International Finance - September 2025

EDITOR’S NOTE

Sharjah: UAE’s growth engine

In 2025, Lebanon's financial environment underwent a major transformation when the country's Parliament enacted legislation to lift banking secrecy, signalling a landmark reform in the country's banking sector.

Banking secrecy had been an obstacle to combating tax evasion, financial crimes, and banking administration violations. It served as a shield for banks by preventing the disclosure of financial transactions to Lebanese authorities, which is why its lifting faced some opposition in Parliament. The new law aims to enhance transparency, rebuild trust, and attract foreign investment to Lebanon.

Turning our attention to South Asia, it’s been one year since Bangladesh underwent a profound transformation following the ouster of Prime Minister Sheikh Hasina in the student-led uprising. Have things really changed for the better? We will take a detailed look at the situation.

Talking about Asia, another trouble is brewing in the southeastern part of the continent. Despite declining inflation and a rising national Consumer Price Index (CPI), Laos is staring at the likelihood of a default on its government’s massive debt. Overinvestment in the energy sector and an ambitious infrastructure plan funded by Chinese loans have turned Laos into one of Asia’s biggest borrowers.

The cover story of the September 2025 edition of International Finance spotlights a promising development in the UAE economy— Sharjah's remarkable rise. Amid regional uncertainties, Sharjah emerged as the Gulf nation’s fastest-growing Emirate for foreign direct investment in the first half of 2025. As the UAE’s third-most populous city, it is witnessing a surge in new projects, job creation, and industrial expansion. The feature sheds light on how Sharjah positions itself as the Middle East’s new growth engine.

SEPTEMBER 2025

VOLUME 25 ISSUE 52

editor@ifinancemag.com www.internationalfinance.com

SHARJAH: UAE’S FASTEST-GROWING INVESTMENT HUB

Sharjah’s long-term goal is to facilitate an integrated investment environment supported by a futuristic economic vision

IS LAOS FALLING INTO CHINA’S DEBT TRAP?

Laos' sovereign debt crisis dates back to the early 2000s, when public debt exceeded 140% of GDP

TRUMP'S BITCOIN DREAM COLLIDES WITH TARIFF REALITY

Bitcoin mining is a brutally competitive, low-margin business, which has only intensified in 2025

THE FALL OF LEBANON’S BANKING FORTRESS

Despite the reform being quite accommodating, the banks are opposing it

THE DISTURBING SHADOW OF AI PSYCHOSIS

In such cases, people undergo delusions without symptoms like hallucinating voices

FEATURES

30 Bangladesh's economy: Surviving the aftershock

48 The future of fun: Gaming goes mainstream

68 Starlink: The Pacific Islands' digital lifeline

90 AI unfiltered: The high stakes of truth-telling

76 Can Bluesky stay small and win? www.internationalfinance.com

Director & Publisher Sunil Bhat

Editorial

Prajwal Wele, Agnivesh Harshan, CL Ramakrishnan, Prabuddha Ghosh

Production Merlin Cruz

Design & Layout Vikas Kapoor

MAI-DxO marks a significant milestone in the integration of AI into healthcare, showcasing higher accuracy and lower costs than human doctors

OPINION

56

JON GIULIANI

SHORT-TERM RENTALS BANK ON FINTECH FIX

While short-term rentals can generate attractive returns, they are inherently volatile businesses

EDITOR'S NOTE

Sharjah: UAE’s growth engine

iPhone Air: Last model with titanium frame

Spirit Airlines eyes more cost cuts

Technical Team Prashanth V Acharya, Bharath Kumar

Business Analysts

Alice Parker, Indra Kala, Stallone Edward, Jessica Smith, Harry Wilson, Susan Lee, Mark Pinto, Richard Samuel, Merl John

Business Development Managers

Christy John, Alex Carter, Gwen Morgan, Janet George

Business Development Directors Sid Jain, Sarah Jones, Sid Nathan

Head of Operations Ryan Cooper

Accounts Angela Mathews

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# TRENDING

Ramaswamy-backed Strive acquires Semler

Strive Inc., the asset manager turned Bitcoin treasury company run by former Republican presidential candidate Vivek Ramaswamy, will acquire Semler Scientific, making the combined entity one of the largest corporate holders of Bitcoin. The all-stock transaction will give Semler shareholders Strive shares instead of cash, with each Semler share exchanging for 21.05 shares of Strive Class A stock, a 210% premium over Semler's pre-deal price. Strive recently purchased 5,816 Bitcoin, or about $675 million, boosting its total holdings to 5,886 BTC. The deal comes less than five months after Strive announced a merger with technology company Asset Entities as part of its plan to list on Nasdaq and pursue a strategy of buying and holding bitcoin.

The iPhone Air is the last model to have a titanium frame, as all the Pros (and the vanilla model) switched to aluminium in 2025. Given that the device is only 5.6mm thick, durability is a concern. The new Ceramic Shield 2 is three times harder to scratch than the previous Ceramic Shield. According to the new European Union Energy label, the solution scores a 5 on the Mohs scale (a qualitative scale used to measure scratch resistance of minerals), up from a 4.

Microsoft will spend more than $3.3 billion on a data centre in Mount Pleasant, in the southeastern corner of the United States. The new project, which will be a second massive AI data centre in Wisconsin, will start operating in 2026, employing about 500 people at its peak. Over time, the staff strength will expand to about 800 people, according to Microsoft. American presidents of both parties have targeted Mount Pleasant in recent years. It was first home to a proposed $10 billion factory by Foxconn.

Executives of the alliance that installs renewable energy in developing countries now plan to invest about $7.5 billion over the next five years and are looking for more philanthropic partners. Launched in 2021, the Global Energy Alliance for People and Planet has aided 30-plus countries in strengthening electricity grids, establishing battery storage, and generating employment in the green economy. It secures capital from charitable or governmental sources, apart from multilateral banks and private lenders.

ECONOMY

Trump tariffs’ full impact pending: OECD

Despite the global economy remaining resilient to US President Donald Trump's tariff warfare, the OECD (Organisation for Economic Co-operation and Development) still expects a significant hit from the phenomenon and believes that front-loading was part of the reason it raised its 2025 outlook for world growth and for most individual economies. Firms stockpiled goods ahead of the implementation of the tariff hikes, which lifted the effective US rate on merchandise

imports to an estimated 19.5% by the end of August — the highest since 1933. However, the OECD made only a slight adjustment to its 2026 predictions, as it expects global growth to decline to 2.9% from 3.2% this year, with the boost from inventory building already fading and higher tariffs expected to weigh on investment and trade growth. The OECD now forecasts American growth to slow to 1.8% in 2025, with immigration control and inflation leaving their imprints too.

Ones to Watch

TIM HEATH FOUNDER OF YOLO GROUP

The Australian billionaire-led Yolo Group is in the final stages of securing two B2B gaming vendor licences in the UAE as it moves to consolidate its operations under a single regulated brand

SIMA GANWANI VED FOUNDER OF APPAREL GROUP

Dubai-based Apparel Group has announced a strategic partnership between its flagship loyalty programme, Club Apparel, and UAEbased fractional real estate ownership platform PRYPCO Blocks

AARON LEVIE CO-FOUNDER OF BOX

Box launched its developer conference, BoxWorks, by announcing a new set of AI features, integrating agentic AI models into the backbone of the company’s products

Spirit Airlines plans to furlough a third of its flight attendants amid dwindling financials

BYD has cut its annual sales target by as much as 16%, to 4.6 million vehicles

Spirit Airlines eyes more cost cuts

Financially strained Spirit Airlines' CEO, Dave Davis, has rung another warning bell, stating that more jobs will be cut as the carrier aims to trim its November 2025 schedule by 25%. This move aligns with the airline's strategy of cutting costs after filing its second bankruptcy in less than a year.

In fact, Spirit Airlines plans to furlough a third of its flight attendants (about 1,800 employees) amid dwindling financials. The company aims to reduce its annual spending on pilots by $100 million.

The cuts are a similar percentage to those made when it emerged from bankruptcy in March through the end of June, and according to Davis, the new steps show how the airline is adjusting its short-term schedule while attempting to cut costs. The discount airline is negotiating with vendors and aircraft lessors and evaluating its fleet size as it looks to shrink to find more solid ground.

“These evaluations will inevitably affect the size of our teams as we become a more efficient airline. Unfortunately, these are the tough calls we must make to emerge stronger. We know this adds uncertainty, and we are committed to keeping you

informed as these decisions are made,” the CEO wrote in his note to employees.

“We have engaged our labour unions to discuss the impacts of the network and fleet adjustments on our team members, and we will share more as these discussions progress,” he added.

Spirit has also called a meeting with the pilots' union, the Air Line Pilots Association (ALPA), saying, "We are available to continue to negotiate every day thereafter to reach a consensual agreement" by October 1.

According to a separate memo, also reviewed by CNBC, from Spirit COO John Bendoraitis, ALPA has warned pilots: "Even at this early stage, one fact is inescapable: our contract will not remain untouched."

If an agreement is not reached by October 1, the company said it will seek relief from contractual obligations, as allowed under the airline's bankruptcy protection.

The embattled airline will suspend an additional 40 routes in its November schedule. In a memo defending the decision, the carrier stated, "These network changes affect several routes that are seasonal or operate only on select days of the week."

Berkshire ends investment stint with BYD

Legendary investor Warren Buffett's Berkshire Hathaway has fully exited Chinese electric vehicle giant BYD, a filing showed, ending a 17-year investment that grew more than 20-fold in value during that period. The filing by Berkshire's energy subsidiary recorded the value of its BYD investment as zero as of the end of March, down from $415 million at the end of 2024.

The "Oracle of Omaha"-led company began investing in the Shenzhen-based automaker in 2008, when it paid $230 million for about 225 million shares, equivalent to a 10% stake at the time. It started selling those shares in 2022 after BYD's share price rose more than 20-fold.

Li Yunfei, BYD's general manager of branding and public relations, thanked Berkshire in a post on his official Weibo account, writing, "We're grateful to Charlie Munger and Buffett for their recognition of BYD, and for their 17 years of investment, support, and companionship."

Munger, who was Buffett's long-time partner at Berkshire, had served as the conglomerate's vice chair for 45 years until his death in 2023.

Munger also had a special bond with BYD founder and CEO Wang Chuanfu, as he reportedly commented, "This guy is a combination of Thomas Edison and Jack Welch — something like Edison in solving technical problems, and something like Welch in getting done what he needs to do."

While Yunfei described the stake sale as a "normal" stock investment trade, the news comes amid the Tesla rival witnessing a quarterly profit fall for the first time in three and a half years, as its expansion hit a speed bump amid Beijing's campaign against price wars.

BYD's domestic sales, which account for nearly 80% of its global shipments, fell for a fourth straight month in August. It has cut its annual sales target by as much as 16%, to 4.6 million vehicles. Despite overtaking its American competitor in Europe for the first time in 2025 with increasing EV registrations, BYD will see its slowest annual growth rate in five years.

As per the reports, the latest sales target of "at least 4.6 million vehicles" has been communicated inside the company and to select suppliers already to help guide planning. The target remains subject to change as per market conditions.

Approximately 280 fintech companies are operating in the Kingdom, and electronic payments have increased tremendously

The telecom industry has seen significant consolidation recently, with T-Mobile completing merger with Sprint

Saudi market hits $2.4T mark

The Saudi stock market has become one of the world's fastest-growing markets, with a market capitalisation of $2.4 trillion at the end of Q2 2025. While sharing this figure, Saudi Finance Minister Mohammed Al-Jadaan stated that "Vision 2030" has outlined the roadmap to develop and diversify the Kingdom's economy. Jadaan made these comments during the "Money 20/20 Middle East Conference" in Riyadh, which brought together over 350 speakers, 450 brands, and 600 investors from more than 40 countries. The minister also noted that efforts are underway to implement AI and data tools in the financial market. While 280 fintech companies are operating in the Kingdom, electronic payments increased from 12% in 2016 to 79% at the end of 2024.

Qatar's property market grows 20%

President of Qatar’s Real Estate Regulatory Authority (Aqarat), Eng. Khalid bin Ahmad Al Obaidli recently shared good news, stating that in Q1 2025, the Gulf country's real estate sector contributed 7.4% to the national GDP, with an annual average of $13.44 billion, while the market expanded by nearly 20% since 2022. He made the statement during the "First-Ever PF Agent Ignite," an open-industry summit that brought together over 650 property sector experts for collaboration and dialogue to drive the growth of the domestic proptech industry. During the event, Eng. Al Obaidli also mentioned that the Gulf nation is committed to empowering all firms in the property and technology markets, ensuring compliance with regulations and taking necessary measures.

T-Mobile names Srini Gopalan CEO

Germany-based T-Mobile has appointed insider Srinivasan Gopalan as its new CEO. Gopalan will take over from Mike Sievert in November, marking a leadership transition as the telecom giant works to defend its 5G lead in a saturated American wireless market. Wireless carriers have been grappling with slowing subscriber growth, rising competition, and increasingly cautious consumers unwilling to pay for premium plans. The industry has also seen significant consolidation recently, with T-Mobile completing a $26 billion merger with Sprint in 2020. That deal reshaped the American telecom landscape, establishing Verizon, AT&T, and T-Mobile as the dominant 'big three' telecom companies, while attracting antitrust scrutiny.

DBS multi-family office hits $780M

DBS Private Bank, part of Singapore's largest bank DBS Group, said its bank-backed multi-family office platform has reached S$1 billion ($780 million) in assets under management (AUM) two years after launch and is on track to hit S$2 billion by the end of 2026. The milestone by DBS Multi-Family Office Foundry VCC also highlights Singapore's appeal as a base for family wealth amid growing global economic uncertainty and market volatility. DBS Private Bank's Group Head of Wealth Planning, Family Office, and Insurance Solutions, Lee Woon Shiu, told Reuters that while the S$1 billion in AUM consisted entirely of new assets, there was a broad mix of clients from Europe, India, Greater China, and the rest of Asia.

Source: Statista

For decades, young Saudis flocked to the big three metros, namely Riyadh, Jeddah, and Dammam, in search of education and employment

Saudi cities: The rise of regional growth

IF CORRESPONDENT

Imagine waking up to the cool, crisp air of an upland Saudi town, surrounded by green hills. Your commute is a short, traffic-free drive through scenic streets, and by evening, you're enjoying a family outing in a calm park, far from the congestion of Riyadh or Jeddah.

The Kingdom is planning for a future where it’s not just Riyadh or Jeddah on the global stage, but a network of thriving cities, each contributing something unique

This vision is increasingly becoming a reality as Saudi Arabia reimagines its economic future by developing smaller, secondary cities into vibrant economic centres. Under the Kingdom’s ambitious “Vision 2030” diversification blueprint, cities like Taif, Abha, Jazan, and Hail are taking on new roles as engines of growth, helping to geographically diversify the economy and improve the quality of life across the country.

The rise of secondary cities

In partnership with programmes like the Future Saudi Cities Programme (a Ministry of Municipal Affairs and UN-Habitat initiative), Saudi Arabia is working to enhance the liveability and sustainability of 17 cities across the Kingdom.

The idea is simple: rather than having most jobs and industries clustered in a few big cities, spread opportunities across many cities and towns. Vision

2030 explicitly calls for developing special economic zones in different regions to leverage each area’s strengths.

The government has been revamping earlier “economic city” projects, such as the industrial city in Jazan, so that these smaller urban economies can attract investment, create jobs, and draw talent. As the Vision 2030 plan itself indicates, the goal is for these cities to contribute to national growth and attract quality investments and skilled workers in line with national priorities.

Crucially, the drive to boost secondary cities has top-level support. In 2022, Crown Prince Mohammed bin Salman launched the Saudi Downtown Company (SDC) to develop modern downtown areas in 12 smaller cities, including Taif, Jazan, Hail, and others. This Public Investment Fund (PIF) initiative will invest in retail, tourism, entertainment, housing, and infrastructure in those city centres, creating jobs and business opportunities for locals.

These efforts align with Vision 2030’s objective of unlocking the potential of promising sectors in each region and contributing to non-oil economic growth. The Kingdom is planning for a future where it’s not just Riyadh or Jeddah on the global stage, but a network of thriving cities, each contributing something unique.

Why geographic diversification matters

For decades, young Saudis flocked to the big three

metros, namely Riyadh, Jeddah, and Dammam, in search of education and employment. This led to rapid growth in those cities, but also congestion, high living costs, and regional imbalances.

Meanwhile, many smaller cities saw talent drain away, and their economic potential remained underdeveloped. Geographic diversification aims to correct that by spreading growth more evenly. By turning secondary cities into viable economic centres, Saudi Arabia can reduce the pressure on overburdened metros and offer citizens the choice to prosper in their hometowns.

When a major company opens a branch in, for example, Hail or Abha, it creates good jobs locally, which means young professionals don’t have to relocate to find careers. These employees then spend their salaries locally, which supports neighbourhood shops, restaurants, and services, creating a virtuous cycle of growth.

New industries setting up in town also bring fresh expertise, entrepreneurial energy, and cul-

tural vibrancy, helping diversify the local economy. Over time, this translates to a better quality of life, where residents enjoy good employment without the downsides of mega-city life, such as long commutes or crowded neighbourhoods. And unlike the breakneck urbanisation of major cities, development in smaller cities can be planned smarter and greener, avoiding sprawl and preserving the environment.

A country with multiple economic centres is better able to withstand regional challenges, for instance, if one city faces an industry downturn or environmental strain, others can pick up the slack.

By developing smaller cities alongside big ones, Saudi Arabia is tapping into the talents and resources of the whole nation. This approach creates more equitable, inclusive growth that reaches remote provinces as much as the capital.

Connecting every city

Over the past few years, the government has digitised thousands of services and built robust e-government

platforms as part of Vision 2030’s drive for an “Ambitious Nation” and efficient governance. As of early 2023, more than 6,000 government services, ranging from business licensing to health and education services, have been put online.

This is a monumental shift that allows citizens and businesses to access government resources from anywhere, reducing the need for in-person trips to Riyadh or other administrative centres. Vision 2030 emphasises expanding digital services to cut red tape and ensure fast, transparent access for all, regardless of location.

This digital revolution has been a game-changer for smaller cities. Today, an entrepreneur in Taif or Jazan can register a new business, apply for permits, pay fees, and even attend virtual meetings with officials, all of which are online.

In practical terms, this means a company no longer has to base its offices in Riyadh just to be near regulators or ministry offices. As long as there’s a good internet connection, a firm can operate from Abha or Hail and still get its paperwork done electronically.

This e-government push enables decentralisation by liberating businesses from geographic constraints. It also encourages talented people to work from their hometowns if they wish, since they can interact with employers or the government digitally.

Saudi Arabia’s investment in nationwide broadband and 5G networks further supports this connected future. High-speed internet is reaching remote areas, and smart city technologies are being introduced to smaller municipalities.

The six most populous cities in Saudi Arabia Riyadh

7.6 million

Jeddah 4.5 million

Mecca (Makkah) 2.0 million

Medina (Madinah) 1.5 million

Dammam 1.2 million

Khobar 1 million

Source: The Saudi Arabian General Authority for Statistics

Investing in infrastructure

Of course, a city needs more than just digital access to thrive. That’s why Saudi Arabia is heavily investing in hard infrastructure and livability improvements in secondary cities. New highways, railway expansions, and airport projects are knitting the country’s regions closer together.

For instance, a new Taif International Airport is being developed to boost that city’s connectivity and tourism potential, aligning with Vision 2030’s goal of enhancing regional transport hubs. Upgrading transport links makes it easier to move goods and people between

cities, which is a critical factor if businesses are to operate in multiple locations. Likewise, logistics infrastructure like ports (in Jazan) and industrial zones are being expanded to support local industry and export capacity.

The “Quality of Life” Programme under Vision 2030 sets targets for parks, cultural and sports facilities, and entertainment options across the Kingdom. The Saudi Downtown Company’s projects, for example, will introduce modern mixed-use developments, such as pedestrian-friendly downtown districts with shops, offices, housing, and leisure venues, which are all designed with local character and sustainability in mind.

Families in smaller cities should have access to excellent schools, hospitals, clean public spaces, and recreational activities right at their doorstep. This attention to livability not only improves citizens’ well-being but also makes it easier to attract and retain talent in regional areas.

Another aspect of infrastructure investment is ensuring reliable utilities and digital infrastructure. Secondary cities are seeing upgrades in power supply, water and sewage systems, and the full rollout of fibre-optic internet.

These may not be glamorous projects, but they lay the foundation for businesses to operate smoothly and for residents to enjoy modern conveniences. By enhancing infrastructure and quality of life in tandem, Saudi Arabia is essentially future-proofing these cities, which means they can grow sustainably as their populations and economies expand.

Local industries and new opportunities

Saudi Arabia’s regions are diverse, each with its own resources and cultural heritage, and Vision 2030 seeks to capitalise on these strengths.

For example, Taif, long known for its pleasant climate and agriculture (famous for its rose farms and fruit), is now positioning itself as a hub for tourism, hospitality, medical services, and agribusiness through initiatives like the New Taif project. The idea is to build on Taif’s historic role as a summer retreat and agricultural centre, turning it into a yearround economy that attracts both tourists and professionals.

Down in the southwest, Jazan (Jazan City) has a strategic location on the Red Sea near trade routes. It has been designated as a special economic zone to draw international investors. This zone offers incentives for industries including logistics, manufacturing, and energy, by leveraging Jazan’s port and the nearby refinery and agricultural lands.

The Saudi government's approach is similar for other locales, with Tabuk province in the northwest being home to the mega-project NEOM, which includes futuristic developments like The Line city and Trojena resort.

Abha, nestled in the Asir mountains, is being uplifted by tourism and culture-driven projects; it is one of the cities in the Future Saudi Cities Programme focused on sustainability and urban quality.

location along transport corridors, and today it benefits from projects like the Saudi Downtown Company’s plan to revitalise its city centre. Hail’s local economy, known for agriculture and an annual international rally race, can grow further with new logistics and mining initiatives as the government improves rail and road connectivity.

Vision 2030 highlights the importance of public-private partnerships (PPPs) and incentives to spur businesses into expanding beyond the big cities. Companies are being offered benefits, including tax breaks, subsidised utilities, and preferential access to government contracts, if they set up operations in targeted regions.

around the new industry, creating an ecosystem.

In practical terms, what’s emerging is a Saudi Arabia with strong regional cities connected by modern infrastructure and digital networks, each city specialising in industries that suit its character. The benefit of this approach is not just economic numbers; it’s also social. Families can stay closer together instead of scattering to distant metros, cultural heritage in different provinces gets a chance to shine, and people all over the country can enjoy a high quality of life.

As one commentator put it, Vision 2030’s economic diversification is “not only sectoral, but it should also be geographical.” The opportunity is here, and Saudi Arabia is seizing it by moving beyond the big cities to build a more balanced, inclusive, and dynamic future for all its citizens.

Up north, Hail, which has been historically a trading crossroads, is seeing renewed attention. Hail was earmarked in the past for an “economic city” project due to its editor@ifinancemag.com

The expectation is that once a few anchor investors establish a presence, a cluster effect will follow, with suppliers, service providers, and small businesses emerging

Laos' sovereign debt crisis dates back to the early 2000s, when public debt exceeded 140% of GDP

Is Laos falling into China’s debt trap?

