For the better part of a decade, Turkey has hardly presented itself as a happy hunting ground for investors. Since the attempted coup of 2016, when it lost its sovereign investment grade rating, erratic policymaking—especially on the monetary side—and a succession of short-lived appointments to the central bank have combined to keep foreign money on the sidelines.

The Turkish lira has lost some 80% of its value against the US dollar over the past five years, hitting an historic low of more than 30 to the dollar in January. Inflation remains high, at around 65%, with the current account a worrying 4% to 5% of GDP.

Yet those who wrote Turkey off after last May’s presidential election, which saw Recep Tayyip Erdogan return for a third five-year term as president, have so far been proven wrong.

In February, an inaugural $500 million bond offering by the Turkey Wealth Fund (TWF) attracted orders totalling some $7 billion, suggesting the country will be active on bond markets this year; some $10 billion is expected to be issued this year, similar to the 2023 total. The TWF holds shares in some of Turkey’s leading companies, including Turkish Airlines, Borsa Istanbul and local energy giant Botas, leading observers to anticipate further offerings, particularly as the yield on the five-year bond dropped to 8.3%, below the targeted level above 9%. Turkish five-year dollar bonds are currently trading with a yield around 7.6%, which is competitive for an emerging market.

Tourism last year reached record arrivals of almost 50 million visitors, up 10% from 2022, and income from tourism rose 17% to $54 billion. In January, the auto industry notched record export earnings of almost $2.8 billion. Both were good news for the current account deficit.

Fatih Karahan, the new governor of the Central Bank of the Republic of Turkey, has shown greater determination than his predecessor to bring inflation to heel. Interest rates now stand at 45%, versus 8.5% nine months ago, and a complex web of unorthodox financial regulations is slowly being dismantled. Turkey watchers were also reassured that the change of governor—the seventh since 2016—was not the result of presidential dismissal; Karahan’s predecessor resigned for a range of reasons, some personal.

Analysts say the credible team of Karahan and Finance Minister Mehmet Simsek, appointed after last year’s elections, has helped transform Turkey’s prospects. Simsek—previously deputy prime minister, and an analyst with Merrill Lynch prior to that—is seen as guiding policymaking, and his presence reassures markets.

“Turkey had no choice but to return to rationality,” says Erich Arispe, Turkey analyst with Fitch Ratings, says of the new team. “This time last year, our sovereign rating was B with a negative outlook; now it’s B with a stable one.” He warns, however, that some clouds are still on the horizon.

“The big question is how durable the policy adjustment is, and how much political space there is for monetary and fiscal tightening,” Arispe argues, even though policymakers are insisting they will do whatever it takes to reduce inflation. The hit to growth—which is expected to fall this year to 2.5% versus 4.5% in 2023, when the economy was buoyed by preelection spending—will be considerable if inflation is to be significantly reduced.

Early signs are that the tightening is working, but some analysts think rebalancing will take longer than many expect.

“Fourth-quarter GDP data showed that private spending has accelerated despite an increasingly restrictive policy stance,” ING economist Muhammet Mercan and emerging markets strategist James Wilson told clients in February, “while leading indicators point to further GDP acceleration in Q1 this year. This implies there is still a long way to go.”

The good news is that much of that continued growth reflects strong investment, with machinery equipment and the construction sector both looking healthy. The planned construction of four new airports, a new superfast train that aims to connecting Istanbul to Ankara in just 80 minutes by 2035, and investments worth 210 billion Turkish lira ($6.5 billion) in the southern city of Mersin following the construction of Turkey’s first nuclear power plant there, all suggest that Erdogan has not lost his passion for big infrastructure projects.

Most analysts remain upbeat about the private-sector impact of the return to orthodoxy and higher interest rates—and a depreciating lira, which has dropped 40% since last year’s elections.

The European Bank for Reconstruction and Development “has been active here for 15 years, and we feel [Turkey] is vibrant and very resilient,” says Rafik Selim, the EBRD’s lead regional economist in Istanbul. Last year, the bank invested a record €2.5 billion ($2.7 billion) in Turkey, including sums sent in response to the February earthquake and substantial commitments to green projects, bringing total investments to €19.5 billion in 440 projects, making Turkey the EBRD’s biggest country of operation.

“The private sector and small to midsize enterprises will be key drivers of growth,” Selim says, “as Turkey takes advantage of its big domestic market and of major nearshoring opportunities, made more attractive by the close long-term relationship with the EU.”

