What forms will the finance de demain ?

What forms the finance de demain will take ? This is the concern of this article. In fact, the world of finance is changing so fast that it is avant-garde to think today about what will be the finance de demain. In fact, financeddemain.com began to wonder since the financial crisis of 2008.

This subprime crisis showed us to what extent the global financial system was fragile. After this crisis, several other forms of finance which today have more or less significant effects on the financial system began to emerge.

In this article, I present to you these news forms of finance which constitute the finance de demain. In other words, together we will answer the following question: What forms will the finance de demain ?

???? Why think of the finance de demain ?

System global financial institution is in bad shape. Isomething must be done. We are constantly dealing with financial crises, with the financialisation of the economy. In short, we are witnessing more and more an instrumentalization of Man for the benefit of the economy and finance.

Finance disconnected from the real sphere. From now on the world economy needs an ethical and more socially responsible finance which must be at the service of man.

In fact, three factual elements prompted our editorial staff to look into the future of finance.

✔️ The 2019 Coronavirus health crisis

Nowadays, no one can deny the perverse effects of COVID19 on the global economy. Until 2021, this crisis which began in 2019 continues to claim victims, on a human, economic and social level.

Its impact on the economy is considerable due to the drop in global consumption for already two years.

Several companies have temporarily ceased their activities due to the drastic confinements. For this the financial markets will not stabilize until the fear and the number of new cases won't stop growing from either side.

Thus, financiers are already thinking about a financial model that could withstand a possible crisis of this kind. Such a model would allow companies to avoid financing problems in such a crisis.

✔️ The perverse effects of financial globalization

The second reason to think about what the finance de demain is financial globalization. THE effects of financial globalization also lead researchers to believe that it is becoming urgent to think of a new way of doing finance.

In reality, with the interconnection of markets and financial centres, investors have the possibility of rapidly moving their capital from one financial center to another according to profit opportunities.

However, this way of doing finance leads to the autonomy of finance, the loss of state power, informational asymmetry and the development of tax havens.

Speaking of the autonomy of finance, it should be remembered that financial operations are far superior to operations related to the purchase of goods or services. They are increasingly linked to the prospect of realizing speculative gains.

Thus, we are witnessing a disconnection of the financial sphere vis-à-vis the real economy. This is the main cause of the 2008 crisis.

With financial globalization, States have lost their power. The monetary authorities have lost their powers to the benefit of large private investors.

Through their financial investments, these investors influence interest rates and exchange rates. This is what accentuates the dependence of “weak” states on “strong” states.

Informational asymmetry and unfair trade agreements are other perverse effects of financial globalization. 

With these agreements, capital is diverted from developing countries to countries with significant production capacity. These contracts have enabled the United States, for example, to attract foreign capital to finance their consumption, investments and innovations. It's financial injustice.

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One of the perverse effects of financial globalization is the development of tax havens. The emergence of tax havens began in the 90s. In fact, a tax haven is a country or territory with reduced or zero taxation.

These countries practice the policy of beggar-thy-neighbor which consists of enriching oneself on the backs of other countries. They are the source of a large part of the world's public debt.

These tax havens promote money laundering dirty, tax evasion and increases inequalities in the world, to the benefit of multinational firms and banks.

Faced with these shortcomings, the global financial system needs a little more ethics and responsibility.

✔️ Environmental protection requirements

The third reason to think about what the finance de demain is environmental protection.

Demographic and industrial development lead to a warming of the planet's atmosphere, which unbalances and endangers its inhabitants. Thus, the protection of the environment and its resources has become a priority issue.

It is above all an awareness of the globalization of ecological problems. To do this, we must rethink finance, advocate greener, more responsible and fairer finance.

???? What forms will the finance de demain ?

Due to stock market play, la finance de demain will take many forms. In this paragraph we talk to you about Islamic finance, parallel finance, green finance and economic intelligence.

✔️ What forms will the finance de demain ? : ethical and responsible finance

La finance de demain will first be Islamic. Like the World Bank, the International Monetary Fund pins all its hopes on Islamic finance.

This finance, which even if only on a theoretical level, is more ethical and socially responsible. To stabilize the financial system in its own way; Islamic finance prohibits the practice of interest, speculation, gambling, etc.

It advocates investments in tangible assets, i.e. investments in the real economy. Furthermore, it recommends that losses and profits be shared between a bank and its customer. doing it, Islamic finance reduces financial injustice.

In practice, the Islamic banking system is recognized as more stable than its conventional equivalent. During the 2008 financial crisis, Islamic banks held up well.

Article to read: The Requirements of Islamic Finance

This resilience could be explained by the fact that they do not practice speculation, the main cause of this crisis. Thus, finance will first be Islamic.

✔️ Parallel finance or shadow banking: spectacular growth

La finance de demain will also be what has been called parallel finance. Still called shadow finance, this finance mainly covers securitization transactions, crowdfunding and securities lending-borrowing transactions. Overall, it is banking operations that escape regulation.

Opaque, speculative, high-risk, systemic, even “ criminal "For some, Shadow Banking is described by others as flexible, dynamic, innovative, adapted to financing the modern economy, and complementary to banking networks" over-regulated ».

According to a report by Le Monde, shadow banking activities had never been so flourishing. Today, this apparent rise of Shadow Banking poses a risk to the stability of the global financial system.

Article to read : What is the Parallel Banking System or Shadow Banking?

In the same vein, an article in the magazine Bilan estimated that the risk of a financial crisis is today largely concentrated in the " shadow finance », both because of its weight and the fact that it is not subject to the same prudential rules as the traditional banking sector. So, should we fear for the future of the finance de demain ?

✔️ Green finance: a necessity for the future of the world

Finance is no longer content only with financing profitable projects. It also takes environmental issues into account. “Green finance” is a concept that defines financial actions and operations that promote the energy transition and the fight against global warming.

This finance seeks to finance projects that do not harm the environment. In other words, any project going in this direction could find financing more easily.

The green finance market is growing and well structured. There we find the green bonds, carbon market, Ecological bonus-malus, placements and white work and carbon taxes.

Green bonds are similar to bonds conventional in that they represent debt securities. However, the borrowed money is used to finance ecological projects.

A carbon market aims to allocate “ rights to pollute which can be traded on a market. Thus, players wishing to pollute more must buy additional rights, which encourages them to reduce greenhouse gas emissions.

Article to read : Green finance at the heart of global concerns

The bonus-malus aims to increase the purchase cost of polluting cars and to reduce the cost of low-polluting cars to encourage purchase. This is the application of the principle polluter pays ».

✔️ Economic intelligence and finance: a harmonious marriage

La finance de demain is also based on economic intelligence. The expression Competitive Intelligence refers to a collective approach within a company which aims to increase its competitiveness over the long term, by strengthening its means of anticipation.

Article to read: Digital finance: the BA BA

We are talking about strategic intelligence. Economic intelligence also aims to optimize the company's innovation potential by means of digital communication.

Thus, economic intelligence is nowadays considered as one of the levers for the success of the digital transformation of Very Small and Medium-Sized Enterprises. This is an opportunity for companies seeking competitive advantages.

In conclusion, to answer the question What forms will the finance de demain; we can say that the global financial system is evolving and has several forms. The finance de demain will not necessarily be the one we know today.

phantom finance, Islamic finance, green finance andEconomic intelligence constitute the new forms of finance.

However, if you want to take control of your personal finances in six months, I highly recommend this guide.

Leave us your opinions in the comments.