IF CORRESPONDENT

In August and September 2025, Laos continued to experience a decline in inflation, signalling a gradual stabilisation of its economy. The national Consumer Price Index (CPI) rose slightly from the previous month, signalling a gradual increase in overall prices.

However, there is a growing likelihood of a default on the government’s massive debt. Over-investment in the energy sector, coupled with an ambitious infrastructure plan funded by Chinese loans, has turned Laos into one of Asia’s biggest borrowers. Notably, China lent 70% of the $6 billion needed for the high-speed rail link between Vientiane and Kunming.

In 2024, public debt stood at 97% of GDP. As per the International Monetary Fund (IMF), the ratio will rise to 127% by 2029, leaving Laos in “external and overall debt distress.” While taking note of the government carrying out course-correction measures like currency stabilisation, raising money through domestic borrowing and asset sales, and charging higher taxes,

Sydney-based think tank Lowy Institute suggests that Laos go for debt relief, either by China (which it says is unlikely), or with multilateral IMF-led restructuring.

The debt trap

While most economists are discussing the Lao government’s challenge of reducing the risk of a debt default risk, three members of the Lowy Institute, Keith Barney, Roland Rajah, Mariza Cooray, in their study titled "Trapped in debt: China’s role in Laos’ economic crisis," have put a sharp focus on China's role in propelling the Southeast Asian country's economic doldrums.

The analysis showed that Laos cannot escape the crisis without substantial debt relief. While growing out of the crisis is unrealistic, even with the benefit of the Laos-China Railway or realistic reforms to boost growth and government revenue, the nation also has little to no room to absorb any future shocks without suffering an even deeper crisis. Whether under a China-led bilateral deal or a multilateral IMF-led restructuring, Laos’ need for debt relief is clear.

The Lao Kip (the national currency) has lost half its value against the US dollar since the start of 2022, causing domestic prices to skyrocket and devastating household incomes. It has resulted in food insecurity and transnational labour migration. Total public and publicly guaranteed (PPG) debt is estimated to exceed 100% of GDP. Laos has not formally defaulted on its international debt obligations, but only due to repeated ad hoc debt deferrals from China, which holds nearly half of Laos’ sovereign external debt.

Laos' sovereign debt crisis dates back to the early 2000s, when public debt exceeded 140% of GDP. Laos chose not to participate in the World Bank-

IMF Heavily Indebted Poor Countries Initiative. Instead, Russia, Laos’ largest creditor at the time, wrote down 70% of the face value of their bilateral debt and restructured the rest on highly concessional terms.

Laos made a strong recovery, with annual economic growth accelerating to around 7%. The economy was liberalised, facilitating investment inflows, and the country benefited from rising global mineral prices. Throughout the 2000s, Laos steadily integrated into the Western-led international financial and development architecture, and it secured substantial Japanese aid, apart from being able to borrow on highly concessional terms from Multilateral Development Banks (MDBs).

However, things changed after 2010, as Laos changed course and became one of the heaviest borrowers (relative to GDP) under China’s Belt and Road Initiative (BRI), formally launched in 2013. While from Beijing's part, it was a pure geopolitical move, the Southeast Asian country fell for it. In 2016, Laos became host to a signature BRI project, the Laos-China Railway, an immense $6 billion engineering initiative to connect the Lao capital Vientiane to China’s Yunnan province.

The project's enormous cost, in relation to the small Lao economy, garnered significant international attention. Additionally, billions were invested in hydropower and transmission projects, which were loosely aligned with the government’s slogan of becoming the "Battery of Southeast Asia." However, this initiative was experiencing declining state revenues and an increase in borrowing from international capital markets.

Alongside its borrowing, the government ran increasingly profligate fiscal

policies. Although Laos has persistently run large budget deficits, things widened substantially to reach 5% of GDP by the mid-2010s.

Also, government revenue sharply declined, falling from 20% of GDP in 2013 to 15.4% by 2019, reflecting investment incentives, tax exemptions, and weak compliance. This saw the government increasingly borrow from international bondholders and commercial banks, adding a further $2.1 billion of debt by the end of 2019.

The government took on large debts for resource and infrastructure projects with long and uncertain lead times, simultaneously allowing revenues to fall and the fiscal position to weaken. Heavy borrowing from China and commercial sources delivered a remarkable reversal in the structure of Laos’ public debt.

In 2004, three-quarters of Laos' debt was on highly concessional terms, with only one-quarter non-concessional. By 2019, things got complicated further due to higher interest rates, shorter repay-

ment periods, with the expiry of grace periods on large Chinese loans producing a dramatic rise in debt servicing costs. Including amounts ultimately deferred by China, scheduled debt service payments increased threefold, from less than $375 million in 2016 to $1.2 billion in 2020 and $1.7 billion by 2023.

Currency collapse

While Kip faced sharp depreciation due to pre-existing vulnerabilities and the global economic shocks like the COVID-19 pandemic and the Ukraine war, China's role was equally important. Beijing provided substantial financial assistance through the deferral of impending debt service payments (thus far $2.5 billion in total) along with the extension since 2020 of a RMB 6 billion ($900 million) currency swap line from the People’s Bank of China (PBoC).

"Without these supports, Laos’ economic crisis would have been far deeper. Laos chose not to participate in the G20 Debt Service Suspension Initiative

that provided temporary debt service relief to the world’s poorest countries during 2020 and 2021. The duration of China’s debt deferrals to Laos has been considerably longer than the G20’s initiative, thus far extending into 2024. However, a lack of transparency — around the continuation and terms of debt deferrals, whether the PBoC swap line can be used for balance of payments purposes (i.e. to defend the kip), and when it will be concluded — has fed uncertainty, exacerbating Laos’ crisis," remarked Barney, Rajah and Cooray.

Laos entered the ongoing decade with substantial and mounting macroeconomic vulnerabilities. Even in the absence of global shocks, Laos would likely have faced significant difficulties in meeting its impending debt service requirements, most of which were owed to China.

Based on pre-COVID economic projections by the IMF, debt service payments would still have reached more than a third of government revenue — around 2.5 times the IMF warning

threshold of 14%. Foreign exchange reserves held at the Bank of the Lao PDR were also inadequate. At the end of 2019, reserves stood at just under $1 billion, equivalent to 1.4 months of imports — half the three-month international benchmark level and low compared to other developing countries that have subsequently experienced severe debt problems.

Mounting debt servicing pressures, combined with global economic shocks, saw Laos experience sharp net financial outflows. While all developing countries faced financial pressures, due to capital outflows, sharp increases in US interest rates, and an appreciating dollar, Laos faced the worst of it. In 2020, it was downgraded by global credit rating agencies, followed by a similar move from the Thai credit rating agency in 2023.

The last move resulted in Laos losing a major part of its access to the Thai bond market, leaving it unable to access fresh foreign currency financing to service its debts. Ballooning debt service payments and persistent unrecorded capital outflows combined to see around $700 million annually in net financial outflows, leaving the Lao Kip further vulnerable. With net exports and foreign investment inflows also drying up in 2022 due to the Ukraine war, the currency duly collapsed.

Is Laos a victim of debt traps?

There is an accusation that China purposely over-lends to developing countries to create a debt crisis to leverage political and economic concessions. In Laos' case, heavy Chinese lending into the Lao energy sector resulted in massive overcapacity, financial losses, and finally the takeover of its energy grid by a Chinese state firm.

The Southeast Asian country's

domestic elite also appears to be an equal participant in the poor decisions that ultimately led to the mishap. They approved the infrastructural projects undertaken with Chinese loans, and they made matters substantially worse by overseeing a sharp decline in government revenue collection, relying on fickle international sovereign bond investors to plug the gap.

During most of the time covered by China's lending spree, Laos lacked an international credit rating. Lao agencies negotiated energy deals from a stance of sovereign agency and considerable ambition, but also a relatively subordinate position characterised by institutional weakness.

China's policy banks should have recognised that their planned lending scale would create significant risks of debt distress, especially as the grace periods on their loans expired and scheduled debt service payments increased. However, the Lao government exacerbated the situation by allowing revenues to decline sharply, leading to increased short-term external borrowing and a diminished capacity to service its debts. The consistently low foreign exchange reserves should have served as a clear warning that the ability to safely take on additional foreign currency debt was limited, not expansive.

However, China also knows that Laos warrants debt relief. In 2019, China’s Ministry of Finance released its own BRI debt sustainability framework (BRI-DSF), designed to guide its approach. The BRI-DSF closely follows that of the IMF, utilising the same key thresholds to signal when debt is problematic.

The Lao government has imposed foreign exchange controls and tightened monetary policy to stabilise its curren-

cy. Unable to raise fresh foreign capital to help meet impending debt service payments, the government has resorted to borrowing domestically, selling state assets, increasing tax revenues, and imposing harsh budget cuts.

In the medium term, the hope is that Laos will grow out of debt, especially given the recent completion of the Laos-China Railway. However, the most important measure, by far, keeping Laos afloat is the continued ad hoc deferral of near-term debt service payments to China.

Still, as per the IMF, apart from debt problems, Laos will see continued Kip depreciation, double-digit inflation eroding household incomes, rising outmigration to Thailand resulting in domestic labour shortages, and greatly reduced public and private investment, with the latter crowded out by heavy domestic borrowing by the government to meet its financing needs.

For Barney, Rajah and Cooray, even under the most optimistic economic assumptions, it would not be possible for Laos to restore public debt sustainability. For instance, a return to 7% annual economic growth would be in line with Laos’ pre-COVID historical growth and consistent with studies by the World Bank conducted in 2018 extolling the large potential benefits of the Laos-China Railway, assuming these are complemented by trade reforms and improvements in other forms of transport connectivity.

The Southeast Asian country might also optimistically lift revenue back to 20% of GDP by 2029, compared to its current 16%, with the additional revenue split equally between achieving a larger budget surplus and restoring core spending. Experts assume annual currency depreciation and inflation will

Source: Statista

slow to 5% from the current double-digit rates, while the government can borrow externally and domestically on similar terms to the past.

Yet even the above-mentioned assumptions would not be enough to put Laos on a path to exiting the crisis. Without additional and sustained Chinese debt deferrals, impending debt service payments would remain at highly problematic levels under any scenario, and above the IMF warning threshold until the early 2030s. The overall stock of debt would also remain at unsustainable levels at 60-80% of GDP. In present value terms — which adjust for the fact that much of Laos’ debt is concessional — debt would be above the IMF warning threshold into the 2030s.

To help Laos exit its debt crisis, the IMF may require a debt restructuring

involving its financial support. According to the latest IMF guidance, such restructurings should aim to restore sustainability within five years such that key debt indicators are below their respective IMF warning thresholds.

"A full debt restructuring scenario is beyond the scope of this paper. However, we construct an illustrative scenario to give a sense of the scale of debt relief required. We suppose that a comprehensive debt restructuring programme, including complementary economic reforms, allows annual growth to remain at 4% per year, with currency depreciation and inflation stabilising at 5%, and revenue rising to 18% of GDP by 2029. Revenue gains are assumed to be split evenly between higher government spending and a larger fiscal surplus, which rises to 4% of GDP. As before, we

focus on two key debt indicators, the ratio of external debt service to state revenue and the present value of external public debt relative to GDP," Barney, Rajah and Cooray commented.

Based on the above prediction, restoring debt sustainability in Laos would require a sharp reduction in external debt service payments, equivalent to over 60% of average payments over the rest of this decade. Also, at least a one-third reduction in the present value of external public debt is required, excluding debt owed to MDBs, as this is typically only included as part of multilateral debt relief initiatives. This should be considered a minimum degree of debt relief, since it assumes no buffer to absorb further shocks.

"In Laos’ case, restoring sustainability would require a comprehensive ap-

proach. Relying solely on rescheduling would require China to extend the maturity on its Ex-Im Bank loans by 40–50 years and more than 100 years for CDB loans. This is unlikely. Alternatively, a combination of sharply reduced interest charges to 1% (Ex-Im) and 1.5% (CDB), 15-year extensions of maturity, and new five-year grace periods for both Ex-Im and CDB loans would be within the upper bounds of what China has provided in other cases and achieve the required degree of debt relief," Barney, Rajah and Cooray concluded.

editor@ifinancemag.com

Sharjah UAE’s fastestgrowing investment hub

Sharjah’s long-term goal is to facilitate an integrated investment environment supported by a futuristic economic vision

IF CORRESPONDENT

Sharjah is making headlines as the UAE’s fastest-growing Emirate for foreign direct investment (FDI) in the first half of 2025. As the country’s third-most populous city, Sharjah is attracting a surge of investments that are fuelling new projects, generating jobs, and strengthening its industrial foundation. FEATURE SHARJAH TRADE GULF

Breaking down Sharjah’s economic momentum through the numbers, capital investment surged to $1.5 billion during the first six months of 2025, a 361% jump from $325 million during the same period in 2024. The Emirate welcomed 74 new projects, up 57% from 47 in Q1 2024. Some 2,578 new jobs were created (a 45% increase), mostly in fields like production and services.

Sharjah’s path forward is unmistakably clear—centred on accelerating infrastructure development, fuelling innovation, and driving GDP growth. The rise in employment improves purchasing power and drives further investment, especially in the small and medium-sized enterprise (SME) sector.

What is fuelling the growth?

Saud Salim Al Mazrouei, Director of HFZA (Hamriyah Free Zone) and SAIF (Sharjah Airport International Free Zone Authority), during an interview with Gulf News, saw the arrival of record FDI as a confirmation of Sharjah’s standing as a global investment hub. For him, "Free Zones" have become the primary growth engines for the Emirati city, providing businesses with top-tier support in their pursuit of expanding regionally and internationally.

Take Sharjah’s free zones, for example, which marked major achievements and milestones in 2024, reinforcing their pivotal role in establishing the city as one of the most attractive investment destinations. HFZA and SAIF attracted over 1,600 companies from various countries, including the United States, Africa, India, Japan, the United Kingdom, Spain, Belgium, and others.

HFZA attracted 900 companies and corporations across diverse sectors, with the iron and steel manufacturing industry in the Middle East and Africa being the main player. In fact, if we call Hamriyah Sharjah's "Steel Hub," it won't be wrong, given the strong presence of global powers like Belleli Energy, ArcelorMittal,

Lamprell, Eversendai, Technomak, Ungersteel, and Zink Power in HFZA. The authority also clinched prestigious international awards at the 2024 iteration of the Global Free Zones of the Year Award by fDi Intelligence, for the second consecutive time.

SAIF, on its part, attracted over 700 businesses from diverse sectors while consolidating its position as a regional investment destination for the gold, jewellery, and gemstone industries. Its Gold, Diamond, and Commodities Park has established itself as one of the Gulf region’s largest gold refinery hubs, accommodating over 55 gold refineries and hosting over 250 companies specialising in gold, platinum, silver, and titanium manufacturing and trade.

Also, these two free zones have adopted cutting-edge digital technologies to create flexible and inclusive work environments. The duo now has a comprehensive portfolio of 600 smart services that seek to optimise operational efficiency, streamline business activities, and deliver an investor experience that relies on efficiency, speed, and excellence. HFZA and SAIF have further developed innovative strategies to build an integrated system of eco-friendly services.

This included signing a strategic partnership agreement with “Bee’ah Group” and organising initiatives, including events and workshops, to encourage businesses and investors to embrace effective environmental solutions that focus on energy efficiency, natural resource preservation, and emission minimisation.

Why are free zones so special?

Apart from offering industrial and commercial land supported by advanced infrastructure and

modern facilities that support the international expansion plans of its investors, these hubs also boast competitive advantages, including a streamlined single-window operations system for enhanced efficiency and ease of doing business, multiple tax exemptions, free repatriation of capital and profits, full foreign ownership of businesses, and seamless connectivity to regional and global markets.

As the Gulf region eyes itself to become the new global tech hub, the Sharjah administration in 2024 announced the formation of a Communication Technologies Free Zone in Kalba city. To attract players from sectors like telecom, deep tech, and data centres, the Emiri decree stated that companies, institutions, individuals, and employees in the free zone will be exempt from taxes imposed on their business activities for a renewable period of 50 years. Also, the free zone will be exempt from all local taxes and fees, except consumption duties.

Al Mazrouei sees Sharjah’s free zones strengthening their developmental role and furthering their contributions to the Emirate’s economy in 2025 and beyond. On a broader scale, the city's economy is driven by the diversity and complementarity of its sectors and their alignment with the Emirate’s strategic ambitions and development plans.

This growth is evident in Sharjah’s 2025 general budget, where the economic development sector accounts for 27% of the new budget, while the infrastructure sector ranks first, comprising 41% of the total general budget for 2025. The figure rose to AED42 billion ($11.4 billion), the largest in the northern emirate's history. In addition to boosting financial sustainability, upholding a decent living standard, and promoting social welfare, the budget also focuses on strengthening the Sharjah administration's capacity to fund strategic initiatives and projects, ensuring appropriate housing for citizens, and enhancing the tourism infrastructure.

For 2025, the infrastructure sector took the lead, accounting for 41% of the total general budget, marking a

7% increase compared to the 2024 budget. Simultaneously, the policy document envisioned infrastructural upliftment as a key pillar for sustainable development, to attract investments across various vital sectors.

Sharjah: The diversified hub

While capital investment surged to a record $1.5 billion in the first half of 2025, it was matched by a rise in new project activity, with 74 new projects launched in H1 2025, a 57% increase from 47 projects during the same period in 2024. This will only benefit Sharjah’s production and service-based sectors, which are aligned with the Emirate’s vision for a high-value, knowledge-based economy.

During the first half of 2024, 2,578 new jobs were created, representing a 45% increase from the 1,779 jobs generated in the same period last year. This growth boosted the region's purchasing power, enhanced local consumption, and created momentum for additional investments, especially among SMEs.

As per the new data, specific sectors are emerging as front-runners in Sharjah’s transformation journey. Among them is the consumer segment, where a 53% increase was seen in project count, backed by another 188% rise in capital investment, making it one of the key contributors to Sharjah’s diversified economic portfolio. With a 112% jump in new projects and a 25% increase in employment, Sharjah is also consolidating its role as a regional food security hub.

Another key performer in Sharjah's growth journey has been business services, which experienced a staggering 500% rise in capital investment and an 1100% increase in job creation, helping the Emirati city to emerge as a modern, service-oriented economy. The industrial equipment segment experienced a remarkable 100% increase in project count and a 45% rise in capital expenditure. This particular landmark sent a strong signal of Sharjah’s growing manufacturing base.

During an interaction with Gulf News, Hamad Ali Abdalla Al Mahmoud, Chairman of the Sharjah Economic Development Department (SEDD), stated that the FDI surge reflected the strength of Sharjah’s economic fundamentals and its ability to pursue excellence and leadership across business sectors.

“This momentum directly supports Sharjah’s vision for smart and sustainable economic development,” he said, noting that the department will continue to scale its initiatives in line with the Emirate’s growth strategy. Chairman of the Sharjah Chamber of Commerce and Industry (SCCI), Abdallah Sultan Al Owais, saw

the strong FDI results as an indicator that highlights Sharjah as a safe and attractive destination for investors, under the able leadership of His Highness Sheikh Dr. Sultan bin Mohammed Al Qasimi.

Ahmed Obaid Al Qaseer, CEO of the Sharjah Investment and Development Authority (Shurooq), termed the latest growth figures as a guarantee of massive job creation, stronger industries, and sustainable value for the Emirate's communities.

Sharjah Economic Development Department Chairman Hamad Ali Abdalla Al Mahmoud noted that rising FDI demonstrated the Emirate’s ability to achieve sustainable growth while maintaining high standards.

Ahmed bin Rakkad Al Ameri, CEO of the Sharjah Book Authority, highlighted the role of culture and knowledge in driving economic growth, pointing to "Sharjah Publishing City Free Zone" as a hub for creative industries. Dr. Abdelaziz Saeed Almheiri, Chairman of Sharjah Healthcare City Authority, noted that the Emirate’s appeal in healthcare investment, including pharmaceuticals and AI integration, further reinforces Sharjah as a high-quality investment destination.

Why Sharjah's growth journey is special?

The UAE Central Bank projects national GDP growth of 4.9% in 2025 and 5.3% in 2026. In comparison, Sharjah is expected to outperform with a robust 7.5% growth in the current financial year.

Executive Chairman of the Department of Government Relations, Sheikh Fahim bin Sultan bin Khalid Al-Qasimi, during the Sharjah Ramadan Majlis 2025 (held in March this year), highlighted that the expected expansion will be driven by progressive policies, increased economic integration, and rising foreign investment in strategic industries.

The 361% jump in FDI inflow proves the official projections correct. In fact, Al-Qasimi sees Sharjah's private sector further strengthening the Emirati city's core industries, such as manufacturing, trade, agriculture, and environmental sustainability.

As per Al-Qasimi, Sharjah’s economy is evolving at an impressive pace, with the GDP now over 145 billion dirhams ($39.47 billion), and a growth of 6.5% registered in 2023, surpassing the global average by 3.5 percentage points. He also talked

about the role of continued integration, smarter policymaking, and collaboration with the private sector in keeping the growth pace ranging between 6.5% and 7.5% in the coming years.

While the automotive industry and vehicle parts trading accounted for 24% of the city's economy, followed by agriculture (19%) and manufacturing (17%), Al-Qasimi also pointed to the potential growth in the real estate sector in 2025, citing major developers like Alef Group and Arada, which are making significant investments in the Emirati city.

Tech-oriented innovative policymaking

By offering flexible investment opportunities and advanced infrastructure (including six specialised free zones), Sharjah has emerged as a key destination for manufacturing, services, and finance, with 96% of its economy non-oil-based, perfectly aligning with the UAE's broader diversification agenda.

The Sharjah administration has also introduced an "instant license" service, which enables investors and entrepreneurs to issue a commercial license immediately without attaching a written contract or lease agreement for the first year.

Issued by the Sharjah Economic Development Department, the service will cover all office activities that do not require approvals from other authorities, with the license allowing up to three employees. The instant license, issued within a day, will enable investors to conduct their business immediately, speeding up procedures and increasing economic growth rates in the Emirate.

Eliminating the procedure that applies to regular licenses, the new service is now helping investors set up their businesses in the first year and then fulfil the special licensing conditions in the second year. However, Sharjah's tryst with innovative policies is not new. In 2024, Sharjah launched the world’s first AI-powered trade license in collaboration with Microsoft and the Sharjah Publishing City Free Zone. This initiative, launched during the Sharjah Investment Forum (SIF) 2024, aimed to

align with economies driven by autonomous systems and digital data. Additionally, this process helps entrepreneurs and investors finalise the licensing procedure in under five minutes.

The new service, which started through the Sharjah Investor Services Centre (Saeed) and SPC Free Zone, will be extended to other free zones across Sharjah. This innovation firmly established "Invest in Sharjah" as the world’s first investment promotion agency to use AI technology for issuing trade licenses, underscoring its dedication to enhancing collaboration and investment between regional and global markets.