Turkey has made strides in investment in human capital, Selim notes, particularly in the less-developed eastern part of the country—and in digital transformation and renewables. Significant investments in solar and wind energy will bolster long-term sustainability and improving energy security, key for a country not blessed with abundant fossil fuel sources.

In March, the government unveiled a 57-point, two-year investment action plan “to facilitate and simplify the legislation, administrative and judicial processes related to the investment environment,” giving priority to projects promoting digital and green transformation.

The big challenge now will be for Turkey to step up its efforts to attract foreign direct investment. In a recent speech, Burak Daglioglu, head of the Presidential Investment Board, noted that the country had attracted $262 billion in foreign investment since 2003, helping it transition from a low-middle income country with per capita income around $3,000 a year to a high-middle income economy with an average of $13,000 per capita and foreign companies accounting for 8.4% of private-sector employment.

Difficult economic conditions have encouraged a brain drain in recent years, however, along with large-scale capital outflows, which last year amounted to some $20 billion. Although much of this could be characterized as hot money, the pullback suggests that Turkey could be doing more to attract long-term investment from abroad.

“Although FDI is positive in net terms—last year it was $10.6 billion, or around 1% of GDP—it is not as high as it was or as Turkey really needs,” warns the EBRD’s Selim, who points out that in the boom years of 2005 to 2008, enthusiasm for Turkey’s then reform path pushed FDI to around 3% of GDP. The reasons are many, including the Covid pandemic, wars in Ukraine and Gaza, and a global trade downturn. “Turkey is not disconnected from what’s happening in the wider region,” Selim cautions.

On the plus side, it seems investor confidence is returning. The Borsa Istanbul All-Share index is up more than 20% in dollar terms this year, outperforming other indexes—although with inflation still running around 65%, real interest rates remain negative.

The positive response to last month’s Turkish bond issuance is another plus; foreign capital inflows are critical. Should confidence in the lira fall too far, however, observers say authorities need to be prepared for all contingencies, including a rise in the current account deficit and unmanageable pressure on the Lira Deposit scheme, which offers individuals protection against exchange rate fluctuations and is currently worth some $80 billion. “Even in time of stress, unlike other similarly rated countries, Turkey has been able to maintain market access,” Fitch’s Arispe notes.

Ahead of local elections at the end of March, Erdogan had promised voters that the focus on growth would resume once Turkey surmounts “the difficulties” it must tackle in 2024. Analysts greeted that reassurance of no deviation from the current orthodox monetary policy as good news.

“Investors need stability and certainty, not least that the return to orthodox economic policies will be sustained,” EBRD’s Rafik says.

BOG chairman Mel Carvill said the acquisition would let the bank pursue opportunities in one of Europe’s fastest-growing emerging economies.

Fitch Ratings suggests that the takeover—subject to regulatory approval in both countries—is ambitious, given that Ameriabank is equivalent to 31% of BOG assets, which could give rise to contagion risks. Nonetheless, it notes that Ameriabank will remain a stand-alone entity. And the Georgian bank can certainly afford it, given that net profits in 2023 were $496 million.

“BOG’s capital position is supported by the bank’s robust profitability, which benefits from wide interest margins and a long record of only moderate loan-impairment charges. We expect net income to equal 25% to 30% of average equity in the next two years,” says Dmitry Vasilyev, a senior director at Fitch Ratings, suggesting the bank’s BB/Stable rating is unlikely to be impacted.

BOG’s bid for Ameriabank is testimony to the dynamism of Armenia’s economy, despite losing the war with Azerbaijan over Nagorno-Karabakh in 2023.

Armenia’s GDP grew by 12.6% in 2022 and 7.4% in 2023, with some 6% growth expected this year—for the same reasons behind the massive growth in Armenian bank deposits and earnings. The Caucasus nation has seen considerable human and financial capital from Russians and Russian businesses that do not want to be locked into Russian banks by international sanctions.

According to Fitch Ratings, “Armenian bank revenue spiked dramatically in 2022, with the pre-tax average return on equity increasing to 28%. The ratio eased to 17% in 2023, which is still far above the 2018–2021 average of 9%.” The group revised the outlook of three banks from Stable to Positive on February 22. With such figures, expect other foreign banks to follow BOG into Armenia, where further bank consolidation is expected. 

Since 2022, the dramatic rise of the US dollar against virtually every other world currency has wreaked havoc on the profits of US multinationals as the value of their foreign earnings plummeted. In the second quarter of 2023 alone, the average hit to earnings for publicly traded North American companies was a whopping $0.05 per share, according to the Quarterly Currency Impact Report conducted by consulting firm Kyriba. Currency volatility has moderated somewhat in 2023, but shifting expectations for inflation and future interest rates have made the environment no less challenging for finance executives.

