institutions who operated for the last 80 years as Anna mentioned can do it for the digital age. The G20 can be taking the lead in this though. OECD can harmonize the standards. The IMF needs to do much more as a universal institution to plug this gap. Its middle name is monetary. Money has been tokenized. And you can guess where I'm pushing for the institution to go. The bank can finance deployment conditioned on openness. Regional development banks go the last mile. Africa needs a BIS innovation hub. It's absent. And digital finance and development finance needs to be reoriented. The last number I saw was less than 5% of the loans are going for digital infrastructure. That number needs to go way above and that's what's needed for change to happen and that's the paper that was released today.
So let's come back to Asia and the optimism about growth and innovation. Is there a prospect of greater technological integration along the lines that Sedarth has just talked about in terms of making these new systems interoperable, first within the region?
Maybe what I can do is I can share on a project that I am leading as part of the APEC business advisory council out of Singapore being a member of the council. I think one of the things that we realize particularly in the case of Asia in the APEC context is the fact that systems from all the countries are quite different. I think if we want to go down the line of saying let's create a common systems across all the systems. Let's get funding from IMF from World Bank to try to get them to pay for the same system. I think that will take a very long time and that in itself doesn't really work. In fact, what actually works is what I would call a trusted and authenticated data. Because for data to flow between countries and then to enable trade to flow smoothly we felt that it was important for the countries to recognize that perhaps there is a common data framework that all the countries can adapt to. Whatever systems that you use does not matter. But if the data structure is consistent and that there is an agreement on how that data can be trusted and authenticated for it to be shared, then I think that would move sharing of trade information flow at a much faster speed than what it is today. And that will also enable financing to happen for cross-border trade to happen a lot easier taking out any fraud along the way because that same data is common between countries.
And I think happy to share that that in itself is going into the APEC ministerial meeting in Sanjin in November and is accepted. So it will be presented as a recommendation for countries in APEC to come together and say this is what APEC will do to try to adopt and countries start to look at a common data infrastructure or data set that we are recommending out of Singapore and that could help perhaps fasten the integration of trade information and enable greater financing and perhaps uplifting some of these poverty that Anna talked about that you see across Asia.
Now that sounds like something that you would describe as more than evolutionary but rather a breakthrough in terms of an approach.
I think it would be because a lot of times we tend to think along the lines of systems. But if you go one level down, we hardly talk about a common data structure that we can all agree to. And I think that's a lot easier to get agreement than to agree on systems which takes a very long time.
If I could, I agree with you completely. I think that there will be a breakthrough for common data, common sets of data to be used and certain common standards. I think nowadays when we started this conversation about fragmentation, one element which is stronger than before is the notion of security, national security that comes into all kind of policy aspect. So you know in AI about technology system the competition the national security has often been used not only in technology but in other aspect of policy as well. So I think that is an uncertainty and that is the different aspect that is not as evident as before is the consideration of national security and the resilience. We talk about resilience. Resilience of systems, of policy, of sustainability. Resilience is the opposite of efficiency in a sense that because resilience you need to build in a lot of safeguards and that is not as cost effective as before. I'm not advocating it one way or the other. I just want to point out that difference.
Now, if we turn attention to the United States, I would say that the approach there is rather Maoist. Let a hundred flowers bloom and we'll see who's the winner. How does that square with what you're describing of at least an ASEAN approach to creating a data framework?
I think the data framework itself does not prevent innovation. But rather is just a recognition that in order for example trade finance to flow smoothly. So all the trade data around shipping around goods needs to be common data structure that can be shared. So companies can still innovate on the back of that on what they want to provide as services and similar to the US is literally let a thousand flowers bloom because anyone can then innovate on the back of it in providing the best solution for users of that data.
So if I could, what you're suggesting could happen and sounds like you hope will happen would not be an element of further fragmentation but rather regional efficiency consistent with international interoperability.
I think it becomes one whereby if it does work within a region itself and it found to be helpful then companies that are used to that information could well be looking for similar kind of setup elsewhere and that same information can be that same data structure can be shared across different organization across the world and perhaps even through BIS innovation hub we could share that through BIS and then that in itself is something that could then be propagated right across the different parts of the world as banks get involved with financing based on a trusted set of data. But I must add that that in itself brings about a different issue which is the risk of cyber security and I think that itself is very real and how do you think about that? How you protect yourself against that in the age where AI hacking is becoming common and that brings about a different set of problems. You know in an ideal world where we can share you're not afraid of hacking that's fine but in this world that we're in where hacking is real and it happens every day every minute that we're living now then how do you protect that and I think resiliency becomes a very important factor in that whole equation.