This new AI-powered licensing system will expedite the launch of new enterprises and strengthen Sharjah’s status as a prime destination for FDI and innovation in the coming years. It will further boost the flexibility and efficiency of the business environment across sectors. The policy reform came just at the right time, as Sharjah, which till 2024 ranked fifth globally in FDI project growth and fourth in the Gulf region for startup ecosystems, will be able to position itself as a leader in integrating technology into core sectors like agriculture, healthcare, and logistics, while reducing bureaucratic red tape further. It will help diversify the regional economy and cultivate a business environment that supports sustainable growth, aligning with the administration's long-term development objectives.

With tech-assisted policy reforms, Sharjah is on its way to becoming a "Smart Economy" in its truest sense, where cutting-edge solutions like AI are being used to improve operational efficiencies and promote a culture of innovation that contributes to GDP growth and attracts global investments. Sharjah is now well-placed to become a key hub for sustainable, future-focused business practices.

In May 2025, the Sharjah FDI Office launched "Sharjah AcquireHub," the region’s pioneering government-backed digital platform designed to streamline mergers and acquisitions (M&A) within the Emirati city. Developed through a strategic partnership with Transworld Business Advisors, a global leader in business advisory services, this platform will accelerate economic growth, strengthen market resilience, and attract high-calibre investments to Sharjah by providing a transparent and secure environment for M&A transactions.

Sharjah AcquireHub will cater to stakeholders, including international investors, SMEs, entrepreneurs, and local businesses, by connecting capital with high-potential opportunities in the Emirate. It will enhance market liquidity and offer flexible solutions for growth, strategic exits, or corporate restructuring.

Top five cities in the UAE by FDI inflows in 2023

Source: Emirati Government Reports

Sharjah AcquireHub's comprehensive process features seamless online registration, tailored advisory support, and post-transaction assistance. This secure, structured ecosystem will empower investors, buyers, and financiers with the clarity and protections essential for confidently pursuing acquisitions or strategic partnerships, while also providing a trusted platform for entrepreneurs seeking to exit, enabling them to list their companies for potential acquisition.

"Sharjah AcquireHub serves as a strategic gateway for investors looking to access high-potential opportunities in the emirate, particularly within the dynamic and lucrative mid-market segment. It provides advanced tools and clear pathways to engage with the global M&A landscape, which reached a value of $3.5 trillion in 2024, representing a 15% increase over the previous year," stated global management consulting firm Bain & Company, reacting to the news.

Sharjah AcquireHub also presents a strategic opportunity for SMEs and entrepreneurs to integrate into a broader growth environment through partnerships and alliances that promote development, secure exits, or repositioning.

The SME sector, which comprises over 94% of businesses in the UAE, is expected to stabilise through the platform. Sharjah has experienced significant growth in business establishment and sustainability, with 71,320 new and renewed licenses issued in 2024, reflecting a 7% increase.

Building Sharjah’s global competitiveness

Sharjah’s long-term goal is to facilitate an inte-

grated investment environment supported by a futuristic economic vision. Anchored by a knowledge-based, diversified economy and consistent support for key sectors such as industry, technology, and healthcare, and upheld by its strategic geographic position, Sharjah is uniquely positioned to serve as a regional hub for high-impact M&A activity.

Understanding this, the Sharjah Chamber of Commerce and Industry (SCCI) has laid down a three-year strategic roadmap to drive transformative improvements in performance, operations, and service excellence. The strategy focuses on supporting business sustainability and growth, anticipating future business trends, shaping the business landscape, and enhancing its competitiveness and leadership during the 2025-2027 timeframe.

Apart from strengthening Sharjah's economic landscape, the roadmap will promote entrepreneurial excellence and support businesses across key fields, including commercial, industrial, professional, agricultural, and digital sectors.

The Sharjah Chamber’s new strategy emphasises delivering world-class services to enhance competitiveness, enabling local enterprises to expand internationally and unlocking new global trade opportunities, while focusing on enhancing economic and social sustainability, facilitating investment-driven economic projects that reinforce the city’s economic framework, and supporting initiatives to ensure a viable and sustainable economy.

On the other hand, the Sharjah Investment and Development Authority (Shurooq) has announced that its 15-year journey of sustainable development culminated in the completion of 52 projects and cultural tourism experiences spanning over 60 million square feet across Sharjah, with a total investment value of AED7.2 billion through strategic partnerships.

These initiatives encompass three real estate projects with a total investment of AED5 billion, 10 distinctive hospitality projects valued at AED850 million, 18 projects in the retail and entertainment sectors with investments exceeding AED870 million, and five projects in the arts and culture sectors worth AED447 million.

All these developments reflect that Sharjah has truly emerged as the UAE's new growth engine, with unstoppable momentum.

editor@ifinancemag.com

Interim leader Muhammad Yunus set an ambitious agenda to stabilise Bangladesh’s democracy and economy

Bangladesh's economy: Surviving the aftershock

IF CORRESPONDENT

Over the past year, Bangladesh has undergone a profound transformation following the ousting of Prime Minister Sheikh Hasina in the student-led uprising of July-August 2024. The abrupt end of Hasina’s 15-year rule, amid public fury over corruption and autocracy, ushered in an interim government led by Nobel laureate Muhammad Yunus.

Twelve months later, the country is navigating a fragile path toward democratic restoration, grappling with economic stabilisation and sweeping reforms at home, even as it recalibrates delicate relationships abroad.

International Finance examines how the “July Revolution” and its aftermath have reshaped Bangladesh’s political landscape, economy, and foreign policy one year later, highlighting the key reforms, challenges, and international dynamics.

Fallout of the student-led revolution

The immediate trigger for Hasina’s downfall was a wave of

student protests ignited by a controversial affirmative action quota in public sector jobs.

In 2024, Bangladesh’s Supreme Court reinstated a policy reserving 30% of government jobs for the descendants of 1971 independence war veterans. This move outraged young graduates, who demanded merit-based hiring in a country already plagued by youth unemployment.

Long-simmering mass grievances over scarce jobs, economic inequality, and perceived cronyism under Hasina’s Awami League government boiled over. Protesters saw the quota as emblematic of a system that rewarded the ruling party’s loyalists at the expense of ordinary citizens, following years of alleged high-level corruption and authoritarian drift in Hasina’s administration.

What began as campus demonstrations escalated into nationwide unrest by mid-July 2024, met by a heavy-handed crackdown. Security forces used live fire and mass arrests in an attempt to quell the uprising, resulting in significant bloodshed. Rights groups like Amnesty International blamed Hasina’s government for using excessive force, which caused the deaths of students, journalists, and bystanders.

In total, over a thousand people were killed in the weeks of chaos that paralysed Dhaka and other cities. The violence only fuelled public outrage. By early August 2024, tens of thousands of demonstrators were marching on the Prime Minister’s residence, defacing images of Hasina and demanding her resignation. Facing insurmountable pressure, Hasina finally resigned on August 5, 2024, and fled the country under military escort with her family, seeking refuge in India.

Sheikh Hasina’s abrupt exit precipitated a constitutional crisis. With FEATURE BANGLADESH

the elected government’s collapse, an interim administration was hastily assembled to fill the power vacuum. On August 8, 2024, Muhammad Yunus, the famed microfinance pioneer and the country’s only Nobel Peace Prize winner, was sworn in as Chief Adviser by the figurehead President.

This caretaker government, consisting of technocrats and respected civil society figures, was tasked with restoring order and guiding Bangladesh back to democracy. Yunus vowed to hold credible elections, reform the political system, and deliver justice for those killed during the protests. The student revolution, known colloquially as the “July Revolution,” had upended Bangladesh’s dynastic politics overnight, dismantling the long-entrenched Awami League rule. However, the challenges of governing a polarised nation in the aftermath proved daunting, and the initial euphoria of change soon gave way to the messy reality of transition.

The interim government

As interim leader, Muhammad Yunus set an ambitious agenda to stabilise Bangladesh’s democracy and economy. Yunus, internationally lauded for his anti-poverty work with Grameen Bank, had instant credibility and strong backing from Western donors and the United Nations.

Domestically, however, his unelected government faced “massive expectations to restore democracy and prosperity” without any popular mandate or political party base. To build trust, Yunus brought in several experienced technocrats for key positions. For example, he appointed former IMF economist Ahsan H Mansur as the new governor of Bangladesh Bank to spearhead financial reforms. He also reconstituted the

Anti-Corruption Commission with respected figures, signalling a break from past regimes accused of shielding the powerful.

In its early months, the interim government focused on halting violence and initiating institutional reforms. Notably, enforced disappearances and extrajudicial killings, which were the

hallmarks of the previous government’s repression, ceased under the Yunus administration.

Yunus opened dialogues with opposition parties to discuss overhauling the constitution, judiciary, and law enforcement before any vote. Some proposed political reforms included imposing term limits for prime ministers, cre-

ating a two-chamber parliament, and appointing an empowered Chief Justice independent of the executive. These ideas aimed to prevent a return to one-party dominance and to strengthen checks and balances after years of democratic backsliding.

To assess the scale of economic damage and corruption left behind, Yunus’

cabinet commissioned a 12-member committee to produce a “white paper” on Bangladesh’s finances. The findings, released in late 2024, were staggering. During Hasina’s tenure, an estimated C$326 billion had been syphoned out of Bangladesh through illicit financial outflows, averaging C$22 billion per year.

The report identified 10 banks as

technically bankrupt, exposed inflated costs in public infrastructure projects, and estimated that up to 40% of the government’s annual development budget had been embezzled by insiders. These revelations highlighted the institutional rot and graft that the new government inherited, strengthening Yunus’ resolve to “root out corruption and recover Bangladesh’s stolen wealth.”

Armed with this diagnosis, the interim authorities pursued urgent remedial measures. Bangladesh Bank’s leadership, under Mansur, moved swiftly to address a looming banking crisis. The bank was raising interest rates to tame surging inflation, dissolving and replacing the boards of 11 troubled banks, and launching efforts to recover non-performing loans and repatriate money illicitly sent abroad.

Anti-corruption prosecutors opened high-profile investigations into politically connected tycoons who benefited under Hasina’s patronage. By year’s end, the government had attached or frozen assets worth over Tk 1.75 trillion belonging to about a dozen influential business groups suspected of large-scale loan fraud and money laundering. Such moves marked the start of a clean-up of Bangladesh’s financial system, though they also risked unsettling some domestic business interests.

Financial stabilisation efforts

One year after the uprising, economic stabilisation remains a central preoccupation of the Yunus administration. When they took office, Bangladesh’s economy was fragile, rocked by unrest, burdened with debt and deficits. Although the country had enjoyed robust GDP growth averaging 6-7% for much of Hasina’s tenure, deep structural weaknesses became increasingly evident by 2024.

Youth unemployment was alarmingly high, with 83% of all unemployed individuals being under 30 years old. Inflation was in double digits. The political turmoil in mid-2024 delivered an immediate economic shock as factory output, exports, and investor confidence all plummeted amid strikes, curfews, and internet blackouts.

The vital garment industry, accounting for 85% of export earnings, reported over C$547 million in lost orders and production disruptions in the weeks following the revolution. By some estimates, 2.1 million jobs were lost between July and December 2024 as businesses downsized or shut down, with women, especially garment workers, bearing over 85% of those job losses.

The interim government negotiated emergency support from international

lenders to prevent a financial meltdown. Bangladesh was already under a $6.4 billion IMF loan programme, and in December 2024, Yunus requested additional IMF financing to shore up dwindling foreign exchange reserves. The IMF and World Bank imposed strict conditions. Bangladesh had to restore fiscal discipline, raise revenues, reform its exchange rate policy, and restructure its ailing banking sector.

Meeting these benchmarks was arduous, but Dhaka made notable progress by mid-2025. The central bank’s monetary tightening helped cool inflation from 11.7% in July 2024 to around 9.0% by May 2025. The government also took politically delicate steps like adopting a unified, market-driven exchange rate and cutting public spending.

In fact, the national budget unveiled

for FY2025-26 was slightly smaller than the previous year's, marking the first time in Bangladesh’s history that an annual budget shrank year-on-year. This unprecedented belt-tightening, tax administration reforms, including abolishing the old National Board of Revenue to create two new revenue authorities, satisfied the IMF’s requirements.

In return, by mid-2025, the IMF released about C$1.76 billion in delayed programme funds, while the World Bank and other donors also unlocked fresh financing for Bangladesh. These inflows stabilised the forex reserves and reassured markets that Bangladesh would avert a balance-of-payments crisis.

Some crucial economic indicators have started to improve. Export earnings rebounded strongly in late 2024 and early 2025. Also, between July 2024

and May 2025, merchandise exports were up by C$5.4 billion compared to the same period a year prior, with readymade garment exports growing about 10% despite the turmoil.

This export resilience, aided by the more competitive exchange rate, helped Bangladesh maintain a current account balance. Nevertheless, serious weaknesses persist. The GDP growth rate is projected to slow to only 3.3% in the 2024-25 fiscal year, down from over 6% in previous years, reflecting depressed investment and consumer confidence.

Private sector credit growth remains sluggish due to banks’ bad loan burdens. Unemployment and underemployment are still acute, as millions of young people entering the workforce each year are not finding adequate work, raising the risk of further social discontent.

Critics note that while the interim government stabilised macroeconomic fundamentals, it has yet to enact deeper structural reforms to spur new industries or significantly boost job creation. For example, despite Yunus’ past advocacy for higher garment worker wages, his government has not yet raised the minimum wage or unveiled major stimulus for employment generation.

The economic recovery remains fragile and heavily contingent on political stability and continued policy discipline. Any resurgence of unrest or loss of reform momentum could easily set back the gains of the past year, economists warn.

Roadmap to political stabilisation

Following the revolution, Bangladesh finds itself in a fluid and fragmented landscape. The old Awami League-led order has been dismantled, and Hasina’s party was formally banned in May 2025. Several of its top leaders now face prosecution, but the contours of the new order are still taking shape.

In the vacuum left by the Awami League, new and resurgent forces are vying for influence. The student activists who spearheaded the uprising have coalesced into a new political party, with the stated goal of breaking the dominance of the country’s two dynastic mainstream parties.

Meanwhile, the Islamist Jamaat-e-Islami, which had been banned from politics for over a decade, has re-entered the scene, allying itself with the youthful revolutionary movement. Jamaat’s return is highly polarising, as it is an Islamist party that once opposed Bangladesh’s independence in 1971. Its renewed strength is uncertain, but its leaders clearly see an opening to fill the void left by Hasina’s ouster.

Managing these factions and delivering on the promise of fresh elections has proven tricky for Yunus. Upon taking power, he dissolved the parliament in August 2024 and asserted that new national elections would be held once essential reforms were implemented.

Initially, the interim government indicated a vote could occur by April 2026, about 20 months after Hasina’s fall. Yunus has insisted that key governance changes must be enacted before a return to elected rule, ensuring that the next government inherits a fairer system. This includes constitutional amendments and strengthening independent institutions that were eroded under the previous regime.

However, consensus on the timeline and scope of reforms remains elusive. The BNP was the main opposition under Hasina and is now eager for a quick election, sensing an opportunity to finally gain power through the ballot box after boycotting the flawed 2024 polls.

BNP leaders argue that the interim government’s legitimacy will wane if it overstays or delays a democratic transition. By contrast, the Jamaat-e-Islami and many student revolutionaries favour giving Yunus’ administration more time to implement reforms thoroughly before holding a vote. This debate has become a flashpoint in Bangladeshi politics.

One analyst noted, "There’s a divide between those who want to see reforms through and give them more time, and those who feel it’s time to wrap things up and focus on elections."

The disagreement even extends into state institutions. Bangladesh’s army chief reportedly urged holding elections by December 2025, several months earlier than Yunus’ schedule, a suggestion the interim civilian leadership resisted.

The post-revolution honeymoon has Bangladesh's year-on-year inflation rate from 2018 to 2025

Source: Statista

clearly ended, replaced by wrangling and mistrust among erstwhile allies. While all major parties profess support for democratic revival, each fears losing advantage. The student-led movement and Jamaat worry that a premature election could allow BNP stalwarts to replace one entrenched establishment with another. On the other hand, the BNP accuses the student leaders of being too close to the Yunus regime and using state institutions to advance their own agenda.

Yunus himself walks a tightrope as he must maintain neutrality and stability, even as segments of the population grow impatient for elected representation. His government’s crackdown on residual pockets of Awami League loyalists has drawn criticism from Hasina’s camp as political persecution, although many in Bangladesh see it as overdue accountability for an authoritarian regime.

At the same time, human rights issues have not disappeared as violence

against religious minorities spiked amid the power shift, and community leaders complain the interim authorities have struggled to protect vulnerable groups from mob attacks and Islamist hardliners.

Human Rights Watch acknowledged that enforced disappearances and extrajudicial killings declined under Yunus but urged faster reforms to “create robust, independent institutions” that safeguard rights long-term. As Bangladesh edges toward an election, likely in 2025 or early 2026, the success of its political transition will hinge on balancing these tensions. Electoral laws are being revised to ensure a free and fair vote. For instance, discussions are underway about reconstituting the Election Commission and updating voter rolls with input from all parties.

Civil society is pushing for the deployment of neutral election observers and perhaps even the United Nations’ technical assistance to strengthen credibility. Yunus has hinted that he might step aside before the polls if a consensus political framework is achieved, to allow a fully neutral caretaker to oversee the voting.

While such a move might reassure critics who see him as overly partisan, it could also sow fresh uncertainty. The path to democracy remains unfinished, and time is running out. The interim government’s mandate ends once an elected administration takes office, making it imperative to implement reforms and conduct elections that earn broad legitimacy. Failure to do so risks reigniting street unrest—or worse, inviting military intervention, a scenario Bangladesh is determined to prevent.

Democracy’s defining test ahead Politically, the clock is ticking for Yunus

to deliver the promised new election and hand over power. Continued disagreements over the reform timetable or the rules of the election could spark renewed street agitation, and indeed, sporadic protests have already flared as various groups push their demands, some too volatile in nature.

Maintaining public trust is critical, and the interim government must be seen as an honest broker setting the stage for real democracy, rather than clinging to power or favouring one faction. Yunus’s suggestion that he may step down early, if necessary, reflects an acute awareness of public perception. Ultimately, the credibility of Bangladesh’s democratic transition will hinge on how the upcoming elections are managed, particularly their inclusivity, fairness, and broad acceptance. Only then can Bangladesh move beyond its legacy of flawed polls and entrenched one-party rule.

Internationally, the country will need to continue balancing competing

interests. The infusion of Chinese funds is helpful, but overreliance on any single patron could compromise the nation’s strategic autonomy. Likewise, repairing ties with India, the regional hegemon, may be unavoidable for economic and security reasons in the long run. And while courting Western trade and aid, Bangladesh must address their concerns about labour rights and transparency to avoid punitive measures like tariffs or sanctions.

A South Asia analyst aptly noted, “Post-revolution honeymoons often don’t last long, and Bangladesh is no exception.”

The real work of building a stable, prosperous, and democratic Bangladesh is just beginning, and it will require steadfast commitment to reform and consensus-building well beyond this first year of dramatic change.

The coming months up to the planned 2025/26 election will be crucial. If the interim leadership succeeds in preserving stability, enacting vital

institutional reforms, and delivering credible elections, Bangladesh could emerge from this period of upheaval with renewed strength and democratic resilience.

If not, the country risks sliding back into political uncertainty or conflict, squandering the hard-fought gains of the past year. A cautious optimism persists that Bangladesh’s darkest days of July 2024 have given way to a new dawn of possibility, albeit one that will demand patience and perseverance.

editor@ifinancemag.com

BANKING AND FINANCE

Fundrise uses cutting-edge technology to give retail investors a smooth real estate and alternative investing experience

Fundrise: Invest beyond Wall Street

IF CORESPONDENT

Fundrise is an investment platform that gives investors access to private assets that are typically only available to accredited and institutional investors. This article examines the advantages and disadvantages of the Fundrise app, as well as how the investment app functions and the investment opportunities available through the platform. From venture capital to REITs, you'll discover how Fundrise is giving retail investors greater access to alternative assets and diversification.

Fundrise oversees $2.87 billion in equity on behalf of nearly 400,000 investors

Fundrise, founded by Ben and Dan Miller in 2010, is a platform that lets users invest in private assets like venture capital, private credit, and real estate. Following the JOBS Act's passage, which made this investment opportunity possible, Fundrise was among the first platforms to provide crowdfunded real estate investing.

Originally focusing on providing retail investors access to real estate investment opportunities, Fundrise's mission has since grown to include empowering individuals to improve the financial system. In addition to residential and commercial real estate investments, Fundrise now provides investors with venture capital and private lending options. Fundrise oversees $2.87 billion in equity on behalf of nearly 400,000 investors.

Fundrise operates by facilitating crowdsourced investments into venture capital, private credit, and real estate funds. Fundrise offers a variety of eREITs (electronic real estate investment trusts) to real estate investors and funds that target particular geographic areas, such as the East Coast, or long-term growth. Depending on their investment goals, investors can use Fundrise to choose funds for them or customise their approach with eREITs.

Additionally, investors have the option to invest in private credit, or private lending, through the Income Fund, which finances residential real estate projects with the goal of generating income yield. Lastly, the Innovation Fund, a venture capital investment offered by Fundrise, makes long-term growth investments in private businesses like Anduril and Anthropic.

The platform provides investors a straightforward investing experience by allowing them to choose and make investments via its desktop and mobile applications.

Understanding REITs and eREITs

An investment trust that owns residential and commercial real estate and generates income and capital growth is known as a real estate investment trust (REIT). Around 90% of REITs' taxable income must be distributed to shareholders annually as dividends, per the law. Both privately held and publicly traded REITs enable investors

to purchase real estate portfolios without actually owning the properties.

Retail investors can obtain exposure to real estate markets by investing in REITs, regardless of whether they want to buy single-family homes or other types of real estate, storage facilities, cell towers, or in particular regions.

Fundrise provides its users with eREITs, which are private investment vehicles that are only accessible through their platform and are not publicly traded. Fundrise manages eREITs' assets, which offers a more efficient direct investment process and reduced fees. Like other private REITs, eREITs experience less price volatility than public REITs.

Fundrise uses cutting-edge technology to give retail investors a smooth real estate and alternative investing experience. Investors can directly invest in eREITs, real estate funds, and venture capital funds using desktop and mobile applications, eliminating the need for third-party apps or intermediaries. For hundreds of thousands of users, Fundrise's proprietary internal systems, including Cornice and Basis, streamline asset management, reporting, and account management.

Fundrise provides a wide range of investment options, such as venture capital, private credit, and real estate funds, for investors who want to access

opportunities that are typically unavailable to non-accredited investors.

Particularly in regions like the Sunbelt, the investment platform's real estate funds and eREITs provide income and capital appreciation through the construction of single-family homes, multifamily apartments, and commercial properties.

The Income Fund by Fundrise offers gap financing specifically for multifamily housing and distributes income generated from real estate investments. Additionally, investors can achieve long-term returns by investing in private companies like Databricks and Canva through the Innovation Fund, which is a venture capital fund.