“The US dollar has been meandering this year, and that still causes headaches for treasurers because of the peaks and valleys,” says Andrew Gage, senior vice president at Kyriba.

Gage’s firm tracks the impact of currency fluctuations on the financial results of 1,700 public companies, half in North America and half in Europe. In the second quarter of 2023, companies disclosed a combined $29.14 billion in currency impacts on their financial results. The actual numbers are far larger for the whole group, as most companies do not quantify the impact of currency movements on their results. The trend, however, is clear. FX volatility remains high, and the pain is felt across global markets as the US dollar fluctuates.

“Currency volatility is like Jupiter’s Red Spot: It moves around a lot,” says Gage. “We saw some of that in European results for the second quarter, and I think companies in Europe may experience more [currency] headwinds than those in the US through the end of this fiscal quarter.”

Corporate reactions to the increased volatility in FX markets vary. A survey of 245 corporate treasury departments worldwide conducted in 2022 by Deloitte & Touche found that 76% were using derivatives to hedge their currency exposures, while 24% reported other preferences. A large plurality of respondents, 45%, ranked FX volatility as one of the top five challenges for their organization. “The volatility has come down from last year, but a lot of organizations are just beginning to come to terms with it,” says Erik Smolders, a managing director at Deloitte’s Treasury Advisory Services. “Some companies want to eliminate their FX exposures; others see it as a cost of doing business and are willing to take some of it on the chin.”

Invariably, those taking it on the chin emphasize the results of their foreign operations in nominal numbers without adjusting for changes in currency prices, hoping that investors will look through currency fluctuations and focus on underlying business trends. “It depends on how companies have been talking to their investors over the years,” says Smolders.

However, the increase in volatility has upped the ante for corporate finance executives, and many are now looking for more-effective ways to manage their FX risks. “I’ve had many more companies ask for assessments of their hedging programs in the last 12 months,” says Smolders. “They want to know how to handle their exposures better and manage costs.”

US and Asian multinationals, typically less inclined to hedge currency risks than their European counterparts, are increasingly looking for solutions to manage risks in a more volatile environment. Netflix is a case in point. As a global leader in video streaming services, Netflix has exposure to more than 45 currencies in its operations and has historically tolerated the swings in reported earnings due to currency movements. However, 2022 was a tipping point for the company. CFO Spence Neumann revealed in a 2022 third-quarter earnings call with analysts that “there’s about 2.5 points of FX drag in our margin. That equates to about—it’s about $1 billion of revenue drag.”

In 2023, the company implemented an FX risk management program to limit the impact of short-term currency movements and reduce the need to raise prices or cut costs in response to them. Netflix disclosed it would use standard forward contracts to hedge some—but not all—of its currency risks.

When managing currency risks, the solution can sometimes be as painful as the problem. With the heightened volatility in currency markets, the cost of hedging risks has risen dramatically for companies since the US Federal Reserve began raising interest rates in early 2022. Treasury executives now need to decide when the higher costs of hedging risk outweigh its benefits.

“The responsibility of the treasury department to manage currency risk isn’t only about hedging. It’s also about managing the cost of hedging,” says Kyriba’s Gage. “A lot of corporate risk management programs were established in low interest rate environments. Now that rates are back up, companies need to think differently about them.”

Deloitte’s Smolders also advises his clients to take a measured approach to identifying foreign currency exposures before deciding if and how they should be hedged. He recommends that companies take steps before considering what derivative instruments to use for hedging purposes.

First, companies should determine if they must take on a currency risk or if they can offload it to suppliers or customers and avoid worrying about currency price fluctuations.

Second, larger companies can reduce the amount they need to hedge by netting their currency exposures in costs and revenues across their organizations.

Third, intercompany hedging activities have tax issues. If a company can hedge its net currency exposure, it should consult with tax advisers about where and in what markets to undertake the hedge.

Finally, accounting for hedges remains an issue in currency-risk management. Most companies use simple forward currency contracts for hedging because they are simple and likely to qualify for favorable hedge accounting treatment. When derivative hedges are deemed ineffective, which requires complicated calculations, the results must be recognized in the income statement.

The key to good currency risk management is having good data from which to make decisions. For many large companies, producing that data is challenging, since different parts of their organization still operate in silos.

“Companies need to have confidence with their currency exposures, and they need the ability to analyze them across their organizations,” says Gage. “They need the right data at the right time.”