And of course it sounds like this innovation as you've all mentioned going to require very large scale investment hence implications for financial markets and capital flows to how this develops. Sedar do you have any comments you want to add to this?
Yeah, I was going to say that the US approach is to allow 99 flowers to bloom but not one. And by that I mean that the private sector can tokenize, provide tokenized money but the sovereign the central bank is prohibited from tokenizing and that's very different to Asia that the anchor in United States is prohibited from playing by the same rules as the private sector whereas in Asia there's a level playing field that the sovereign and the private sector can embrace the same technology as the business model demands and what you said I think in terms of the approach on data on identity on AI on cross-border flows I think it's the first framework we are seeing globally where regions are coming together regionally and agreeing on one thing and it's also very pragmatic that everyone is not forced to join it at the same pace that they join it when their systems are mature and I think it's a good example for moving forward globally.
Anna, what is the bank doing about this or is this in essence outside the scope and too far advanced for your basic anti-poverty client base?
Yeah. So yesterday when we started these meetings, we started the morning with a session on AI which might be the way I engage on this topic which is captured in the World Development Report this year which we looked at AI in developing countries. What's the opportunity? What's the challenge? And what we found was certainly what does AI require to be like what we call large AI? You need a lot of energy. You need computing power. You need data that moves and you need skills. Very few developing countries today have all of that in place to be able to be a large AI player. But what we have found is that our clients can do what we call small AI which are more practical localized applications that are task specific and it's a game changer. I've seen it firsthand in so many countries. If you can have a farmer who is connected digitally to other farmers to a market and we have the open network agreement in agriculture and agritech now which we can make available. It's a game changer because they can know what market is where. They can know what fertilizer prices are and they can use their digital modality to even do crop disease diagnostics very very quickly and be able to arrest it. So we think small AI applications are game changers. What the WDR found was that every country is playing around with it but no one's gone to scale. So what we really want to see is the adaptation pace picking up so much faster so that every process, every task that lends itself to productivity gains and growth can take advantage of what we call small AI. The other thing we found is that only about 5% or so of jobs on average are at risk in developing countries. What's the opportunity however is that you can get so much more productivity out of the workers. You can actually get growth through AI. And what we also found is that in many countries and I was just in Europe and talking to some of our counterparts that used to be more part of the central eastern European region. They have such an aging population the workforce is shrinking and their AI can also fill in. So if you look at it from an optimistic point of view, it can actually fill a lot of opportunities and solutions for a lot of different problems. But the bottom line is we're quite optimistic about AI in developing countries, but it's small AI. That doesn't mean they shouldn't double down on energy and computing power and data and digital connectivity and the skill set of course, but we think you don't have to wait for that to be able to benefit from AI.
Is the bank going to take a leadership position in this area in terms of developing and diffusing this technology in its clients?
Yes. So that's what we're doing. Every we are really this year with the basis on this WDR now we're really looking at a kind of AI in a box for every client. What does every client setting present sector by sector task by task to be able to deploy better AI but it's again through this small AI and I've just seen so many great examples I want to make sure that they multiply by multiple times so that we can see more of them so this is our future and if you look at I was intrigued by some of this shared data when we look at the work we do in agriculture now we want farmers to have access to a common data set so that they have a level playing field in a way. So we're working under an initiative we launched called AgriConnect which is really to make digital enabled farming and we've partnered with organizations like Google who actually have provided a free platform for this for clients to be able to tap into with a couple of other partners. So we think that there's lots of opportunities to take this much more to scale. We have a digital strategy where we want to see about a billion people connected to internet and digital services again by 2030 and this is taking off but it needs energy as you were saying. I thought that was good the blind spot is how do you get the natural resources required to motorize this so we need to continue to work on that that's the foundational pillar in our job strategy which is foundational infrastructure so we're back at investing a lot in infrastructure. That's what we're looking to do. They're very large. They require a lot of money. So the public sector can't do it all. So we need to get the private sector in and we need to get partners. So co-financing is a big part of our game now. And we have created a co-financing platform and we have so many partnerships now with all the other multilateral development banks. We meet much more regularly and we have also introduced something called full mutual reliance framework with ADB and the Inter-American Development Bank which means if there's a project that they have identified with a client and it needs funding we can come in and provide funding without overlaying it with our process. We basically trail them with our funding and they process the program and we can also lead and they can trail us all for a client not to be burdened by two institutions for the same project.