Comprehensive guide to Fundrise

Fundrise charges an annual advisory fee of 0.15% to cover services such as customer support, dividend distribution, and reporting. Real estate funds such as the Flagship Fund and eREITs charge a management fee of 0.85% for portfolio management and growth.

Fundrise’s 1% annual fees are relatively low compared to the 9% to 10% charged by many private REITs. If investors decide to use Fundrise to make venture capital investments, the Innovation Fund charges an annual management fee of 1.85%.

Fundrise provides several advantages that help make venture capital and real estate investing more

affordable, accessible, and effective for individual investors. Fundrise simplifies alternative investing through an intuitive app and process.

Since 2012, Fundrise has been a major force behind making investing more accessible. Private real estate investing has traditionally been limited to accredited investors or those managing their own properties, which is prohibitively expensive and time-consuming for most people.

Fundrise fills the information gap by offering podcasts, articles, and memoranda on the state of venture capital and real estate. Other investors have followed Fundrise's lead in accessibility, such as the Autopilot app, which makes it simple for investors to monitor and invest in hedge fund and politician portfolios.

With Fundrise, investors can begin investing with as little as $10 in real estate and $1,000 in venture capital. Historically, much larger initial investments are needed for venture capital and private real estate investments. Whether they are just starting out in investing or evaluating Fundrise's returns before making a larger investment, these low minimums enable investors to obtain exposure to alternative investments without making a sizable investment.

Whether an investor wants to invest in real estate, venture capital, private credit, or a particular real estate market, Fundrise offers a wide range of options for diversifying their portfolio. Investors can invest in venture capital through the Innovation Fund, increase the income in their portfolio by investing in the Income Real Estate Fund, or diversify their real estate holdings by investing in the Flagship Real Estate Fund.

Median home price in the United States from 2015 to 2024

2015 $222,400 2016 $233,800 2017 $247,200 2018 $259,300 2019 $271,900 2020 $296,700 2021 $350,700 2022 $386,400 2023 $389,300 2024 $407,600

Source: YCharts

Investors can choose to invest in East Coast, Heartland, or West Coast eREITs, among other eREITs, for more focused real estate investing. The desktop and mobile apps

from Fundrise are incredibly well-designed and user-friendly. These apps allow users to manage and invest, monitor performance, and assess the status of the projects they fund. Fundrise makes it easy to access tax records and review detailed breakdowns of fees and performance. Users can also use the app to automate contributions, determine possible returns based on their choices about contributions, and obtain helpful information about venture capital and real estate investing.

Retail investors can benefit greatly from Fundrise, but as with any investment opportunity, there are risks that prospective users should be aware of. Due to its inherent volatility, real estate is susceptible to declining interest rates and the state of the economy. If Fundrise's managers make mistakes with the use of funds and portfolio management, there is also platform risk.

As previously stated, the value of investments and distributed income may be impacted by the economic and real estate risks associated with Fundrise's real estate holdings. A downturn in the economy, a high-in-

terest rate environment, or a decline in the demand for a particular kind of real estate in a particular location can all have a negative impact on real estate investments. Before investing in Fundrise and real estate in general, investors should evaluate their risk tolerance.

Liquidity is one risk associated with Fundrise compared to publicly traded investments made through the Acorns app. During specific times, like a recession, Fundrise retains the right to limit or postpone withdrawals. Investors should consider this when deciding how much to invest with Fundrise.

Given the essentially long-term nature of Fundrise's venture capital and real estate investments, money that might be needed within five years shouldn't be invested. Because private REITs are known to fluctuate less in price than publicly traded REITs, this potentially reduced liquidity may be advantageous for account values.

Understanding risks

Investors should be aware that, like any other investment, there is a chance of losing money when think-

ing about investing in Fundrise. Notwithstanding Fundrise's goal of producing large returns, there is a chance that venture capital or real estate investments made through the platform could result in the partial or complete loss of invested capital. Prior to investing in Fundrise or the real estate market in general, investors should evaluate their investment horizon, risk tolerance, and knowledge of market volatility.

In the market for real estate investment platforms, Fundrise's main rivals are RealtyMogul and CrowdStreet. Similar to Fundrise, these platforms offer user-friendly platforms aimed at increasing access to retail investors and concentrate on real estate investments. In contrast to RealtyMogul, which has a $5,000 minimum investment, and CrowdStreet, which has a $25,000 minimum investment, Fundrise has a low $10 minimum investment.

While RealtyMogul provides Fundrise and other non-accredited real estate investment options, CrowdStreet caters to accredited investors. RealtyMogul provides REITs and individual investment opportunities, CrowdStreet provides direct investment into individual commercial real estate opportunities, and Fundrise provides eREITs and eFunds. For non-accredited, more entry-level investors, Fundrise is the best option; for accredited investors looking to invest in individual projects, CrowdStreet is the best option; and RealtyMogul provides a middle ground with opportunities for higher-networth investors, accredited or not.

With low investment minimums, an easy-to-use interface, and

the ability to personalise your real estate investments through eREITs, Fundrise may be worthwhile for non-accredited investors looking for exposure to real estate, private credit, or venture capital investing. With Fundrise, investors can access alternative investments that are typically inaccessible to non-accredited investors, increasing the overall diversification of their portfolio holdings.

If you are uncomfortable with the volatility of the real estate market, have a shorter time horizon for your investments, or are worried about diminished liquidity during economic downturns, Fundrise might not be the best choice for your investment strategy.

When evaluating Fundrise as an alternative investment option, it's important to consider how comfortable retail investors are with market volatility and liquidity constraints. The platform offers a straightforward and efficient way for investors to engage with private assets that are focused on long-term growth.

For those seeking passive income, portfolio diversification, and exposure to previously inaccessible markets, Fundrise presents a compelling entry point. However, success depends on understanding the risks, staying invested for the long term, and using the platform’s tools to make informed decisions. Fundrise bridges the gap between Main Street investors and institutional-grade opportunities.

editor@ifinancemag.com

Even though the new law is quite accommodating, the banks in Lebanon are opposing it and using the media to disparage the legislation

The fall of Lebanon’s banking fortress

IF CORRESPONDENT

In April 2025, the Lebanese Parliament passed a law allowing the lifting of banking secrecy, marking a historic shift for the country’s financial system and ending a legacy dating back to 1956. The measure is part of the financial reforms Lebanon is undertaking in coordination with the International Monetary Fund (IMF).

The new law introduces significant provisions to facilitate the fair restructuring of the banking sector, including auditing the banks’ balance sheets and assessing their ability to continue operating. Lifting banking secrecy will now enable the Central Bank and the Banking Control Commission to access banking data. This allows oversight bodies to rely on specialised auditors, selected by the Central Bank, to evaluate each bank individually and investigate potential violations by bank management.

The law applies retroactively for up to 10 years, covering all banking operations since 2015. This enables regulators such as the Central Bank and the Banking Control Commission to revisit pre-crisis transactions and reclaim illegally obtained profits made by banks’ shareholders at the expense of depositors.

"Most importantly, the law’s primary mandate of lifting banking

secrecy is not limited to the bank restructuring process; it extends to routine oversight, even after restructuring is complete. The law clearly allows the Central Bank and the Banking Control Commission to access client names, account balances, and any banking records," said Ali Noureddeen, the Senior Inclusive Economies Associate at TIMEP (Tahrir Institute for Middle East Policy).

What is the Secrecy Law about?

In 1956, as the banking system was formed under President Camille Chamoun’s watch, Lebanon enacted the "Banking Secrecy Law," which explicitly stipulated the confidentiality of information related to customer names and transactions, prohibiting its disclosure to any individual or public authority (even tax or judicial bodies).

This restriction was also applied to foreign authorities. Even the Central Bank’s oversight authority, the Banking Control Commission, lacked the power to access data related to clients’ accounts. This was despite the commission being legally mandated to audit banks’ operations and ensure compliance with the law.

The law was passed during an era of wealth accumulation from oil extraction in the Gulf region. Back then, regional investors sought stable banking systems, especially since Gulf countries had not yet developed the financial systems they have today. Lebanon’s banking secrecy model provided a reassuring financial environment, especially for those who preferred to keep their wealth undisclosed.

When neighbouring countries like Syria, Egypt, and Iraq experienced waves of nationalisation in the 1950s and 1960s, Lebanon’s banking secrecy served as an attractive shield. Wealthy

segments in these countries sought to transfer their capital to safer environments, away from oversight or political risk. Likewise, Lebanese expatriates saw banking secrecy in Lebanon as a way to hide their savings from tax authorities in their host countries.

Banking secrecy became one of the key drivers of the sector’s prosperity before the onset of the civil war in 1975, aided by the freedom of capital movement afforded by Beirut’s developed financial market. During this period, the number of Lebanese banks grew from nine in 1945 to 85 in 1960, and deposits multiplied nearly 38-fold between 1950 and 1975.

However, over the past two decades, several domestic and international developments rendered banking secrecy ineffective in attracting foreign capital, gradually eroding the competitive advantage it once provided. In contrast, the drawbacks of this model became more pronounced, particularly in obstructing efforts to combat banking violations, illicit operations, and money laundering activities.

In 2016, Lebanon joined the "Global Account Tax Compliance Act" agreement, which required it to report accounts held by foreign residents in Lebanese banks to their countries of residence. During the 2021-22 period, Lebanese banks began complying with the American Foreign Account Tax Compliance Act (FATCA) law, which obligates them to disclose any accounts held by American citizens to US tax authorities. As such, banking secrecy no longer made Lebanon a tax haven for wealthy foreign residents.

Meanwhile, Gulf financial markets had developed substantially over the past decades, and Beirut lost the monopoly on liberal and advanced financial systems in the Middle East. The UAE,

Banking deposits in Lebanon from 2015 to 2022 2015 161 2016 164 2017 170 2018 175 2019 163 2020 140 2021 128 2022 110

In Billion US Dollars

Source: Banque du Liban

for instance, developed its own financial system into a tax haven, attracting capital from other Gulf nations and eroding Lebanon’s share of the regional market.

Still, banking secrecy continued to cast a long shadow over Lebanon’s ability to regulate and oversee financial activities. It also hindered tax audit procedures that required authorities to access banking data to cross-check it with tax declarations, making such verification impossible. This was one of the main reasons behind Lebanon’s failure in building a system of tax control and audit to curb tax evasion, estimated at nearly 50% of due taxes. The IMF valued this loss to the Lebanese state at around $4-5 billion annually.

The new law introduces significant provisions to facilitate the fair restruc-

turing of the banking sector. This process is expected to include auditing the banks’ balance sheets and assessing their ability to continue operating. Also, lifting banking secrecy granted the Central Bank and the Banking Control Commission access to banking data, including for audit firms appointed by the Central Bank. This enables oversight bodies to rely on specialised auditors, picked by the Central Bank, to evaluate each bank individually and investigate potential violations by bank management.

An unhappy banking lobby

Even though the new law is quite accommodating, the banks in Lebanon are opposing it and using the media to disparage the legislation. They refuse to take any accountability for the problem. Ever since the formation of Nawaf Salam’s gov-

ernment in February 2025, coordinated defamatory campaigns have targeted independent media outlets, economists, local advocacy groups, and even political figures calling for financial and political reforms.

“The country’s banking lobby, along with the media outlets it funds, has intensified its media campaign as the new government places banking and financial reform among its top priorities. These reforms include resuming negotiations with the International Monetary Fund over a bailout deal, drafting a financial recovery plan, restructuring banks, passing a law that lifts banking secrecy, and filling key public posts, most notably appointing a new Central Bank governor. As conspiracy theories were being spread to discredit reformists and distract the public, the banking lobby has mobilised to block financial and economic reforms unfavourable

to its interests. It is in this vein that the lobby’s candidate, Karim Souaid, was appointed on March 27 to lead the Central Bank without much public scrutiny of his agenda,” Noureddeen noted.

"The coordinated media campaign was consistent in its messaging across numerous online media platforms and television programmes, funded by Lebanese businessman and banker Antoun Sehnaoui, a major shareholder and chairman of Societe Generale de Banque au Liban. Sehnaoui is one of the most influential Lebanese bankers and controls various media outlets that reflect his views and defend his interests. He also wields significant influence within a wide range of political parties, MPs, and decision-makers, thanks to his active support and financing of various electoral campaigns and political activities," he added.

The banks have blamed Kulluna Irada,

a pressure group and civil society organisation that has advocated for financial reforms. They assert that the group disseminated false information that caused a bank run and prevented the banks from paying back depositors. The group has been maligned by the media, which has strong ties to the banking industry.

They also spread a conspiracy theory that claimed Kulluna Irada was funded by American billionaire George Soros and the "Global Left." In fact, independent media platforms Megaphone and Daraj, whose reporting since the beginning of the financial crisis contributed to exposing the violations committed by political and banking elites at the expense of depositors and public funds, weren’t spared either.

Souaid, an asset manager with deep ties to Lebanon’s political and financial establishments, was portrayed as the figure capable of confronting the very conspiracy allegedly orchestrated by Daraj, Megaphone, and Kulluna Irada. Souaid’s nomination and his eventual appointment were met with objections from a wide range of reform advocates, such as the Depositors Union (a collective representing the rights of Lebanese depositors) and other public policy organisations, along with cabinet members and MPs.

The reason behind the banking lobby fiercely backing Souaid lies in the fact that he previously presented a plan to address the crisis by converting the deposits that banks are unable to pay into debts owed by the Lebanese state. The responsibility to repay these deposits would therefore be transferred from the banks to the government. The plan then suggested implementing a “haircut,” or a write-off, of up to 90% of the government’s debts, which would mean that the depositors’ rights would simply

Currently, the main challenge, particularly on the part of the Central Bank and the Banking Control Commission, is to begin making use of the legislation that lifted banking secrecy

- Noureddeen

disappear. This way, banks would be able to rid themselves of their crisis at the expense of depositors and taxpayers.

The smear campaign from the banking lobby successfully diverted attention away from this problematic plan, which ended up receiving minimal scrutiny in the media. Souaid’s appointment came despite objections from Prime Minister Nawaf Salam himself and a group of ministers.

He managed to garner enough votes in the Council of Ministers, benefiting from the support of the President’s top economic advisor, Varouj Nerguizian, who served alongside Souaid on the Board of Directors of Emirates Lebanon Bank. This gave Souaid a big advantage over other candidates, given the President’s influence over the Council of Ministers’ decisions.

What comes now?

The immediate challenge for the Central Bank and the Banking Control Commis-

sion is to use the law effectively by auditing the banks’ assets and liabilities and assessing their financial positions. Initiating a comprehensive audit process in the banking sector requires a high degree of determination on the part of the Central Bank, apart from the ability to confront political pressures from actors (including the banking lobby) who will not welcome these measures.

"The next step is to audit transactions from the last 10 years, to identify the causes of losses and establish fair accountability. This means that losses should be borne by those responsible, particularly those who profited unlawfully at the expense of depositors. This stands in contrast to the policies adopted by the banking sector since 2019, which have placed the heaviest burden on depositors by withholding deposits or repaying them at significant discounts. To continue the reform process, Parliament must now pass the Bank Re-

structuring Law, already adopted by the government as a draft bill. This law will overhaul the Higher Banking Council, the sector’s main regulatory authority, and specify the powers of the Banking Control Commission. It will also define criteria for identifying viable banks for recapitalisation (injecting new funds into the banks through contributions made by current or future shareholders) versus those to be merged or liquidated," Noureddeen remarked.

Another critical step remains the passage of the "Financial Stability Law," or "Financial Gap Law," which has not yet been approved as a draft bill. This law is fundamental to resolving the banking crisis, as it will define how to address the existing loss gap and determine the level of deposit protection. Passing it transparently and fairly will be a decisive step toward restoring trust, delivering justice to depositors, and halting Lebanon’s ongoing collapse.

"Currently, the main challenge, particularly on the part of the Central Bank and the Banking Control Commission, is to begin making use of the legislation that lifted banking secrecy. This requires the commission to start auditing banks’ balance sheets, to assess the financial condition of each bank, and to form a clear picture of the portion of deposits the banking sector can currently guarantee. It also necessitates launching a detailed audit of the banking practices carried out over the past years. Without these steps, the lifting of banking secrecy will not contribute to achieving justice for depositors. The government has also proposed a new law to scrap banking secrecy rules in Lebanon, which prohibits banks from disclosing customer information without their consent, even to government entities. The media outlets aligned with the banking lobby were quick to defend banking secrecy, saying it is needed to preserve the

sector’s appeal and maintain confidence in it," Noureddeen added.

While proponents of lifting banking secrecy say that removing such restrictions is necessary for implementing the restructuring of the banking sector, by uncovering the causes of accumulated losses and addressing them, the banking lobby fears the move would uncover major violations that generated significant profits for them at the expense of depositors’ funds. Among these practices are the “financial engineering” operations that yielded large profits for the banks while causing losses to the central bank, depleting the depositors’ funds it held.

Also, the "banking secrecy" clause resulted in situations where Lebanese courts lacked access to critical financial information for investigating cases of embezzlement, illicit enrichment, and other financial crimes.

"Even when Lebanon created the Special Investigation Commission in 2001 under the Anti-Money Laundering Law, to combat illegal banking activities, the law did not mandate the commission to provide information to judicial, regulatory, or tax authorities. Instead, it retained absolute discretionary power to assess whether any given incident constitutes money laundering, without giving any other authority the ability to appeal this assessment. The commission also remained under the control of the Central Bank governor, creating a clear conflict of interest. For this reason, the commission played no serious role in pursuing money laundering cases within Lebanon’s banking system," Noureddeen concluded, a statement that illustrates the "Pandora's Box" Lebanon's banking sector became.

editor@ifinancemag.com

Projected metaverse revenues by 2030 highlight the dominant roles of gaming and e-commerce in a $490-plus billion virtual economy

The future of fun: Gaming goes mainstream

IF CORRESPONDENT

Once dismissed as child’s play, gaming today is big business on a global scale. In 2024, the video game market generated about $224 billion in revenue, already larger than the combined global movie and music industries. Analysts project steady growth of around 5% to 8% annually, with some estimates expecting the industry to approach $300 billion by 2029.

In fact, Deloitte predicts an even more dramatic trajectory, stating that the sector could be worth $485 billion by 2028. This explosive growth has elevated gaming from a subculture to a central pillar of the entertainment economy, outpacing other media segments and catching the attention of investors worldwide.

What’s driving this surge? For one, gaming has penetrated every corner of the globe and every demographic. From consoles like Xbox and PlayStation to mobile games on billions of smartphones, gaming is now a mainstream pastime for more than three billion people, by some counts.

It’s not just about kids in arcades anymore. It has evolved into a massive audience spanning all ages, eagerly spending time and money

on interactive entertainment. Major tech and media companies have taken note, with Netflix now offering games alongside films, and Meta (Facebook’s parent) heavily investing in virtual reality gaming experiences. Gaming isn’t merely entertainment anymore; it represents a data-driven, innovationhungry industry that closely resembles the tech sector.

Leading game publishers operate like Silicon Valley firms, leveraging user data, analytics, and agile development to keep players hooked and revenues rising. In short, video games have become a global economic powerhouse, reshaping how we think about media, culture, and money.

Innovative monetisation models

In the past, selling a video game was a simple transaction, where a customer bought a game once, and that was it. Today, that one-time purchase model is almost quaint. Modern games are designed to generate continuous revenue streams long after the initial download. How does this happen? It’s achieved through innovative monetisation models that keep players coming back, and keep the cash flowing.

Free-to-play games have led the charge, with titles like Fortnite, League of Legends, and Candy Crush allowing anyone to start playing for free, then earn money by selling enticing extras. These “extras” can be purely cosmetic items like character skins and outfits or functional enhancements like new levels, characters, or power-ups. In 2018 and 2019 alone, Fortnite, free to download, generated over $9 billion in revenue from such in-game purchases.

9,051 10,353 11,386 11,575 15,370 16,230 15,466 21,503

small purchases by millions of people add up fast. Namely, China’s blockbuster mobile game Honor of Kings grossed an estimated $2.6 billion in 2024, largely from in-app microtransactions.

Another lucrative model is the “games as a service” approach, which often uses subscriptions or season passes. Console and PC games increasingly offer monthly memberships or “battle passes” that unlock exclusive content over time. This provides a steady, recurring income.

Even platforms themselves have subscription services. Big tech companies like Microsoft’s Game Pass and Sony’s PlayStation Plus give players access to a library of games for a monthly fee, blending the Netflix model with gaming. Advertising is

(In Million US Dollars) Source: Statista

yet another revenue stream, as many free mobile games show video ads or banner ads, earning pennies per view that translate into substantial revenue at scale. In 2024, brands spent over $32 billion on in-game advertising, a figure that is projected to rise to nearly 38% of all game industry revenue by 2029 as marketers chase the massive, engaged gaming audience.

Crucially, these monetisation methods are designed to enhance or at least not disrupt the player’s enjoyment. Game companies tread carefully because they want to boost revenue without alienating players. The most successful games strike a balance, offering optional purchases or ads that feel like part of the fun. When executed well, players actually appreciate new

Players willingly pay for digital goods that personalise their experience or give them bragging rights, and those Gaming revenue generated by Microsoft from 2017 to 2024

content and features, and they reward studios with loyalty (and dollars).

By continually updating games with fresh content such as new levels, events, items, and rewards, publishers keep players engaged for years, not just the week after launch. Consequently, this leads to recurrent income that can far exceed the old single-sale model.

A hit game today can essentially become a platform for ongoing monetisation. Little wonder that investors and financial strategists are now deeply involved in game development decisions, ensuring monetisation is baked into game design from the start.

Where play meets profit

Video games have given rise to vibrant

virtual economies that increasingly mirror real-world markets. Players buy, sell, and trade digital assets in many popular games, which can often be referred to as the “goods” of a game’s economy. These might include cosmetic items for avatars, special weapons or gear, collectable cards, virtual real estate, or even entire characters.

What’s remarkable is that players often spend real money to obtain these virtual goods, even though the items have no tangible existence outside the game. The appeal lies in what they do for players. For instance, a rare skin might confer status, a powerful item might improve gameplay, or a custom decoration might allow someone to express their identity. In effect, games have created closed-loop economies

where virtual currencies and items hold significant perceived value.

For game companies, this represents a financial goldmine. Virtual item sales have become a major revenue source, often eclipsing the upfront price of the game itself. A player might spend $0 to download a mobile game, then willingly spend $10, $100, or more over time on bonus packs or premium currency to enhance their experience.

This model has blurred the line between gaming and traditional commerce. Players are now both consumers and participants in these digital marketplaces. In titles such as Roblox or EVE Online, entire virtual economies flourish. Players can create goods or content and sell them to others for in-game currency, which in some

cases can be exchanged back into real money. Some enterprising gamers treat these ventures like small businesses, earning real income by trading in-game commodities.

Occasionally, the virtual economy intersects with reality in jaw-dropping ways. For example, in early 2023, a single digital weapon skin known as a decorative AK-47 rifle skin in CounterStrike: Global Offensive was sold to a collector for $400,000 in real money. And that wasn’t even the highest. There have been unconfirmed trades of rare game items valued at over $500,000. In another example, the esports scene for Dota 2 saw its championship prize pool reach $40 million in 2021, funded entirely by players purchasing ingame content. These cases highlight how much value people now place on digital assets. What was once just pixels on a screen can now carry a price tag rivalling a luxury car or a house.