That remains an elusive goal for most large companies. In the 2022 Deloitte survey, the largest number of respondents (83%) cited the lack of visibility into their currency exposures and the reliability of their forecasts as a key challenge they faced in managing FX risks. The second most-cited challenge (71%) was the manual identification and capture process for those exposures.

“Getting good data out of enterprise resource planning systems is a consistent challenge for companies,” says Smolders. “Companies operating with more than one system have more problems.”

The renewed volatility of the currency markets in the past two years is a powerful motivator for companies to accelerate the digitalization of their treasury function. This can provide the data they need to make better decisions about their overseas investments and operations. Global financial executives will struggle to control them effectively without an accurate big-picture view of companywide currency and financial exposures.

The volatility is not likely to decrease anytime soon. Wars, inflation, supply chain crises, and divergent central bank monetary policies will likely continue to make FX markets more treacherous for global corporations.

“Companies have had to navigate through sustained crises for about four years now, and I don’t see that changing,” says Gage. “Currency volatility is now a front-burner issue for them.”

Global Finance selects its award winners based on objective factors such as trans-action volume, market share, breadth of offerings, and global coverage, as detailed in public company documents and media reports.

Our criteria also include subjective factors such as reputation, thought leadership, customer service, and technology innovation, using input from industry analysts, surveys, corporate executives, and others. Although entries are not required in order to win, decision-making can be informed by submissions that provide additional insight.

Last year was nothing short of historic for our Best Global Foreign Exchange Bank, UBS. Between the takeover of its longtime rival, Credit Suisse, in what analysts call the most important banking M&A in history, and the substantial growth of its foreign exchange (FX) operation in developing markets, the behemoth bank has done it all with unrivaled excellence.

The takeover of its rival’s operation led to substantial growth in clientele and traded volume in European markets, resulting in solid profitability growth. It also led to key additions to UBS’ FX team, further expanding the bank’s knowledge.

At the same time, UBS teams in Asia, the Middle East, and Latin America have kept working relentlessly to improve the bank’s digital offering for emerging market currencies.

As a result of this unmatched year, the Swiss-based giant now ranks as one of the largest private wealth managers in the world, with undisputed market share in Europe. It has also watched its emerging markets FX operation mount into one of the world’s largest, expanding the bank’s offerings to its clients worldwide.

Among the bank’s most significant global technological breakthroughs is UBS’ FX Engine Room, with which the bank can place all analytics in one place for use by its global sales force, thus broadening the footprint of its operations to clients looking to trade currencies on a global scale.    —Thomas Monteiro

Driven by constant strategic investments and rock-solid market positioning, BBVA takes home our award as the Best FX Bank for Corporates in 2023.

With a global presence covering key markets such as the US, Mexico, Colombia, Peru, Argentina, and Europe; adherence to the Bank for International Settlement’s FX Global Code; and a commitment to compliance, BBVA offers a comprehensive FX-services suite that caters to both the broader and the most specific needs of corporates worldwide.

The Spanish-based bank has maintained its core principles, providing world-class strategy and research-tailored insights while investing in cutting-edge technology.

Notable innovations have included improved onboarding with eMarkets and dynamic FX pricing in Colombia, 24-hour FX trading, and a customized mobile app for small and midsize enterprises across the network.

BBVA’s accomplishments among corporates helped the bank strengthen its leadership in Mexico, Peru, Colombia, Spain, and Turkey. The bank improved its position in Argentina, where it increased its share in the corporate FX spot market and sustained leadership in imports and exports.          —TM

With solid growth in key emerging markets and an increasing foothold in both the US and Europe, Santander reaffirmed in 2023 its status as a pivotal institution for corporations operating in some of the globe’s fastest-moving markets.

By providing extensive coverage with over 50 currency pairs; an unmatched clientele; and knowledge of the market in countries such as Brazil, Mexico, Argentina, and Spain, the bank can guarantee that its clients stay ahead of the curve amid the intrinsic difficulties associated with emerging market currency trading.

In a year in which currency volatility proved a challenge for those based in both developed and developing markets, Santander’s comprehensive trading platform offers diverse options for trading across various channels. It includes streaming capabilities for online pricing in spot, forwards, swaps, non-deliverable forwards, FX options, and structured product trading.

The Spanish-based giant also provided top-of-line global research, market updates, strategies, and FX publications to its clients, ensuring an edge over the competition.