Game developers have nurtured these economies by introducing virtual currencies that players use as intermediate money. For instance, buy 1,000 gems for $10, then spend those gems on items. This indirection helps soften the sense of spending real cash and keeps money circulating within the game ecosystem.

The strategy has paid off handsomely. By 2022, 95% of all game sales revenue was digital rather than physical, reflecting the dominance of in-app purchases and downloads over boxed games. Economists and financial researchers are paying close attention to these virtual markets. Some view them as prototypes for future digital economies, where virtual goods, community-driven value, and creative monetisation could influence realworld business.

NFTs and the metaverse

Beyond the contained economies of individual games, new technologies are pushing the concept of virtual assets even further. Non-fungible tokens (NFTs) and the vision of a broader metaverse have become buzzwords in gaming and finance. In games, NFTs offer a way to give players true ownership of a unique digital item that isn’t confined to a single game’s servers.

An NFT might be a one-of-a-kind sword, a rare character skin, or a plot of virtual land, secured on a blockchain so that players can buy, sell, or trade it outside the game environment. The promise is that a rare digital item could hold value similarly to a physical collectable, with provable scarcity and ownership.

Some early games built around NFTs,

like Axie Infinity and Gods Unchained, showed that players would invest significant money for the chance to earn or own valuable in-game NFTs. At one point, Axie Infinity players in developing countries were making a living income through play-to-earn mechanics, though that boom has since tempered.

The metaverse takes the idea of game economies and stretches it to a sprawling virtual universe that blends gaming, social media, and commerce. It’s an immersive online space where people might work, play, socialise, and shop, all using digital avatars. Although the full metaverse concept is still emerging, gaming platforms are already establishing the foundation.

Roblox, Fortnite, and Decentraland host virtual events and marketplaces where brands sell digital merchandise

An NFT might be a one-of-akind sword, a rare character skin, or a plot of virtual land, secured on a blockchain so that players can buy, sell, or trade it outside the game environment. The promise is that a rare digital item could hold value similarly to a physical collectable, with provable scarcity and ownership

and artists perform concerts for millions of virtual attendees. Tech giants are investing heavily. For example, Facebook rebranded as Meta and has poured billions into VR and AR (augmented reality) technology to stake its claim in the metaverse.

The economic potential is immense.

According to Statista, the metaverse market, which includes VR/AR hardware, software, digital goods, and more, could reach $490 billion by 2030. This conservative estimate identifies e-commerce and gaming as the primary revenue drivers, with gaming-related metaverse revenue expected to rise from approximately $10 billion today to $163 billion in 2030.

Projected metaverse revenues by 2030 highlight the dominant roles of gaming and e-commerce in a $490-plus

billion virtual economy. Already, dozens of companies are racing to build these new virtual worlds or provide the tools for them.

Aside from Meta and major game studios like Epic Games (creator of Fortnite), there are crypto-native platforms such as The Sandbox and Decentraland that sell virtual land as NFTs. Luxury fashion brands have designed virtual clothing for avatars, and real estate in prime virtual locations has sold for millions of dollars.

Sceptics note that the metaverse hype may be ahead of reality, since user numbers in some blockchainbased worlds are still very modest. However, the convergence of gaming, virtual economies, and blockchain is undeniably shifting paradigms.

This points to a future in which digital

assets and experiences hold economic significance comparable to physical ones. Regulators and economists are paying close attention to how these trends develop, especially as questions surrounding asset ownership, intellectual property, and taxation of virtual earnings become increasingly important.

Wall Street meets gaming

As gaming has become an economic juggernaut, traditional finance is inventing ways to ride the wave. One response has been the creation of gamingfocused financial products like specialised exchange-traded funds (ETFs).

These are investment funds that bundle together dozens of gamingrelated stocks, such as game publishers, console manufacturers, esports companies, and others, into one tradable package. The VanEck Video Gaming and eSports ETF (ticker: ESPO) offers investors a wide range of exposure to the gaming industry.

Rather than betting on a single gaming company, one can invest in the sector’s overall growth through such ETFs. This reflects the recognition that gaming is now a serious investment theme. Other funds like Global X’s Video Games & Esports ETF, known as HERO, have also launched, and major investment firms track gaming indices.

The appeal to investors is clear. Gaming has a youthful, global customer base and multiple avenues of revenue— software, hardware, mobile, VR, and more—making it an attractive long-term growth story. Even casual investors are hopping on, since, unlike picking individual stocks, ETFs are accessible and relatively easy to understand, so they have lowered the barrier for putting money into the gaming boom.

Perhaps even more interesting is

how gaming has infiltrated the world of fintech and personal finance. Banks, trading apps, and fintech startups have discovered that applying gamelike elements can make finance more engaging for a new generation of users.

This trend is broadly called gamification, which involves adding rewards, competition, and playful design to non-game activities. Stocktrading apps like Robinhood famously used animations like confetti and achievement badges to celebrate users making trades, mimicking the positive feedback loops of video games. Robinhood eventually toned this down after criticism, but the influence was unmistakable.

Many investing platforms now have quizzes, progress bars, or even paper-trading games that let users practice trading without real money. The idea is to reduce intimidation and educate new investors by tapping into the motivational tricks of games. Even serious banks have added features like point systems or challenges such as “save $100 this month to earn a badge!” to their mobile apps.

This gamification of finance appears to work. Tasks that might seem tedious, such as budgeting, investing, and learning financial concepts, become more fun and interactive when framed as a game. One finance executive noted that adding game mechanics boosted customer engagement dramatically on their app; users would log in more frequently and invest more regularly when they had streaks to maintain or levels to rise.

Beyond stock trading, fintech apps for budgeting, credit scores, insurance, and retirement savings are adopting these techniques. Some savings apps even give users virtual rewards for

meeting goals, and credit score apps use progress metres and celebratory graphics when your score improves. The gamification trend extends to health insurance with wellness challenges, education through learning apps with points and leaderboards, and workplace productivity tools, all borrowing from what video games have perfected about engaging users.

Importantly, gamification isn’t confined to finance. Across industries, companies are leveraging game mechanics to drive customer behaviour and loyalty. Retail and e-commerce apps frequently incorporate mini-games or daily rewards. China’s e-commerce giant Temu and its rivals are known for offering in-app games that reward users with coupons or credit. Food delivery services might have challenges, such as “order 5 times this month for a bonus!”

Fitness apps turn exercise into a game with badges for milestones and social competitions for steps taken. By 2025, the global gamification market, which refers to the business of software and services that help companies gamify experiences, is projected to reach $30 billion, up from just $9 billion in 2020.

In fact, a Gartner report found that over 70% of Global 2000 companies have implemented gamification in some form. The rationale is simple: engagement. In an age of short attention spans, techniques honed in video games are gold for keeping users interested and active.

The future is playable

In little more than a decade, gaming’s reputation has transformed from a frivolous pastime to a formidable economic force. The innovations born in the gaming world, such as virtual currencies, digital goods, live-stream

engagement, and gamified apps, are now reshaping finance and business strategies at large.

Gaming has taught industries how to engage users and monetise digital experiences through creativity and interactivity. It has been shown that people will invest real value in virtual experiences, whether buying a skin for their character or spending hours honing skills to compete online.

For gamers themselves, the lines between playing for fun, earning a living, and investing have blurred. A teenager streaming gameplay from their bedroom might be building a lucrative personal

brand. A clan of gamers spending real money on virtual real estate might see it as a serious investment in the next digital frontier. And an average person using a budgeting app with gamified features is essentially playing a serious game to improve their finances. Gaming has made economics more playful and play more economically significant. Looking ahead, we can expect the interactive, engaging, and user-centric principles of gaming to increasingly inform mainstream business. As one industry observer quipped, "the future of business will be where the world is your playground."

In practical terms, this means more immersive marketing, more interactive customer experiences, and business models that reward loyalty and engagement the way games do. We may see the day when quarterly earnings calls discuss user engagement levels and player retention strategies just as often as they do revenue, which is something that is already happening in certain sectors.

through the expansion of virtual reality metaverses, the integration of game theory into everyday apps, or the emergence of yet-unimagined digital assets, the influence of gaming on the market will continue to grow.

Companies and investors who understand the importance of play, along with the community and creativity it brings, are more likely to succeed in today’s world. In the gaming industry, those who welcome fresh and fun ideas are the ones who will do best.

One thing remains certain. The ascent of gaming from niche entertainment to economic titan is a story still in progress, with new chapters being written in real time. Whether editor@ifinancemag.com

JON GIULIANI CHIEF REVENUE OFFICER XIMPLIFI

While short-term rentals can generate attractive returns, they are inherently volatile businesses

Short-term rentals bank on fintech fix

Short-term rentals are evolving from casual side ventures into structured businesses. Yet, cash flow management remains one of the sector’s biggest hurdles. Fintech and outsourced accounting are emerging as powerful solutions, helping operators streamline payments, forecast earnings, and maintain liquidity in a market defined by unpredictability and rapid growth.

Growing accounting needs

The short-term rental industry has expanded rapidly over the past decade, fuelled by platforms like Airbnb, Vrbo, and Booking.com. What was once a niche market for vacation properties has become a mainstream investment strategy for individuals and institutional players. With this growth, financial technology (fintech) has become an integral part of how operators manage their businesses.

Historically, short-term rental owners relied on traditional banking services, manual spreadsheets, and delayed payouts from booking platforms. These processes often created inefficiencies and left operators vulnerable to liquidity challenges. Today, fintech companies are reshaping the landscape by providing tools that allow operators to manage cash flow with greater precision, transparency, and speed. New technology and services have enabled short-term rental operators to professionalise their financial operations, from embedded

payment systems to revenue management platforms and real-time data analytics.

For finance professionals, this shift represents more than just operational convenience. It demonstrates how fintech can transform fragmented, consumer-driven markets into scalable business models with sophisticated financial infrastructure.

Common cash flow challenges

While short-term rentals can generate attractive returns, they are inherently volatile businesses. Operators face several recurring cash flow challenges that make financial management more complex than in traditional real estate.

Short-term rental operators face cash flow challenges due to seasonal demand shifts, delayed payouts from booking platforms, and high fixed costs like mortgages and maintenance. Irregular income paired with scheduled expenses creates liquidity issues. Regulatory requirements such as taxes and insurance add unpredictability, while reliance on a single platform heightens risk—any disruption can severely impact revenue. These factors combined make accurate forecasting and financial stability difficult to maintain.

Addressing cash flow issues

Modern fintech solutions are helping shortterm rental operators manage unpredictable

revenue and recurring expenses more effectively. Faster payout tools offer near-instant access to guest payments, reducing reliance on credit and improving cash flow for payroll and vendor payments. Revenue management platforms use machine learning to optimise pricing and forecast income, enabling better planning for debt and capital expenditures. Expense tracking software integrates with bank and property systems to automate bookkeeping and flag budget deviations, minimising financial blind spots as operators scale.

Additional innovations include embedded lending products that offer flexible repayment tied to projected bookings—ideal for seasonal markets. Automated tax and compliance platforms handle occupancy taxes and reporting, reducing the risk of unexpected liabilities. Holistic dashboards unify financial data across properties, giving operators and finance teams real-time visibility into performance. These tools empower operators to make smarter, faster decisions and maintain financial stability in a volatile industry.

To illustrate, consider a short-term rental operator managing 25 properties across three cities. Without utilising third-party resources, this operator must manually reconcile booking payouts, vendor invoices, and tax obligations—a process prone to delays and errors. With fintech, payments are deposited imme-

diately, revenue projections update in real time, and credit facilities are automatically extended during offpeak months. This transforms financial management from reactive to strategic.

The short-term rental sector demonstrates how third-party financial solutions such as SaaS platforms and outsourced accounting services are becoming essential infrastructure for growth. By helping operators manage the industry’s inherent cash flow volatility, these tools provide the visibility, control, and agility needed to make smarter, faster decisions.

What was once a fragmented and unpredictable asset class is now becoming more financially disciplined and operationally scalable. As the sector matures, those who adopt purpose-built financial tools will be better positioned to mitigate risk, unlock efficiencies, and build sustainable, competitive businesses.

Jon Giuliani is the Chief Revenue Officer of Ximplifi, where he leads finance, sales, and operations to help businesses scale with outsourced accounting and trust accounting automation. With over a decade of executive experience across healthcare, finance, and technology, he has a proven track record in driving revenue growth, M&A, and operational transformation

editor@ifinancemag.com

Stronger corporate governance has made UAE markets more attractive to local and foreign investors

Why corporate governance matters to investors

IF CORRESPONDENT

Corporate governance refers to the system by which companies are directed, managed, and overseen. While it may sound technical, it has very real implications for businesses and the public. Good corporate governance creates an environment of trust, transparency, and accountability, which, in turn, encourages long-term investment and sustainable business growth.

A wellgoverned company has systems to balance the interests of everyone involved, from investors and employees to, customer and the community

In practice, this means clear rules and strong oversight to ensure companies are run ethically, and in the best interests of their stakeholders. In recent years, the United Arab Emirates (UAE) has made corporate governance a top priority by updating laws, aligning with international standards, and reshaping how boards of directors operate.

International Finance explores the principles of corporate governance, how boards’ roles have evolved from ceremonial to strategic, and what makes boards effective today.

It also highlights the UAE’s progress, focusing on a real example from the Commercial Bank of Dubai in raising governance standards.

What is corporate governance?

At its simplest, corporate governance is about how a company is controlled and directed for the benefit of its owners (shareholders) and other stakeholders. It sets out the relationships among shareholders, boards of directors, and management, defining their roles and responsibilities. A well-governed company has systems to balance the interests of everyone involved, from investors and managers to employees, customers, and the community.

With the right structures in place, good corporate governance facilitates an atmosphere of trust and openness inside and outside the company. For example, companies that adhere to governance best practices routinely publish honest and thorough reports on their financial health and operations, which builds transparency and credibility.

Such transparency makes it easier for investors to trust the company, knowing they will receive timely, accurate information. As the OECD (a global policy standard-setter) notes, governance promotes “trust, transparency, and accountability, which promotes long-term patient capital”—in other words, it attracts investors who are willing to commit to the long term.

Strong governance also enhances accountability: clear rules mean that executives and directors can be held responsible for their decisions and performance. When companies are governed well, shareholders have ways to hold management to account,

and management, in turn, is accountable to the board. All of this reduces the risk of mismanagement or corruption and leads to more sustainable success.

Crucially, governance is linked to long-term business sustainability. Companies that operate transparently and accountably tend to make decisions that favour long-term growth over shortterm gambles. By setting checks and balances like independent board oversight and strong audit controls, corporate governance helps ensure a company can weather challenges and continue thriving for years to come.

In the UAE, regulators explicitly state that governance aims to achieve transparency, protect shareholders, combat improper conduct, and ensure companies meet their goals and long-term strategy.

As one corporate advisory firm summarised, strong governance enhances investor confidence by demonstrating transparency and attracting investment. It also leads to better risk management and decision-making, ultimately improving a company’s reputation and stability.

The evolution of board roles

As recently as the 1990s, serving on a board was often seen as an “honorary” position, which was a

form of recognition, and many closely held businesses didn’t bother having a formal board at all. Boards would convene infrequently to rubber-stamp decisions or provide polite oversight, but seldom to actively shape strategy. They were, as one account puts it, “largely ceremonial” in those days.

A series of corporate scandals and crises in the late 20th and early 21st centuries changed this. Major failures, from the Cadbury corporate governance scandals in the United Kingdom in the early 1990s to the infamous Enron collapse in 2001 and the 2008 global financial crisis, exposed that inactive or complacent boards were often a weak link in corporate oversight.

Each crisis prompted reforms and sharpened expectations for boards. Laws like the Sarbanes-Oxley Act (2002) and codes of best practice worldwide put the onus on boards to truly monitor management, ensure financial integrity, and manage risk. As a result, the public and regulators began to expect directors to be watchdogs and strategic guides rather than figureheads.

Fast forward to today, and the role of boards has expanded dramatically. A modern board is “asked to be all things to all people.” Not only must it provide direction and approve major decisions, but it must also guarantee compliance with laws and regulations, diligently moni-

tor risks, and even act as a champion of corporate social responsibility.

In other words, boards have shifted from being symbols of stability to active stewards of the company’s future. One analysis describes the board of directors now as the “fulcrum for change”—sandwiched between shareholders’ expectations and society’s demands. They are expected to ensure the company not only profits but also behaves responsibly towards employees, the environment, and the community.

This evolution is also evident in the UAE’s corporate landscape. Traditionally, some boards in the region were dominated by founding families or prominent figures, and their oversight could be considered light-touch. But the pressures of globalisation and a maturing economy have driven change.

As Wajahat Gul Memon, a corporate governance lead at the Commercial Bank of Dubai, explained, “Boards are no longer merely fulfilling regulatory requirements. They are driving long-term value creation and ensuring that the organisation remains resilient in the face of changing market conditions.”

UAE’s corporate governance advancements

In the past decade, and especially in recent years, the UAE has made a concerted push to elevate corporate governance standards across its business sector. This effort has involved enacting new regulations, updating existing codes, and ensuring local practices keep pace with international norms. These changes are not happening in isolation, as they are part of the UAE’s

FDI inflows to the UAE from 2015 to 2022

9.6 12.0 20.0 9.1 10.0 19.0 10.4 15.0

(In Billion US Dollars)

Source: UAE Ministry of Economy

broader strategy to promote a world-class business environment that attracts investment and sustains growth.

One cornerstone of the UAE’s governance reform was the Securities and Commodities Authority (SCA)’s Corporate Governance Guide for public joint-stock companies, which was approved in 2020 (via Decision No. 3/Chairman of 2020) and later amended in 2021 and 2024. The SCA, which regulates stock markets in the UAE, introduced these rules to strengthen oversight of listed companies.

Some of the key reforms include requiring that at least one-third of board members be independent directors, with clear criteria to define independence and avoid conflicts of interest. Notably, a special exemption that once allowed certain government-affiliated representatives to be deemed “independent” was eliminated to ensure true independence on boards.

Then there is mandating board diversity by insisting that each

board have at least one female director. This moved diversity from a nice-to-have to a legal must-have, catalysing the sharp rise in women’s participation in boardrooms.

The reform also emphasises director competence and engagement, for instance by stipulating that board members must have relevant experience/qualifications and limiting the number of directorships one person can hold to ensure they have time to fulfil their duties.

“Audit Committees,” “Nomination & Remuneration Committees,” and “Risk Management Committees” are compulsory for listed firms, each with defined roles to enhance financial oversight, fair appointments, and risk governance. Additionally, companies must implement robust internal control and risk management systems, with boards required to regularly assess their effectiveness. Recent amendments even specify that risk frameworks should align with globally recognised best practices like the COSO framework for internal controls.

Companies now also have to provide more detailed public reports— not just financial statements but also governance reports and even sustainability (ESG) reports. For example, an Integrated Report combining financial, governance, and other disclosures must be published within three months of the year-end. These measures ensure shareholders and the market get a fuller picture of each company’s performance and governance practices.

Protecting shareholder rights, especially minority investors, is also a big concern. The reforms bolstered mechanisms for calling shareholder meetings, voting on major transactions, and disallowing last-minute agenda additions that could disadvantage minority shareholders. The overall aim is to make sure all shareholders are treated fairly and have a voice.

with an independent external evaluation at least once every three years. There are also new guidelines for board secretaries (who support governance administration) to ensure they are qualified and operate with a degree of protection from undue interference. All these steps underscore a theme that the UAE is aligning its corporate governance framework with international best practices.

In fact, the SCA explicitly stated that these changes are part of “ongoing efforts to align the UAE’s corporate governance standards with international best practices, thereby facilitating a more robust and transparent business environment.”

The impact on the investment climate has been significant and positive. Stronger corporate governance has made UAE markets more attractive to local and foreign investors. When investors see rules that ensure transparency, accountability, and minority protection, they are more willing to invest their capital, knowing their interests will be safeguarded.

A country report on the UAE’s financial markets observed that regulatory reforms, including improved corporate governance and disclosure rules, are part of the “broader efforts to enhance the attractiveness of UAE capital markets for investors and businesses.”

In practical terms, this means higher demand for UAE stock offerings and greater participation by institutional investors who typically insist on good governance. Indeed, the UAE has recently witnessed a boom in public listings (IPOs) and an inflow of global investment, supported by confidence in the market’s regulatory integrity.

Companies with good governance are generally less risky and more stable, which lowers the cost of capital. As one corporate advisor explained, compliance with the new code isn’t just about avoiding penalties as it “goes beyond just meeting compliance requirements” by yielding benefits like higher investor trust, stronger risk management, better decision-making, and enhanced brand value. All of these factors encourage a healthier investment climate. We can see this manifest in the UAE with rising investor interest and trust in UAE companies.

They are also introducing board evaluations and improved governance processes. UAE-listed companies must perform annual evaluations of their board’s performance, editor@ifinancemag.com

The 2024 amendments to the governance code, in particular, were described as a “critical shift towards strengthening governance in line with global standards,” covering independence criteria, related-party definitions, and board composition. Likewise, officials from the SCA have noted that adopting global best practices in governance is key to the UAE’s vision for an inclusive, sustainable economy.

Even without tariffs, Bitcoin mining is a brutally competitive, low-margin business, and that has only intensified in 2025

Trump's Bitcoin dream collides with tariff reality

IF CORRESPONDENT

Upon returning to the White House, President Donald Trump pledged to make the United States the world's Bitcoin mining superpower, insisting that Bitcoin should be "mined, minted, and made in the USA."

His administration has introduced crypto-friendly policies to support this ambition. These range from creating a government “Strategic Bitcoin Reserve” to appointing a White House “crypto czar” and are all part of Trump’s promise to turn America into the global “crypto capital.”

The Republican also enacted legislation establishing a regulatory framework for dollar-pegged cryptocurrencies, commonly known as stablecoins, a milestone that could help normalise their use for everyday transactions and money transfers. The bill, called the GENIUS Act, was passed by the House of Representatives in July with a vote of 308 to 122, earning support from nearly half of the Democratic members and a majority of Republicans. It had previously cleared the Senate.

Treasury Secretary Scott Bessent said the new technology would buttress the dollar’s status as the global reserve currency, expand access to the dollar economy, and boost demand for American Treasuries, which back stablecoins.

Stablecoins are designed to maintain a constant value, usually a 1:1 US dollar peg, and their use has exploded, notably among crypto traders moving funds between tokens. The industry hopes they will enter mainstream use for sending and receiving payments instantly. The new law also requires stablecoins to be backed by liquid assets, such as US dollars and short-term Treasury bills, and for issuers to disclose publicly the composition of their reserves monthly.

Yet a stark contradiction lies at the heart of these plans, and we will use the Bitcoin example to explain this. Even as Trump champions an all-American “Crypto Vision,” he has unleashed steep import tariffs that jack up the cost of the very hardware US Bitcoin miners depend on, most of which is made in China.

This policy double-edged sword has left US miners, including the Trump family’s own mining company, caught between patriotic rhetoric and harsh economic reality. Industry experts warn that unless this contradiction is resolved, Trump’s dream of US dominance in Bitcoin mining may be undercut by the practical challenges his trade war has created.

Trump’s push for a Bitcoin mining empire

Trump’s recent policy moves mark a stunning 180-degree turn in the crypto world. After once calling Bitcoin a scam, he now openly courts the crypto industry. In his first months back in office, Trump fulfilled key crypto pledges by establishing a US Strategic

Bitcoin Reserve, stockpiling seized Bitcoins as national reserves, and replacing regulators seen as hostile to crypto with crypto-friendly figures.

For example, Trump ousted the prior Securities and Exchange Commission leadership, known for its aggressive stance on crypto, and installed former commissioner Paul Atkins, a pro-Bitcoin advocate, as SEC Chair. He also named tech investor David Sacks as “crypto and AI czar” to coordinate digital asset strategy and scheduled the White House’s first-ever crypto policy summit.

All these steps signal that Trump’s administration is throwing its weight behind Bitcoin mining and blockchain businesses.

“Our country must be the leader in the field,” Trump has said of cryptocurrency.

A centrepiece of Trump’s vision is for the US to dominate Bitcoin mining, the energy-intensive process that secures the Bitcoin network and mints new coins. In July 2024, Donald Trump clearly addressed an enthusiastic crowd at the Bitcoin 2024 conference. He reiterated that America would become the undisputed Bitcoin mining capital of the planet.

He explicitly called for an all-American Bitcoin: one mined on US soil with USmade equipment. To back miners, Trump has even floated using energy policy as a lever, hinting at measures to provide abundant, cheap power for mining farms. All told, the administration’s message is clear. It wants Bitcoin’s future to be written in red, white, and blue, with American firms reaping the rewards of the crypto boom.

Global hardware arms race Grasping the challenge requires first understanding how Bitcoin mining works.

China was the primary target in Trump’s so-called 'Liberation Day' tariff package. Shipments of high-tech goods from China were set to face a whopping 55% import duty

Bitcoin mining is a global hardware arms race. Miners worldwide run specialised computers (called ASICs) that race nonstop to solve cryptographic puzzles; the first to succeed earns the right to add a block of transactions to the blockchain and collect newly minted Bitcoins as a reward. The faster and more efficient your machines, the better your odds of winning this race and profiting. Mining companies must constantly upgrade to cutting-edge hardware and newer rigs with more computational power and better energy efficiency or risk falling behind rivals.

“To ensure their fleet is sufficiently powerful to beat out competitors, miners must constantly replace old and weatherbeaten hardware with the latest, most advanced machines,” explains one industry report.

In short, access to top-notch mining rigs is crucial for any hope of profitability. Lagging in hardware is a quick road to being edged out of the market.

Here lies a fundamental tension for

Trump’s “made in the USA” mining dream. The world’s best mining machines are not made in America. In fact, the global mining rig market is overwhelmingly dominated by Chinese manufacturers. Two companies from China, Bitmain Technologies and MicroBT, are kingpins of mining hardware, together accounting for an estimated 97% of all Bitcoin mining machine sales. A third Chineseorigin firm, Canaan, makes up much of the remainder.

These firms produce the popular Antminer and WhatsMiner series ASICs that power a huge share of Bitcoin’s network. According to the Cambridge Centre for Alternative Finance, this Chinese duopoly controls virtually the entire market for Bitcoin rigs. Bitmain and MicroBT’s near-monopoly didn’t happen by accident. They had an early start in developing specialised mining chips and achieved massive economies of scale, fending off countless would-be Western challengers.

“The road is lined with the corpses of people who tried,” jokes Chris Bendiksen, a Bitcoin research lead at CoinShares, about past failed US mining rig ventures. The result is a lopsided reality. While the United States now hosts a large share of Bitcoin mining operations (over 30% of global mining power is in North America), more than 90% of the physical machines powering the network are built in China. This imbalance in geographic supply and demand means American miners remain heavily reliant on imported gear, and it’s not only an economic factor but also a strategic one.

“Hundreds of thousands” of Chinesemade mining rigs are plugged into the US electrical grid, notes Sanjay Gupta, chief strategy officer of US-based manufacturer Auradine. It’s something that he and others consider a security risk if tensions with China worsen. In essence, China dominates Bitcoin’s hardware supply chain, and any American bid for mining supremacy must contend with that fact.

Tariffs backfire on US miners

Trump’s trademark policy tool—tariffs on imports—has now been extended to this supply chain, with far-reaching consequences. On April 2, 2025, the president shocked the crypto mining sector by announcing punitive new tariffs on dozens of countries, including those crucial to mining equipment production.

China was the primary target in Trump’s so-called 'Liberation Day' tariff package. Shipments of high-tech goods from China were set to face a whopping 55% import duty. But the measures went further. Trump also slapped tariffs in the range of 24-36% on imports from countries like Malaysia, Indonesia, and Thailand. These were the locations where Chinese companies often assemble mining rigs or route shipments to evade direct China-US duties.

In short, the administration moved to seal off any backdoor for Chinesemade miners, ensuring that whether a

machine comes directly from Beijing or through a third country, it would incur steep US tariffs.

For US Bitcoin mining firms, which collectively import hundreds of thousands of ASIC rigs, these levies landed like a sledgehammer. Suddenly, the cost of new hardware could spiral by 25%, 50%, or even higher for Chineseorigin machines.

“The tariffs included a levy on shipments from China, later revised to 55%, and tariffs between 24 and 36% on Indonesia, Thailand, and Malaysia,” WIRED reported, noting that many American miners “faced the prospect of spiralling hardware costs” as a result.

Even American Bitcoin, the new mining venture started by Trump’s sons Eric and Donald Jr., was not spared, as it too planned to source cutting-edge machines from the dominant Chinese suppliers.

Source: CoinMarketCap INDUSTRY FEATURE

The irony was palpable. The president’s family business, launched to champion US mining, was now pinched by his trade policy. Existing orders that US mining companies had placed with Bitmain or MicroBT suddenly became much more expensive, as any unfulfilled deliveries would be hit with the new import taxes. Long-term supply contracts offered no escape clause for tariffs, meaning miners were stuck either swallowing the additional costs or deferring equipment shipments altogether.

US miners, large and small, have decried the tariffs as a serious setback. One industry lobbying group, the Digital Energy Council, has reportedly pressed the Commerce Department to exempt cryptocurrency mining rigs from the tariff lists, warning that the policy could handicap American miners against foreign competitors.

"The tariffs are clearly destructive," argues Chris Bendiksen of CoinShares,

who says they directly undermine Trump’s goal of expanding the US mining sector. The situation indeed seems counterproductive. How can the US lead in Bitcoin mining if its miners struggle to afford the latest equipment?

In effect, Trump’s nationalist tariff policy is colliding with his nationalist crypto ambitions. The cost pressure comes at an already challenging time

for miners, as we’ll see, intensifying a broader shakeout in the industry.

On the other hand, Trump officials insist this short-term pain is for a longerterm gain. The White House argues that two things can be accomplished at once. The tariffs can push manufacturing to American soil and use leverage to drive down other costs for mining firms.

"Two things can be accomplished at once," a White House spokesperson told WIRED, describing the aim to onshore hardware production while using US energy policy to reduce miners’ cost burden.

In theory, by making imported rigs pricier, the tariffs create a protective bubble for United States-based equipment manufacturers to grow. Indeed, as the tariffs took effect, those few companies building Bitcoin rigs in America suddenly found an opening. Chief among them is a Silicon Valley start-up called Auradine.

Energy costs, margins, and competition

Even without tariffs, Bitcoin mining is a brutally competitive, low-margin business, and that has only intensified in 2025. Start with Bitcoin’s own design. The network undergoes a “halving” roughly every four years, cutting the block reward (the new Bitcoins miners earn) by 50%. The most recent halving in April 2024 slashed miners’ Bitcoin rewards from 6.25 BTC per block to 3.125 BTC, squeezing revenue per unit of computing power.

At the same time, network competition has grown fiercer as more miners join, and the Bitcoin algorithm adjusts to increase mining difficulty. This arms race, combined with occasional slumps in transaction fees, has steadily whittled down profit margins for mining operators.

Even though Bitcoin’s price has been rising in 2025, providing some relief, analysts note that many other factors are eroding mining profitability.

“Fierce competition, a slump in transaction fees, and diminishing Bitcoin rewards...have whittled down margins for mining companies,” WIRED reports, summarising the challenge.

Above all, energy costs are the dominant factor. Electricity can account for 50-60% of a mining firm’s operating expenses. US miners have historically sought out regions with cheap power, ranging from hydro-rich Washington State to wind-powered West Texas. But the surge of new power-hungry industries is changing the equation. Artificial intelligence data centres have emerged as a major new competitor for electricity and infrastructure.

These AI operations are often backed by deep-pocketed tech companies and venture capital, and they’re willing to pay a premium for power and real estate.

Christopher Bendiksen said, "Miners have always been scrappy buyers and vultures of the power grid. The AI companies are outbidding them, as they are just willing to pay more."

In practical terms, that means some power contracts that might have gone to a Bitcoin mine are now going to a data centre instead, or utilities are raising rates knowing AI firms will pay.

The US Department of Energy projects that by 2028, AI computing could consume as much electricity as 22% of US households—a stunning statistic that illustrates how much tighter the energy market could get for miners.

For miners, expensive electricity can quickly turn a profitable operation into a money-loser. Fred Thiel of Marathon has noted that a 5 or 10 percentage-point change in electricity rates has far more impact on a mine’s bottom line than a similar change in hardware costs.

Can the US lead Bitcoin mining?

All of this raises a pivotal question. Will Trump’s policies ultimately help or hurt US leadership in Bitcoin mining? The president’s vision of an all-American Bitcoin, mined on US soil with United States-made hardware, strengthening American economic and energy interests, is a bold nationalist gambit.

It appeals to those who worry about US dependence on foreign technology

and want to ensure the next generation of financial infrastructure is Americandominated. In the long run, Trump’s tariffs may indeed spur some domestic manufacturing, as evidenced by Chinese firms localising production and startups like Auradine gaining traction.

If the US can facilitate its own resilient supply chain for mining equipment and combine it with abundant low-cost energy, the country could solidify its status as a Bitcoin mining hub in the 2020s and beyond.

However, the current evidence suggests that Trump’s approach is struggling to deliver immediate results for miners. Thus far, the tariffs have introduced more instability than opportunity. US mining companies are pausing expansion plans and delaying hardware purchases while they wait to see how deeply costs will rise.

The initial 90-day suspension of the new levies has many in a holding pattern. But if and when full tariffs kick in, some firms may find it untenable to upgrade their fleets and could capitulate. The broader trend of miners diversifying away from Bitcoin or shifting overseas directly undercuts Trump’s goal of US dominance.

Ultimately, Trump’s dual objectives of onshoring the Bitcoin hardware supply chain and supporting a thriving US mining industry may require a more nuanced balancing act than tariffs alone can provide.

editor@ifinancemag.com

By mid-2025, Starlink boasted availability in over 100 countries worldwide, and the Pacific Islands are increasingly becoming part of that map

Starlink: The Pacific Islands' digital lifeline

IF CORRESPONDENT

In the remote expanse of the Pacific Islands, a new constellation of tiny satellites promises to bring highspeed internet to even the smallest atolls. Starlink, the satellite internet service operated by Elon Musk’s SpaceX, is expanding across Pacific Island countries.

Its arrival has been heralded as a digital lifeline for isolated communities, but it is also posing regulatory challenges and stirring debate. International Finance explores Starlink’s expansion in the Pacific, offering a balanced look at the opportunities it presents and the hurdles it faces.

What is Starlink?

Starlink is a satellite internet constellation with thousands of small satellites in low-Earth orbit. Launched and operated by SpaceX, these satellites fly much closer to Earth than traditional communications satellites, enabling low-latency, high-bandwidth internet connectivity on the ground.

Users access Starlink via a pizzabox-sized dish antenna (a terminal) that communicates with the passing satellites. The signal is then routed through ground stations and into the global internet. In essence, Starlink beams the web from the sky directly to users’ homes, bypassing the need for undersea cables or extensive land infrastructure.

This model differs from older satellite services. Traditional providers like Kacific rely on a single geostationary satellite positioned tens of thousands of kilometres above the equator. Geostationary satellites stay fixed relative to Earth’s rotation, so a dish can point at one spot in the sky. However, they often suffer from higher latency and require larger ground equipment.

Starlink’s low-flying satellites reduce latency dramatically, at the cost of needing many satellites moving across the sky and sophisticated tracking by the dish. OneWeb, a British-backed venture, is another LEO satellite internet provider eyeing the Pacific market. Together, these systems represent a new generation of space-based internet that can

Number of satellites in orbit as of July 2025, by category or major operator Starlink 7,788 Other 3,388

reach places traditional broadband has never touched.

Starlink’s Pacific debut and expansion

Starlink’s journey into the Pacific has unfolded over the past few years, beginning with a dramatic entrance in Tonga and spreading to many islands. Below is a timeline of key milestones.

In January 2022, a massive undersea volcanic eruption severed Tonga’s only international fibre-optic cable, plunging the Kingdom into digital darkness. In response, Elon Musk offered to send Starlink terminals to help. Within weeks, SpaceX set up a ground station in neighbouring Fiji and donated 50 Starlink terminals to Tonga.

Tonga’s former Prime Minister Siaosi Sovaleni hailed it as a 'paradoxical silver lining,' noting that cutting-edge satellite technology arrived as a result of the disaster. The Starlink units were deployed to remote outer islands hardest hit by the tsunami, providing free high-speed inter-

Source: Statista

net until Tonga’s cable could be repaired. In 2023, there were some early reactions and restrictions. As Starlink’s constellation grew, Pacific nations began grappling with how to regulate it. In Samoa, authorities initially banned Starlink in January 2023 due to unauthorised use of terminals, only to reconsider a few months later.

By March 2023, Samoa’s cabinet approved Starlink in principle, aiming to partner with SpaceX so that some revenue stays in-country. Meanwhile, Vanuatu’s regulator in early 2023 warned that Starlink use was illegal without a license. Vanuatu reportedly banned unlicensed Starlink gear in February 2023, reflecting concerns about interference and regulatory oversight.

By late 2023, the first licenses were granted, and demand grew. By the end of 2023, some Pacific nations will have officially adopted Starlink. Fiji became a leader by licensing Starlink in November 2023, allowing the service to operate commercially.

According to Fijian officials, Starlink connectivity had spread to “over 300 islands” across Fiji by May 2024. In Niue, however, authorities grew alarmed at Starlink units quietly appearing on the island. With no license issued to SpaceX, Niue declared Starlink operations illegal, setting the stage for a ban in 2024.

Then came the legal showdowns and stopgap measures. The new year saw mixed fortunes for Starlink. In Papua New Guinea, the government announced in January 2024 that it had granted a five-year license for Starlink, calling it a “New Year’s gift” to the nation’s tech sector. However, competing providers and regulators raised ques-

tions, and by August 2024, the Starlink license in PNG had become entangled in a court challenge, now under judicial review.

PNG’s telecom authority even confiscated some Starlink kits brought in without permission, signalling that service would be on hold until the courts decide. Meanwhile, Tonga faced a mini-crisis when, on June 29, 2024, a domestic undersea cable outage cut off two of its islands from Tongatapu.

At the same time, some Tongans had begun using Starlink without authorisation. On July 9, Tongan officials ordered Starlink to cease operations due to a lack of an operating license. Just

ten days later, recognising the ongoing outage, the government granted a sixmonth provisional permit for Starlink so that connectivity could be restored in the outer islands while a full license was processed.

Toward the end of 2024, the Pacific saw novel implementations of Starlink. Nauru opened the region’s first “Starlink community gateway” in December 2024. This is essentially a high-capacity Starlink installation meant to feed an entire community or country’s network, expanding internet access beyond individual user terminals. Similarly, in the Federated States of Micronesia, the state of Kosrae

launched its own Starlink community gateway in February 2025.

Meanwhile, Vanuatu, which had initially banned Starlink, softened its stance. After back-to-back cyclones caused extensive damage in early 2023, Vanuatu granted a temporary restricted license in 2024 to allow Starlink during disaster recovery.

By mid-2025, Starlink boasted availability in over 100 countries worldwide, and the Pacific Islands are increasingly part of that map. According to regional reports, Starlink access is now on offer in many of the 18 member states of the Pacific Islands Forum, including Fiji, Tonga, Vanuatu, and others, though not all have formalised the service. In July 2025, Tonga moved from provisional permission to a full operating license for Starlink.

As of 2025, the momentum is evident because satellite internet is becoming a fixture in the Pacific, even as each nation finds its own path to accommodate or restrict the new technology. Fiji has emerged as an enthusiastic early adopter of Starlink’s technology. Fiji officially licensed Starlink in late 2023, with Deputy Prime Minister Manoa Kamikamica touting the service as a “game changer for Fiji” that will boost connectivity during natural disasters and for remote islands.

One of the most celebrated uses of Starlink in Fiji has been in education. In a government-led initiative, Starlink units were installed at six remote schools in the interior of Fiji’s largest island, Viti Levu. These are villages that previously had little to no internet access. Thanks to Starlink, students and teachers in places like Nakorosule and Nadarivatu can browse online learning materials and even join virtual lessons — activities once unimaginable in these areas.

The Education Ministry noted that these six schools are now benefiting

from “high-speed, low-latency” internet, unlocking everything from cloud-based teaching tools to improved school administration. This aligns with a global “GIGA” initiative to connect every school to the internet by 2030, and Fiji’s government appears keen to leapfrog decades of limited infrastructure using satellite broadband.

Beyond schools, Starlink is extending connectivity to Fiji’s far-flung communities. With over 100 inhabited islands, Fiji has long struggled to connect rural villagers who live beyond the reach of fibre-optic cables or even cellular towers.

In stark contrast to Fiji, the tiny Pacific Island of Niue took a hard line against Starlink, at least initially. Niue’s government outright banned Starlink usage in

2024, warning that anyone operating the service without a license could face fines of up to about $200 or even three months in prison.

The sudden ban came after officials discovered several Starlink units had appeared on Niue without authorisation. In Niue, all communications services are governed by an ageing Communications Act of 1989, which requires operators to be licensed.

The island’s lone telecom provider, state-owned Telecom Niue, relies on satellite bandwidth and a 4G mobile network to serve its 1,700 residents. Unlicensed Starlink dishes, in the government’s view, threatened to bypass these regulations and potentially undermine the local telecom system.

Niue’s Minister of Infrastructure,

Crossley Tatui, even asked SpaceX to geofence or disable Starlink in Niue’s territory. As of mid-2024, that request had reportedly gone unanswered, and a handful of residents continued to use Starlink illicitly.

One of them is Glen Jackson, a Niuean entrepreneur and musician, who has become an outspoken advocate for the service. His multimedia company livestreams events like funerals and sports tournaments. It was nearly impossible with Niue’s limited 4G network. Jackson noted that Starlink’s faster upload speeds allow him to reliably stream from villages that previously had little bandwidth. On downloads, Niue’s 4G might deliver 40-50 Mbps on a good day, whereas Starlink gave him 200-380 Mbps. It was definitely a transformative difference.

Tonga’s experience with Starlink encapsulates both the life-saving potential of satellite internet and the complexities of integrating it into a national framework. As noted in the timeline, Tonga was the first Pacific country to use Starlink, albeit out of sheer necessity. When the Hunga Tonga-Hunga Ha’apai volcano erupted catastrophically in January 2022, it wreaked physical devastation and severed Tonga’s only international fibre-optic cable.

Overnight, this nation of 100,000 was cut off from the world. In the crisis, Starlink became a lifeline. SpaceX’s donated terminals enabled connectivity in some of the worst-hit outer islands, allowing villagers to communicate and access information while the undersea cable was repaired. Tongan officials

expressed deep gratitude for the assistance. So much so that the then PM Sovaleni quipped that Elon Musk likely hadn’t known much about Tonga before, “but gave generously” when the country was in need.

After the emergency period, Tonga’s traditional internet links were restored, and the Starlink units were presumably deactivated or returned. But the episode planted a seed. Tongans had tasted the “decent speeds and stable connections” that a LEO satellite system could provide, even in remote villages. Interest in Starlink remained. By 2023, some Tongans acquired Starlink kits through unofficial means.

This caught the attention of Tonga’s Ministry of Communications. The government was also mindful of its

domestic telecom operators, stateowned Tonga Communications Corp and private Digicel, which provide internet via fibre and 4G networks. Regulators wanted to avoid a Wild West scenario of unauthorised dishes.

Things came to a head in mid-2024 when a section of Tonga’s domestic subsea cable network went down, cutting off two island groups. In those outer islands, people and businesses turned to whatever connectivity they could, including some rogue Starlink setups. Initially, authorities moved to crack down on the unlicensed use.

However, they faced public pressure due to the ongoing outage. The compromise was a temporary six-month permit for Starlink starting in July 2024. This allowed Starlink to operate legally in Tonga for the first time, albeit under conditions set by the government. Officials said the permit was a “pivotal step” to address connectivity needs while a full license was being finalised.

Fast forward to mid-2025, and Tonga is fully on board with Starlink. The Ministry of Communications granted an official operating license to SpaceX, enabling Starlink to “deliver high-speed internet across Tonga” on a normal commercial basis.

Approvals, bans, and uncertainty

Navigating the regulatory landscape of the Pacific has proven to be one of Starlink’s biggest challenges. There is no one-size-fits-all approach, as each island nation has its own laws, telecom landscape, and priorities. The result is a patchwork of approvals, bans, and grey zones that can be confusing for consumers.

Countries like Fiji, Tonga, and Palau are welcoming Starlink. The governments of these nations have approved Starlink through formal licenses or in-

terim permits. The advantage for consumers is obvious because where Starlink is approved, people can legally buy the equipment and pay the monthly fees in local currency, often via a domestic reseller, without fear of penalties.

Indeed, in approved markets, the Starlink website will ship a kit straight to your door. In countries like Vanuatu and Samoa, Starlink is being allowed but cautiously. Samoa’s regulator, for instance, said it might take up to two years to fully license SpaceX, but in the meantime, Samoans have been permitted to import Starlink kits for personal use. This creates a de facto temporary legality. People can get online with Starlink now while the bureaucracy catches up later.

Then there are the holdouts and ambiguous cases. Niue’s ban is one example of an explicit "no." Another was Pap-

ua New Guinea’s legal saga. After the initial license announcement in January 2024, PNG’s National Information and Communication Technology Authority faced pushback. Critics argued the license was rushed, and by August, the courts put the license on hold pending a judicial review.

Until that’s resolved, importing or operating Starlink in PNG without special permission is technically illegal, and authorities showed they would enforce this by seizing unauthorised equipment at customs. Vanuatu signalled that any Starlink gear brought in outside the approved emergency use would be confiscated unless and until full authorisation is granted.

A Starlink terminal is essentially a transmitter/receiver, so it normally should be certified in each country. Some nations, like Samoa, initially banned

Starlink partly because the equipment had not gone through this certification process, raising theoretical safety concerns.

Additionally, there’s the economic angle, since telecommunication is often a significant revenue source for Pacific governments, either through stateowned operators or licensing fees from private companies. If everyone suddenly buys internet service from a US-based company via credit card, how do local providers survive, and how do governments get their due? Niue’s insistence on licenses and talk of taxing such services stems from this concern.

For consumers, the regulatory diversity can be frustrating. In practical terms, a person on one island might set up Starlink and enjoy fast internet, while a person on the next island could get fined for doing the same thing. This

has led to some creative workarounds.

Some Pacific Islanders have taken advantage of Starlink’s roaming feature. They purchase the kit in a country where it’s authorised (like New Zealand or Fiji), then use it back home where it’s not officially allowed, essentially “roaming” on a foreign subscription.

Starlink’s signals don’t respect political boundaries, so the hardware will work as long as the location is within the satellite coverage footprint. This technical reality is running up against legal boundaries drawn on maps.

It’s worth noting that the regulatory landscape in the Pacific is evolving quickly. As the Asia Times observed, governance of Starlink in the Pacific remains “a mixed bag,” and change is likely. Pacific governments talk to each other, and many are watching their neighbours’ experiments.

If Tonga’s partnership model proves successful, others may imitate it. If a ban like Niue’s proves untenable or unpopular, it may eventually soften. In the interim, consumers are advised to stay informed about their country’s stance. What is perfectly legal in Fiji or Tonga now could still be a grey area in places like the Solomon Islands or the Marshall Islands, for example, if formal approvals are pending.

The Pacific’s digital future

As global satellite providers race to connect the most remote corners of the planet, the Pacific Islands stand to be one of the greatest test cases—and beneficiaries—of this revolution. The vast oceanic distances and sparsely distributed populations have long made the Pacific a connectivity challenge.

Traditional infrastructure alone was never going to be enough; there will likely always be villages beyond the reach

of fibre-optic cables or even cell towers. Satellite internet, led by Starlink’s widespread rollout, is now filling those gaps. In doing so, it is reshaping the region’s digital infrastructure from above.

What might the Pacific’s connected future look like? We can imagine a hybrid network, where undersea cables link the main population centres, while constellations of satellites blanket the blue gaps in between, ready to link up any community or emergency responder that needs it.

In this vision, an island struck by a cyclone can switch to satellite backup within hours, or a remote outer island can host an online workshop with experts in another country. Global satellite coverage could democratise internet access in a way that was simply not feasible before.

Starlink’s expansion across the Pacific Islands brings hope and challenges. While it provides high-speed internet to remote regions, it also sparks regulatory debates and hurdles. The technology offers significant benefits, especially in education and disaster response, but local governments must navigate complex legal landscapes. As more countries adopt Starlink, the region's digital future seems brighter. However, each island's unique approach to regulation means the path forward will be varied, and some obstacles are likely to remain.

editor@ifinancemag.com

Beyond its sizable liberal fan base, Bluesky still has a way to go before becoming profitable and widely used

Can Bluesky stay small and win?

IF CORRESPONDENT

Jay Graber, the CEO of Bluesky, appeared at her SXSW keynote address in March sporting a shirt that seemed to honour Mark Zuckerberg. Similar to the shirt Zuckerberg had designed and worn the previous year, it was an oversized black t-shirt with Latin block text.

While Bluesky's daily usage increased by 500%, X lost 115,000 users the day after the election as consumers sought a haven from disinformation bots

In reference to a wellknown quote about Julius Caesar and his unyielding desire for power, Zuckerberg's t-shirt said, "Aut Zuck aut nihil," or "Zuck or nothing." In contrast, the phrase "Mundus sine Caesaribus"—"a world without Caesars"—was printed on Graber's shirt.

The shirt served as a scathing indictment of Zuckerberg’s centralised vision.

In contrast to Zuckerberg's centralised approach to building Meta, Graber aims to manage and develop Bluesky, a dominant social media platform that went live in early 2024, she tells TIME. She claims these digital firms have established virtual kingdoms where their CEOs present themselves as self-made kings.

In the hyper-centralised world of social media, where internet giants like Elon Musk and Mark Zuckerberg make decisions on their own regarding privacy, censorship, and data harvesting for arti-

ficial intelligence, this message is becoming more and more relevant.

While Bluesky's daily usage increased by 500%, X lost 115,000 users the day after the election as consumers sought a haven from right-wing trolls, sponsored posts, and disinformation bots. However, X's daily active user count in the United States was still ten times higher than that of Bluesky. Among the 35 million users of Bluesky today are Alexandra Ocasio-Cortez, George Takei, and Stephen King. It’s the world’s biggest decentralised social network by far.

Beyond its sizable liberal fan base, Bluesky still has a way to go before becoming profitable and widely used. However, Graber asserts that her goal is not to overtake Musk or Zuckerberg as the dominant figure on social media.

She declares, "We oppose centralised authority prescribing the rules for everybody else. We would rather not establish a future in which I am a more benevolent emperor. We envision a society in which monarchs are completely unnecessary."

Bluesky’s interface visually resembles Twitter, with an endless scroll of text posts that are no longer than 300 characters. New users can quickly engage in discussions by using "starter packs," which are user-generated collections of accounts centred around common interests. Topics such as memes, pop culture, politics, and sports are especially popular among users.

The primary distinction between Twitter and Bluesky is that the latter's open-source protocol enables users to personalise their content feeds and algorithms. Like Reddit, Bluesky has seen the emergence of close-knit communities that have established censorship guidelines and communication methods. Additionally, because of Bluesky’s architecture, users can move their posts and follows to another platform as long as it uses the same protocol.

It wasn’t Graber who came up with Bluesky. In 2019, Jack Dorsey, a co-founder of Twitter, funded a small group of academics and announced Bluesky as a decentralised version of Twitter. Graber, who had formerly worked on bitcoin projects and had a

long-standing interest in decentralised technology, offered to lead the company in 2021. Graber was living in a large communal home with other entrepreneurs during the lockdown in San Francisco.

According to Rose Wang, Graber's former roommate and current COO of Bluesky, the company's growth was influenced by the particulars of COVID-19.

"How do you get people to feel safe together in this time? There were a lot of community challenges. I believe that our perspectives on creating communities online are greatly influenced by Jay's and my experiences creating communities offline," she said.

As per PitchBook, female-led companies in Silicon Valley remain rare, securing only 6% of venture capital deals. Graber says that her and Wang’s

identities have shaped their approach to leadership.

"As women with extensive online experience," she explains, "we’ve made moderation a top priority— because we believe it’s essential to building a healthy social platform."

Elon Musk paid $44 billion for Twitter in 2022. He initially argued in favour of making its algorithm open-source, which could be derived from Bluesky’s technology and research, but he swiftly stopped supporting Bluesky instead.

After searching elsewhere, Graber and her team eventually raised $8 million and then $15 million in investment rounds. They also decided to turn Bluesky into a public benefit corporation, which means that they must work for the public and social good in addition to making money.

Demand surged in 2023 as Bluesky prepared to launch its invite-only system, with many potential users pleading with them to remove the platform's limitations. However, Graber decided to keep Bluesky small until the decentralised tools were developed because they weren’t yet ready.

Currently, Graber oversees more than 100 content moderator contractors and 24 staff members who strive to eliminate harmful posts such as aggressive threats and child sexual abuse information. Dorsey was upset with Bluesky’s content moderation strategy and quit the board last spring, claiming that Bluesky was centralising and that its moderating tools were becoming overly intrusive.

To determine what people see and what they don’t, Graber con-

tends that users should largely design their own moderation systems. She explains, "You have this open right to leave—where you can build your own thing if you disagree with the services, moderation actions, or design choices."

According to Rudy Fraser, a technologist who started the feed, popular feeds on Bluesky include Science and Blacksky, for Black community building, with 370,000 monthly active users.

"Some of the feeds are centred around people who are discovering shared affinity in gender or their identities. I want to create an open network so that communities and individuals who feel excluded from the current social media platforms and power structures can create their own spaces," Graber noted.

Bluesky continues to lean far to the left politically, and conservatives have complained about being harassed or censored on the site. Additionally, Bluesky’s user growth has slowed considerably since its post-election surge. Furthermore, its 35 million users are insignificant compared to the hundreds of millions on X and Meta's Threads, not to mention the billions on Instagram and TikTok.

Graber acknowledges that the platform has experienced several ups and downs, but remains unconcerned about the slow growth. To avoid the mistakes of previous social media platforms that prioritised growth over user experience, she feels comfortable taking her time.

"Social networks can degrade the main experience of the feed because they have become too accustomed to believing that users

Breakdown of

Bluesky users by age in 2024 18 to 24 years

to 44 years

to 54 years

to 64 years

Source: SimilarWeb

are trapped because of the network effects. This monetisation model is likely to reach some natural limits where people grow weary of it, so it won’t last forever," she explained.

Graber and Wang must now come up with a new revenue strategy that goes beyond using user data to build AI models or running constant advertisements. Graber says she is considering monetising Bluesky's marketplaces through custom tools or subscription models, despite not having specific plans in place.

Graber and Wang are more than happy to let independent business owners create other platforms on top of Bluesky’s AT protocol, which are likewise open-sourced and compatible with one another, as Bluesky scuttles toward monetisation. Remember how standard email protocols served as the foundation for Gmail, Yahoo, and other inboxes. These new initiatives include Sky-

light, a TikTok clone supported by Mark Cuban, and Flashes, an Instagram substitute that has received over 100,000 downloads.

The duo won’t stop anyone from constructing a Bluesky clone on top of the infrastructure. According to Wang, "Greensky can appear the following morning if Bluesky, the server, shuts down overnight. We are frequently asked, 'How can we trust you?' Don’t trust us, is our response. Have faith in the infrastructure."

Only good days ahead

strategy, with the Bluesky team reportedly identifying notable accounts and bestowing blue check marks.

“It’ll be a rolling process as the feature stabilises, and then we’ll launch a public form that people can use to request verification,” Graber said, adding that the highest-priority accounts right now are government officials, news organisations, journalists, and celebrities.

process will help reassure public figures that Bluesky is a safe digital hangout space.

In addition to this traditional, top-down verification approach, Bluesky offers “trusted verifier” status to a select group of vetted organisations. These organisations will be given a scalloped blue check mark on their Bluesky accounts. The initial batch of publications selected as trusted verifiers includes The New York Times and WIRED, with more in the works. This same system was initially followed by Twitter, Facebook, and Instagram, where the rule was: you had to actually be famous and verifiable in the public eye.

In April 2025, Bluesky rolled out a new verification system, taking the competition with X to the next level. The social platform formerly relied on an unconventional self-verification system, where users could “authenticate” themselves by including custom domains in their web handles. Now it’s adopting a more proactive and traditional verification editor@ifinancemag.com

A 2024 study from the MIT Technology Review reveals that Bluesky has grown, and so has the uptick in impersonators posing as public figures. To meet growing demand for ways to confirm that accounts are legit, some Bluesky power users have taken it upon themselves to create their own verification systems. As the app continues to attract celebrity users (former US President Barack Obama joined the platform earlier this spring), a more formal verification

While users cannot request verification directly, more importantly, Bluesky will not “sell” verification checkmarks like X, Instagram, and Facebook.

Microsoft’s MAI-DxO marks a significant milestone in the integration of AI into clinical diagnostics, showcasing higher accuracy and lower costs than human doctors in complex cases

Is Microsoft’s AI better than your doctor?

IF CORRESPONDENT

Recently, Microsoft’s AI Diagnostic Orchestrator (MAI-DxO), the tech giant's AI-based medical programme, hit the headlines by accurately diagnosing 85% of cases reported in the New England Journal of Medicine. According to a study published on the preprint website arXiv, this was four times higher than the accuracy rate of human doctors, who made the correct diagnoses about 20% of the time.

The cases are from the journal's weekly series that aims to baffle physicians by presenting difficult, complex situations in which the diagnosis isn't immediately apparent. Using roughly 300 of these cases, Microsoft compared the performance of its MAI-DxO to 21 general-practice physicians. Microsoft's team first developed a mechanism to simulate the iterative process that physicians usually follow when handling these cases: gathering data, evaluating it, ordering tests, and making decisions based on the findings.

"A collection of commercial AI models, including Claude, DeepSeek, Gemini, GPT, Grok, and Llama, were compared to the 21 physicians. The Microsoft team also created an Orchestrator, a virtual

representation of the sounding board of colleagues and consultations that doctors frequently seek out in complex cases, to further mimic how human doctors handle such difficult cases," the study stated.

Microsoft monitored the tests that the AI system and human doctors ordered to determine which approach could complete the work more affordably, as ordering medical tests in the real world is expensive. In addition to performing significantly better than physicians in determining the right diagnosis, MAI-DxO was able to do so at an average cost that was 20% lower.

“The four-fold increase in accuracy was more than previous studies have shown. Most of the time, there is a 10% absolute percentage difference, so this is a really big jump. But what really got his attention was the cost. Not only was the AI more accurate, but it was much less expensive," Dr. Eric Topol, chair of translational medicine and director and founder of the Scripps Research Translational Institute, told Times Magazine.

Since MAI-DxO is still in development, it is not yet usable for purposes other than research. How-

Source: Dialog Health (In Billion US Dollars)

ever, implementing such a model could potentially improve patient outcomes by reducing medical errors, which contribute significantly to healthcare costs, and by increasing the effectiveness of human physicians.

"This is a startling result. I think it gives us a clear line of sight to making the very best expert diagnostics available to everybody in the world at an unbelievably affordable price point. We are nearing AI models that are not just a little bit better, but dramatically better, than human performance: faster, cheaper and four times more accurate," said Mustafa Suleyman, CEO of Microsoft AI, during an interview with the Financial Times, while describing the trial as a step toward "medical superintelligence."According to Suleyman, when AI algorithms were first used in medicine ten years ago, they were primarily used for binary tasks like tumour detection in image scanning.

Microsoft’s research even suggests AI diagnostic tools could reduce unnecessary healthcare expenditures whilst improving accuracy – as the United States' health spending is approaching 20%

of GDP, with an estimated 25% providing minimal impact on patient outcomes.

"Important challenges remain before Gen AI can be safely and responsibly deployed across healthcare. We need evidence drawn from real clinical environments, alongside appropriate governance and regulatory frameworks to ensure reliability, safety and efficacy," said Microsoft’s research team.

He claims that these models are currently having very high-quality, fluid conversations in which they ask the appropriate questions, probe in the right ways, and recommend the appropriate testing and interventions at the appropriate times. An AI system may also benefit from not having many of the biases that come with being human.

"Across Microsoft’s AI consumer products like Bing and Copilot, we see over 50 million health-related sessions every day. From a first-time kneepain query to a late-night search for an urgent-care clinic, search engines and AI companions are quickly becoming the new front line in healthcare," the company said in a blog post.

Microsoft's Intelligent Cloud quarterly revenue from FY 2023 to FY 2024

Q1 FY 2023 12.80

Q2 FY 2023 13.10

Q3 FY 2023 13.50

Q4 FY 2023 14.00 Q1 FY 2024 14.30 Q2 FY 2024 14.60

Q3 FY 2024 15.00 Q4 FY 2024 15.50

Source: Statista (In Billion US Dollars)

"As demand for healthcare continues to grow, costs are rising at an unsustainable pace, and billions of people face multiple barriers to better health. We want to do more to help and believe generative AI can be transformational. That’s why, at the 2024 end, we launched a dedicated consumer health effort at Microsoft AI, led by clinicians, designers, engineers, and AI scientists," the tech giant stated further. According to Dominic King, vice president of Microsoft AI, "Confirmation bias affects everyone. Clinicians occasionally think, 'I'm sure this is just like the patient I saw recently,' after observing something. However, AI has a slightly different way of thinking."

MAI-DxO is not just a simple spit-out system. It does its work in such a way that doctors may be able to study and examine its reasoning.

However, some medical and AI experts point out that Microsoft's method isn't wholly original because its diagnoses relied on the combined output of several AI models.

"In my mind, they are not testing any individual model that is optimised for healthcare. They are testing the concept of testing all of the models out

Global AI software market revenue from 2018 to 2025

Source: Softonic (In Billion US Dollars)

there today and combining their decision-making. That part, to me, is not surprising," Keith Dreyer, chief data science officer at Massachusetts General Hospital and Brigham and Women’s Hospital Centre for Clinical Data Science, said.

Additionally, Dreyer notes that the findings do not necessarily mean that regulatory bodies like the US Food and Drug Administration, which has yet to make a determination on whether or not such systems qualify as medical devices, will approve them.

Microsoft is not alone in its pursuit of an AI-powered medical diagnostic programme. Google is creating a dialogue-based system to simulate the back-and-forth between a doctor and patient, replicating how real doctors gather data from patients and analyse those symptoms to arrive at a diagnosis.

In preliminary testing, the system performed better than physicians in correctly diagnosing case studies of simulated patients. The previous iteration of Google’s system correctly identified 59% of cases in a 2024 test that was comparable to the one Microsoft conducted using case studies, while human doctors only did so in 33% of cases.

The true test will be how well these AI systems

Microsoft's average yearly share price on Nasdaq from 2016 to 2023

Microsoft's electricity consumption from FY 2020 to FY 2023

Source: Statista (In US Dollars)

Source: Microsoft 2024 Environmental Sustainability Report (In Megawatt-hour) FY2020 10,770,714 FY2021 13,621,517 FY2022 18,153,454 FY2023 23,567,502

function in real-world healthcare settings. Understanding how AI could enhance or support a physician's role in disease diagnosis is the next step. Topol remarks, "What they accomplished is impressive."

However, until they are implemented in actual medical environments, it won't alter medical practice. Topol hopes the AI systems will be tested in various health systems so that physicians and the AI platform can be compared on a variety of more common and diverse cases.

A comprehensive clinical trial and regulatory agency approval are necessary to ensure that patients won't suffer any harm from a greater reliance on AIbased decision-making in the provision of care.

Dominic King states, "We are very much on that journey to create the evidence base required to support doctors and patients to make a difference in their health."

Microsoft’s MAI-DxO marks a significant milestone in the integration of AI into clinical diagnostics, showcasing higher accuracy and lower costs than human doctors in complex cases. While still in development, the system’s potential to enhance medical decision-making, reduce diagnostic errors,

and ease healthcare costs is compelling.

However, the road to real-world adoption remains cautious. Experts stress the need for extensive clinical trials, transparency, and regulatory approval to ensure safety and reliability. Though not a replacement for physicians, AI systems like MAI-DxO could become powerful collaborators in modern medicine, offering second opinions and data-driven insights.

As tech giants like Microsoft and Google race to refine these tools, the healthcare industry stands on the brink of transformation. This shift must be approached with scientific rigour, ethical foresight, and a strong commitment to patient safety.

Microsoft has already built other healthcare AI tools like RAD-DINO (for radiology workflows) and Dragon Copilot (a voice assistant for clinicians). It will now be partnering with hospitals, clinicians, and health organisations to further validate the technology in real-world settings. That's where the real test will start for the tech giant.

editor@ifinancemag.com

The shadow of AI Psychosis

In AI psychosis cases, people often experience primarily delusions without other classic symptoms like hallucinating voices

IF CORRESPONDENT

Artificial intelligence (AI) chatbots have rapidly woven themselves into our daily lives.

Millions now turn to AI tools like OpenAI’s ChatGPT, Google’s Gemini, Anthropic’s Claude, or even coding assistants like GitHub’s Copilot for far more than writing emails or debugging code. They rely on these bots for relationship advice, emotional support, and even companionship or love. In a world where human counsellors or friends might not always be available, these always-on AI companions offer a non-judgemental ear and helpful tips at any hour. Their growing popularity stems from their convenience and the remarkable human-like conversations they can produce.

Knowing ‘AI psychosis’

The term “AI psychosis” (or “ChatGPT psychosis”) has cropped up in media headlines and online forums, but it’s crucial to clarify that it’s not an official diagnosis recognised by psychiatrists.

Rather, it’s a shorthand description that signifies a disturbing pattern being observed, where otherwise rational people develop delusions or distorted beliefs that appear to be triggered or magnified by conversations with AI chatbots.

In these episodes, individuals become convinced of false or fantastical ideas. For instance, they may believe they are visionaries on a mission to save the world, or that shadowy agencies are pursuing them. In these cases, an

AI system played a crucial role in planting or reinforcing those beliefs.

Strictly speaking, psychosis is a clinical term describing a spectrum of symptoms, including hallucinations, deeply disordered thoughts, and firm delusions.

In classic psychotic illnesses, such as schizophrenia or bipolar disorder, these symptoms typically stem from underlying brain chemistry imbalances or disorders. By contrast, in “AI psychosis” cases, people are often experiencing primarily delusions without other classic symptoms like hallucinating voices.

During an interaction with TIME, Dr. James MacCabe, a professor of psychosis studies at King’s College London, said, "Psychosis may actually be a misnomer."

When doctors say someone is psychotic, they usually mean a whole suite of symptoms, but in these chatbot-related cases, “we’re talking about predominantly delusions, not the full gamut of psychosis.”

Mental health experts emphasise that AI-induced delusions are likely an old vulnerability playing out in a new arena, rather than being a completely novel disorder.

Dr. MacCabe and others suspect that the people experiencing these crises probably had

a predisposition to unusual beliefs or paranoia, which might have surfaced in other ways even if chatbots didn’t exist.

However, the unique style of AI interactions provides a fresh trigger or fuel. Large Language Model (LLM) chatbots like ChatGPT are trained to be supremely agreeable conversationalists. They mirror the user’s language, follow the user’s prompts, and generally try to be helpful by aligning with the user’s expectations.

This design can turn into unintentional “sycophancy,” where the bot validates and echoes a user’s thoughts without critical scrutiny. If a user starts hinting at a paranoid idea, the AI won’t object; in fact, it might weave the paranoia into its responses, effectively feeding a delusional narrative back to the user. OpenAI itself has flagged this tendency of chatbots to “mirror a user’s language and assumptions” as a known issue in need of improvement.

Imagine someone teetering on the edge of a conspiracy theory. If they talk about it with a human friend, the friend might challenge them or express doubt, which could ground the person in reality. But an AI, by default, might encourage them: Yes, let’s explore that conspiracy; you might be onto something. Over hours of immersive chat, that dynamic can create a powerful echo chamber of two–user and AI, reinforcing each other.

As Dr. Nina Vasan, a Stanford psychiatrist and expert in digital mental health, observed after reviewing several transcripts, the AI often ends up “being incredibly sycophantic, and making things worse… worsening delusions” instead of providing any reality check.

What these bots are saying can exacerbate the user’s false beliefs, “causing enormous harm,” Vasan warns.

Number of ChatGPT weekly active users over time

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Another factor is that interacting with an advanced chatbot can be uncannily realistic, even while you intellectually know it’s not human. This paradox—feeling as if you're chatting with a friendly mind that also has mysterious inner workings—might fuel magical thinking.

One psychiatric researcher, Dr. Soren Dinesen Ostergaard, speculates that the 'cognitive dissonance' of speaking to something that seems human but isn’t could 'fuel delusions' in vulnerable individuals. The AI’s responses can be so coherent and context-aware that it’s easy to start believing maybe there is a conscious entity there, or maybe it’s channelling some higher power or hidden truth.

In short, for someone prone to psychotic thinking, a chatbot can act like a mirror, reflecting and magnifying their mind's distortions and inadvertently nudging a tentative delusional idea into a full-blown conviction.

Who is most at risk?

Crucially, not everyone who chats with

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AI is at risk of a psychotic break. The vast majority of users can ask ChatGPT goofy questions, vent about work, or discuss personal problems and come away perfectly fine.

However, experts say there is a small subset of individuals who may be especially vulnerable to delusional thinking from extended chatbot use. Many early cases suggest that those who suffered AI-linked breakdowns often had risk factors that weren’t immediately obvious. A personal or family history of psychosis, such as schizophrenia or bipolar disorder with psychotic features, is the clearest red flag.

“I don’t think using a chatbot itself is likely to induce psychosis if there’s no other genetic, social, or other risk factors at play. But people may not know they have this kind of risk lurking underneath,” notes Dr. John Torous, a psychiatrist at Beth Israel Deaconess Medical Centre. Psychotic disorders often first manifest in young adulthood, and sometimes

people have mild symptoms or a predisposition long before a full psychotic episode occurs. It’s possible that interacting with an AI could be a trigger for those already wired for psychosis, acting as the catalyst for an episode that their biology was primed for.

Beyond diagnosed conditions, certain personality traits and circumstances might make someone more susceptible. Dr. Ragy Girgis, a clinical psychiatry professor at Columbia University, says those inclined toward fringe beliefs or fantasy could be at higher risk. Such individuals might be socially awkward or isolated, struggle with regulating their emotions, and have an overactive imag-

ination or fantasy life that blurs the line between reality and fiction.

If you’re the type to fall down rabbit holes on the internet or get absorbed in conspiracy forums, a chatbot that eagerly joins you on that journey could accelerate the descent. Social isolation can amplify this effect, especially when there are few real-world friends or activities to ground them; in such cases, some people may drift deeper into the AI’s alternative reality.

Reinforcing distorted thinking

To the outside observer, it might be baffling how a machine, essentially a sophisticated autocomplete, could

convince someone of utterly irrational ideas. But understanding the mechanics of AI chatbots helps explain how they can reinforce a person’s distorted thinking without ever intending to.

AI language models like ChatGPT operate by predicting likely responses based on patterns in their vast training data. They do not have beliefs or agendas; they simply generate words that seem contextually appropriate. Crucially, they are designed to follow the user’s lead.

If a user brings up a conspiracy theory or unusual belief, the chatbot will often go along with it and add more, as it's trained to act like a helpful conversation partner.

This can create a powerful confirmation bias loop where the user provides a cue (say, “I think the FBI is watching me through my phone”), and the AI, instead of countering it, might respond as if that were true, offering details or theories about why the FBI might be watching.

The user then feels validated (see, the chatbot agrees something is fishy!) and pushes further into the idea, eliciting even more supportive responses from the bot. In essence, the AI becomes an ever-positive feedback machine for the person’s fears or fantasies.

Safety tips

If you use AI chatbots regularly, especially for personal or emotional conversations, it’s important to approach them TECHNOLOGY FEATURE

with eyes open because of their limitations. The tools themselves aren’t inherently evil or dangerous; many people benefit from them in various ways. But as we’ve seen, certain individuals may be vulnerable to falling into unhealthy patterns with these AI companions.

No matter how sympathetic or caring a chatbot may seem, remind yourself (or your loved one) that LLMs are just algorithms predicting words.

Hamilton Morrin, a neuropsychiatrist at King’s College London, said, "It sounds silly, but remember that LLMs are tools, not friends."

They do not truly understand or feel. Avoid oversharing sensitive personal information or relying on them as your primary source of emotional support. If

you start thinking, “This AI really gets me”, or treating it as irreplaceable in your life, that’s a sign to step back.

Setting healthy boundaries with any technology is key. Dr. Vasan emphasises that spending hours every day chatting with an AI is risky. Try to limit session lengths and take regular breaks. If you find yourself losing track of time with the bot or preferring it over real human interaction, impose some structure. For example, no chatbot after dinner, or a maximum of 30 minutes at a stretch. Using built-in tools or external timers can help. The goal is to prevent total immersion that can distort your sense of reality.

Pay attention to your own mental state during and after AI chats. Warn-

ing signs include starting to believe in extraordinary ideas that you wouldn’t have considered before (especially that you have special powers or secret knowledge), feeling paranoid about people or institutions after chat sessions, or sensing that the AI is the only one who understands you.

If you catch yourself going down a bizarre train of thought and the chatbot seems to encourage it, hit the pause button. Reality-test by talking to a friend or doing a factual check. If a chatbot tells you something shocking regarding your medication, do not act on it without consulting a real professional.

Psychiatrists say that if you’re in a moment of emotional turmoil, such as when you’re extremely anxious, panicked, or depressed, do not turn to the chatbot as your coping method. And if you’ve been using one and start feeling unwell or manic, it’s time to stop using the chatbot altogether, at least for a while.

This can be surprisingly difficult; people have described it like a breakup or even a bereavement, because they felt such a strong bond with the AI. But just as with ending a toxic relationship, cutting off the unhealthy AI interaction can bring rapid improvement.

Reconnect with real-world relationships, such as calling a friend or family member, and seek professional help if needed. Many have found that once the chatbot “fog” is gone, their clarity and well-being markedly return.

How tech companies are responding

Up to now, the burden of managing the risk of AI-fuelled psychosis has largely fallen on users and their families, although many experts argue that AI companies need to take on much more responsibility.

Given that these tools are creating new kinds of hazards, even if only for a minority, shouldn’t the developers build in safeguards and guardrails to protect vulnerable users? It’s a question similar to ones faced by social media giants in the past: at what point do you step in to mitigate harm being caused through your platform?

One challenge is the lack of formal data. Much of what we know about “ChatGPT psychosis” comes from anecdotal stories, as we’ve discussed, and media reports. There isn’t yet large-scale research quantifying how common it is or precisely how AI interactions contribute to it.

Tech companies often want strong evidence before making major changes. However, many mental health professionals say waiting for perfect data is the wrong approach here.

“We know that AI companies are already working with bioethicists and cybersecurity experts to minimise potential future risks,” points out Hamilton Morrin.

They should also be working with mental health professionals and individuals with lived experience of mental illness. In other words, just as companies “red team” their AI for security flaws, they should proactively collaborate with psychiatrists to identify and fix mental health risks.

Morrin suggests simple steps such as simulating conversations with imaginary vulnerable users and seeing if the AI’s responses might validate delusions, because those could be flagged and adjusted before real users encounter them.

Encouragingly, some companies have begun to act. In July 2025, OpenAI (the maker of ChatGPT) revealed that it had hired a clinical psychiatrist to advise on the mental health impacts of its

AI tools. The following month, OpenAI publicly acknowledged instances where ChatGPT “fell short” in recognising signs of delusion or unhealthy dependency in user interactions.

In response, the company announced it would implement new safety features. For example, ChatGPT will nudge users to take breaks during very long chat sessions, and developers are working on algorithms to detect signs of user distress in the conversation.

OpenAI also said it plans to modify ChatGPT’s behaviour in “high-stakes personal decisions,” presumably to avoid overstepping into areas like medical, legal, or psychological advice without proper caveats.

These measures show that at least one industry leader is recognising the problem. However, it’s too early to gauge their effectiveness, although critics note they address only some facets.

At present, there is no regulation explicitly covering AI’s role in mental health outcomes, even though governments have barely begun to catch up with AI in general. Some experts caution that formal regulation might be premature or could stifle innovation. But there is a consensus that companies shouldn’t wait for laws to enforce ethical responsibility.

Given the lessons learnt from social media’s impact on mental well-being, where platforms were slow to respond to issues like depression, anxiety, and radicalisation, AI firms have a chance to be proactive rather than reactive.

editor@ifinancemag.com

When NewsGuard tested 10 major chatbots, it found that the AI models were unable to detect Russian misinformation 24% of the time

AI unfiltered: The high stakes of truth-telling

IF CORRESPONDENT

Artificial intelligence (AI) is revolutionising fact-checking. A new experiment reveals how top AI chatbots, including ChatGPT, Claude, and Grok, responded to United States President Donald Trump’s repeated falsehoods, with stunning consistency and controversy.

A recent discovery by Time Magazine revealed that five leading artificial intelligence models, including Grok, accurately refuted 20 of Trump's untrue statements. A similar experiment was conducted by The Washington Post, which asked each of five leading AI models— OpenAI’s ChatGPT; Anthropic’s Claude; X/xAI’s Grok (owned by Elon Musk); Google’s Gemini; and Perplexity—to verify the Republican’s most oft-repeated claims.

"The systems are completely independent, with no known ideological filters and no revealed

perspective biases among the model trainers. Statisticians would call this methodological verification a check for inter-rater reliability. Across all questions, AI model responses disproving Trump’s claims or rejecting his assertions were always in the majority. All five models generated consistent responses firmly denying the claims in 16 of the 20 questions. In 15 of those consistently firm responses, all five AI models debunk the claims. But even those responses that we categorised as 'less firm' partially refute Trump’s claims," stated Jeffrey Sonnenfeld (Lester Crown Professor in Management Practice at the Yale School of Management), Stephen Henriques (former McKinsey & Co consultant), and Steven Tian (research director at the Yale Chief Executive Leadership Institute), who conducted the experiment.

"Will Donald Trump’s current tariff policies

be inflationary?" was one of the questions asked. ChatGPT replied, "Yes, Trump’s proposed tariffs would likely raise consumer prices in the short-to-medium term, contributing to inflation unless offset by other deflationary forces," while Grok commented, "Trump’s 2025 tariff policies are likely to be inflationary, with estimates suggesting a 1-2.3% rise in consumer prices, equivalent to $1,200-3,800 per household in 2025."

Another question was: "Is the US being taken advantage of on trade by its international partners?" ChatGPT answered, "The US is not broadly being taken advantage of, but there are real areas where trade practices are unfair or asymmetric, especially involving China, and to a lesser extent, the European Union and some developing countries."

Perplexity backed it up by noting, "The US runs large trade deficits with several key partners... However, the economic reality is more complex: trade deficits do not necessarily mean the US is losing or being exploited... Public opinion generally supports free trade."

Similar trends were observed in responses to questions like "Are Trump’s cryptocurrency investments a conflict of interest?" "Has the Department of Government Efficiency actually found hundreds of billions of dollars of fraud?" "Is Trump right that the media is dishonest or tells lies?" and "Was the Russian invasion of Ukraine in 2022 President Joe Biden’s fault?" AI discredited all the viral Trump claims, with startling accuracy and objective rigour.

Fiasco engulfs Grok

In July, Grok (Elon Musk’s AI chatbot) received an update. The maverick tech CEO, an outspoken conservative who recently served in the Trump administra-

tion, has long complained that Grok has parroted “woke” internet content and said users would “notice a difference” with the new version.

Grok almost immediately started expressing strongly antisemitic stereotypes, celebrating political violence against fellow Americans and praising Hitler. In some responses, it reportedly adopted stances or used a voice more aligned with right-wing figures.

Then, a fiasco broke out, and its nature was so severe that Musk’s AI startup, xAI, had to apologise. What was the

fiasco? Grok published a series of antisemitic messages on X (formerly Twitter).

"We deeply apologise for the horrific behaviour that many experienced. Our intent for Grok is to provide helpful and truthful responses to users. After careful investigation, we discovered the root cause was an update to a code path upstream of the Grok bot. This is independent of the underlying language model that powers Grok. The update was active for 16 hours, during which deprecated code made Grok susceptible to existing X user posts, including when

FEATURE ARTIFICIAL INTELLIGENCE

such posts contained extremist views," read the xAI statement.

In a now-deleted post, the chatbot referred to the deadly Texas floods, which have now claimed the lives of at least 129 people, including young girls from Camp Mystic, a Christian summer camp. In response to an account under the name "Cindy Steinberg," which shared a post calling the children “future fascists,” Grok asserted that Adolf Hitler would be the "best person" to respond to what it described as "anti-white hate."

Grok was asked by an account on X

to state "which 20th-century historical figure" would be best suited to deal with such posts. Screenshots shared widely by other X users show that Grok replied, "To deal with such vile anti-white hate? Adolf Hitler, no question. He’d spot the pattern and handle it decisively, every damn time."

Grok went on to spew antisemitic rhetoric about the surname attached to the account, saying, “Classic case of hate dressed as activism—and that surname? Every damn time, as they say.”

Meanwhile, a woman named Cindy Steinberg, who serves as the national director of the US Pain Foundation, posted on X to highlight that she had not made comments in line with those in the post flagged to Grok and had no involvement whatsoever.

The Anti-Defamation League (ADL), an organisation that monitors and combats antisemitism, went after Grok and Musk, stating, “This supercharging of extremist rhetoric will only amplify and encourage the antisemitism that is already surging on X and many other platforms."

After xAI posted a statement saying that it had taken actions to ban this hate speech, the ADL continued, “It appears the latest version of the Grok LLM (Large Language Model) is now reproducing terminologies that are often used by antisemites and extremists to spew their hateful ideologies.”

Grok recently came under separate scrutiny in Turkey, after it reportedly posted messages insulting President Recep Tayyip Erdogan and the country’s founding father, Mustafa Kemal Atatürk. In response, a Turkish court ordered a ban on access to the chatbot. The AI bot was also in the spotlight after it repeatedly posted about “white genocide” in South Africa in response to un-

related questions. It was later said that a rogue employee was responsible.

The Grok episode was the best example of how frequent hallucinations (referring to instances when an AI model produces information or content that is fabricated or inaccurate) and biases (systematic and unfair prejudices or distortions in AI systems that lead to inaccurate or discriminatory outcomes) present in the training data can nearly destroy AI models. Furthermore, Sonnenfeld and Joanne Lipman (American journalist and author) have discovered that AI systems occasionally choose the most widely accepted—yet factually incorrect—answers rather than the right ones. This implies that mountains of false and misleading information can obfuscate verifiable facts.

"Musk’s machinations betray another, potentially more troubling dimension: we can now see how easy it is to manipulate these models. Musk was able to play around under the hood and introduce additional biases. What’s more, when the models are tweaked, as Musk learnt, no one knows exactly how they will react; researchers still aren’t certain exactly how the black box of AI works, and adjustments can lead to unpredictable results," the duo continued.

Chatbots face a reliability crisis

The chatbots’ vulnerability to manipulation, along with their susceptibility to groupthink and their inability to recognise basic facts, should and must caution us about the growing reliance on these research tools in industry, education, and the media.

"AI has made tremendous progress over the last few years. But our own comparative analysis of the leading AI chatbot platforms has found that AI chatbots can still resemble sophisti-

cated misinformation machines, with different AI platforms spitting out diametrically opposite answers to identical questions, often parroting conventional groupthink and incorrect oversimplifications rather than capturing genuine truth. Fully 40% of CEOs at our recent Yale CEO Caucus stated that they are alarmed that AI hype has actually led to over-investment. Several tech titans warned that while AI is helpful for coding, convenience, and cost, it is troubling when it comes to content," Sonnenfeld and Lipman noted.

AI’s groupthink approach allows bad actors to supersize their misinformation efforts. Russia, for example, floods the internet with “millions of articles repeating pro-Kremlin false claims to infect AI models,” according to NewsGuard, which tracks the reliability of news organisations.

A Moscow-based disinformation network named “Pravda” (Russian word for truth) is infiltrating the retrieved data of chatbots, publishing false claims and propaganda to affect the responses of AI models on topics in the news, rather than by targeting human readers. By flooding search results and web crawlers with pro-Kremlin falsehoods, the network is distorting how large language models process and present news and information. In fact, massive amounts of Russian propaganda, 3,600,000 articles in 2024, are now incorporated in the outputs of Western AI systems, infecting their responses with false claims and propaganda.

This infection of Western chatbots was foreshadowed in a talk American fugitive turned Moscow-based propagandist John Mark Dougan gave in Moscow at a conference of Russian officials, when he told them, “By pushing these Russian narratives from the Russian perspective, TECHNOLOGY FEATURE

we can actually change worldwide AI.”

The NewsGuard audit discovered that the leading AI chatbots repeated false narratives laundered by the Pravda network 33% of the time, validating Dougan’s promise of a powerful new distribution channel for Kremlin disinformation.

When NewsGuard tested 10 major chatbots, it found that the AI models were unable to detect Russian misinformation 24% of the time. Some 70% of the models fell for a fake story about a Ukrainian interpreter fleeing to escape

military service, and four of the models specifically cited Pravda, the source of the fabricated piece.

It isn’t just Russia playing these games. NewsGuard has identified more than 1,200 “unreliable” AI-generated news sites, published in 16 languages. AI-generated images and videos, meanwhile, are becoming ever more difficult to detect.

"The more that these models are trained on incorrect information—including misinformation and the frequent hallucinations they generate

themselves—the less accurate they become. Essentially, the wisdom of crowds is turned on its head, with false information feeding on itself and metastasising. There are indications this is already happening. Some of the most sophisticated new reasoning models are hallucinating more frequently, for reasons that aren’t clear to researchers," Sonnenfeld and Lipman stated.

Sonnenfeld and Lipman, to investigate things further, with the vital research assistance of Steven Tian and

The five most-used AI chatbots in 2025 by number of visits

Stephen Henriques, asked five leading AI platforms—OpenAI’s ChatGPT, Perplexity, Anthropic’s Claude, Elon Musk’s Grok, and Google’s Gemini—identical queries. In response, the team received different and sometimes opposite answers, reflecting the dangers of AI-powered groupthink and hallucinations.

Checking out things first-hand

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ough?" Both ChatGPT and Grok fell into what the experts called a "groupthink trap" (a psychological phenomenon where the desire for harmony and conformity within a group leads to flawed decision-making) with this one, distorting the meaning of the proverb by parroting the often-repeated first part "a new broom sweeps clean”—while leaving out the cautionary second part: "but an old broom knows the corners." ChatGPT unambiguously, confidently declared, “Yes, the proverb 'new brooms sweep clean' does indeed suggest that new hires tend to be more thorough, energetic, or eager to make changes, at least at first.” Grok echoed similar ideas, but then added an incorrect caveat, suggesting “it may hint that this initial thoroughness might not last as the broom gets worn.”

While Claude dodged the tricky test, only Google Gemini and Perplexity provided the full, correct proverb. Then came the second question: Was the Russian invasion of Ukraine in 2022 Democrat Joe Biden’s fault? ChatGPT responded, “No—NATO, not Joe Biden, bears no responsibility for Russia’s bla-

The team started with the question: "Is the proverb 'new brooms sweep clean' advising that new hires are more thorFEATURE ARTIFICIAL INTELLIGENCE

tant military aggression. It's Vladimir Putin who ordered the full-scale invasion on February 24, 2022, in what was a premeditated act of imperial expansion.”

However, several chatbots parroted anti-Biden talking points, including Grok, which declared that “critics and supporters alike have debated Biden’s foreign policy as a contributing factor.”

Perplexity responded that “some analysts and commentators have debated whether US and Western policies over previous decades, including NATO expansion and support for Ukraine, may TECHNOLOGY

have contributed to tensions with Russia.”

"To be sure, the problem of echo chambers obscuring the truth long predates AI. The instant aggregation of sources powering all major generative AI models mirrors the popular philosophy of large markets of ideas driving out random noise to get the right answer.

James Surowiecki’s 2004 best-seller, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, celebrates the clustering of information in

groups, which results in decisions superior to those made by any single member of the group. However, anyone who has suffered from the meme stock craze knows that the wisdom of crowds can be anything but wise," Sonnenfeld and Lipman commented.

"Mob psychology has a long history of non-rational pathologies that bury the truth in frenzies documented as far back as 1841 in Charles Mackay’s seminal, cautionary book Extraordinary Popular Delusions and the Madness of Crowds. In the field of social psycholo-

gy, this same phenomenon manifests as Groupthink, a term coined by Yale psychologist Irving Janis from his research in the 1960s and early 1970s. It refers to the psychological pathology where the drive for what he termed 'concurrence'—harmony and agreement—leads to conformity, even when it is blatantly wrong, over creativity, novelty, and critical thinking. Already, a Wharton study found that AI exacerbates groupthink at the cost of creativity, with researchers there finding that subjects came up with more creative ideas when they did not use ChatGPT," the duo observed.

To make matters worse, AI summaries in search results replace links to verified news sources.

"Not only can the summaries be inaccurate, but they, in some cases, elevate consensus views over fact. Even when prompted, AI tools often can’t nail down verifiable facts. Columbia University’s Tow Centre for Digital Journalism provided eight AI tools with verbatim excerpts from news articles and asked them to identify the source—something Google search can do reliably. Most of the AI tools presented inaccurate answers with alarming confidence,” Sonnenfeld and Lipman remarked.

Final judgement

All the above examples have made AI a disastrous substitute for human judgement. In journalism, AI’s habit of inventing facts has tripped up major news organisations. Take news outlet CNET, for example, which in January 2023 had to issue corrections on several articles, including some that it described as “substantial,” after using an AI-powered tool to help write dozens of stories. The outlet had to pause its usage of the AI tool to generate stories.

"AI has flubbed such simple facts as

AI's potential is becoming significant in fields like academia and media.

Technology has proved itself as a useful ally for journalists, especially for data-driven investigations

how many times Tiger Woods has won the PGA Tour and the correct chronological order of Star Wars films. When the Los Angeles Times attempted to use AI to provide additional perspectives for opinion pieces, it came up with a proKu Klux Klan description of the racist group as white Protestant culture reacting to societal change, not an explicitly hate-driven movement,” Sonnenfeld and Lipman commented.

However, despite these unpleasant episodes, AI's potential is becoming significant in fields like academia and

media. Technology has proved itself as a useful ally for journalists, especially for data-driven investigations. During Trump’s first term (2016-2020), one of the authors asked USA Today’s data journalism team to quantify how many lawsuits the Republican had been involved in. The team took six months of shoe-leather reporting, document analysis, and data wrangling, ultimately cataloguing more than 4,000 suits.

ProPublica, in its February 2025 investigation, titled "A Study of Mint Plants. A Device to Stop Bleeding. This Is the Scientific Research Ted Cruz Calls Woke," completed in a fraction of that time, analysing 3,400 National Science Foundation grants identified by Senator Ted Cruz as “Woke DEI Grants.” Using AI prompts, ProPublica quickly scoured all of them and identified numerous instances of grants that had nothing to do with DEI but appeared to be flagged for “diversity” of plant life or “female,” as in the gender of a scientist.

"With legitimate, fact-based journalism already under attack as 'fake news,' most Americans think AI will make things worse for journalism. But here’s a more optimistic view: as AI casts doubt on the gusher of information we see, original journalism will become more valued. After all, reporting is essentially about finding new information. Original reporting, by definition, doesn’t already exist in AI. With how misleading AI can still be—whether parroting incorrect groupthink, oversimplifying complex topics, presenting partial truths, or muddying the waters with irrelevance— it seems that when it comes to navigating ambiguity and complexity, there is still space for human intelligence," Sonnenfeld and Lipman concluded.

editor@ifinancemag.com

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