Moreover, with a dedicated team of expert trading and sales professionals based in several key markets for emerging markets currencies, Santander’s clients were able to navigate the complex FX landscape confidently and efficiently.            —TM

Liquidity concerns spilled over in 2023 into some of the world’s key markets due to the failures of historical powerhouses such as Credit Suisse and Silicon Valley Bank. Farther south, in Brazil, Itaú Unibanco not only weathered the challenges but also achieved outstanding performance metrics.

These numbers ensured the top-line stability of the bank’s reserves and liquidity offerings, showcasing Itaú’s resilience in the face of global economic uncertainties.

In 2023, the Brazilian financial giant posted an impressive net income of $6.3 billion and a loan portfolio amounting to a robust $224.5 billion. Backed by solid reserves and growing profitability, Itaú’s FX operation thrived, showcasing an above-average return on equity of over 21%.

This trend was also backed by the bank’s continuing investments in technology. Via an impressive compound annual growth rate of 43.5% since 2020, these helped guarantee speed and ease whenever clients needed large sums of foreign currency.

As a result of the bank’s best-in-breed liquidity offering, it effortlessly operated some of the largest FX transactions of its history, such as a $1.2 billion dividend payment for a prominent global beverage company and a single-tranche transaction totaling $1.3 billion for a client in the energy sector.      —TM

Bank of New York Mellon (BNY Mellon) won the Best FX Market Maker award due to its market position, excellent client service, financial performance, and continued technological development. BNY Mellon is one of the top five global US dollar payment clearers. Its client franchise includes 97 of the top 100 banks worldwide and 89 of the top 100 investment managers.

BNY Mellon Treasury Services added new business across strategic payment solutions and liquidity products. It drove higher payment volumes while generating traction as it built its digital payments and related FX and trade businesses. FX revenue has increased, primarily driven by the volume of client transactions, including hedging activities. The bank is a leading provider of global payments, liquidity management, and trade finance services. The bank has extensive experience providing trade and cash services to financial institutions and central banks outside the US.

In emerging markets, the bank is active with custody, global payments, and issuer services. BNY Mellon is a full-service global provider of FX services, actively trading in over 100 of the world’s currencies. It serves clients from trading desks in Europe, Asia, and North America.     —Darren Stubing

The 2023 global leader in sustainable finance, Societe Generale (SocGen) once again proved its core commitment to meeting the diverse demands within the broad environmental, social, and governance (ESG) spectrum.

The global sustainability markets’ recovery from the challenges of 2022 is expected to propel full-year 2023 green, social, sustainable, and sustainability-linked bond issuances to between $900 billion and $1 trillion, according to S&P Global. SocGen’s customers were able to enjoy best-in-breed market positioning, gaining a significant edge over the competition.

The French powerhouse’s FX team helped support its ESG products for customers worldwide, including the bank’s flagship ESG benchmarks, sustainability swaps, sustainability options, and sustainability-related derivatives.

The bank also stepped on the gas by providing hybrid trade financing offerings to its customers, linking traditional finance to sustainability goals, thus helping to fuel ESG investments the world over.

Additionally, in November, SocGen launched its first-ever digital green bond, registered directly on the Ethereum public blockchain. This strategic move aims to enhance transparency and traceability in ESG data and broaden the bank’s currency-related sustainable offerings.     —TM

JP Morgan was awarded Best FX Commodity Trading Bank, as its well-executed strategy consolidated its FX commodity trading activities, capitalizing on its top ranking in fees and market share in investment banking.

The bank is the top ranked in research, underpinning its strength in FX commodity trading. It has a longstanding leadership position in energy, power and renewables. It has made significant investments in the low-carbon energy transition. From local production to worldwide trading, JP Morgan has a strong presence in the metals and mining industry, including key areas in the Americas, Europe, the Middle East, Africa, and Asia-Pacific; and the bank has deepened its footprint in Australia and India.

JP Morgan has achieved excellence in FX commodity trading execution, aided by technology and analytics. Its FX and commodities trading platform provides access to fast and reliable electronic market-making and order placement across every commodity class—including base metals, precious metals, energy, agriculture, and commodity indexes—with tradeable prices in multiple currencies. Its platform can send over 120 currencies and receive more than 40 across 200 countries.  —DS

FirstRand, the operator of the Rand Merchant Bank (RMB) corporate investment bank and of the retail and commercial lender First National Bank (FNB), for South Africa and the region, is this year’s award winner as Global Finance’s Best Foreign Exchange Bank for Africa. This top African financial institution has been rewarded for carefully marshaling its foreign exchange (FX) business and its mobile and online offerings.

Offering FX solutions from personal travel to corporate, remittance partnerships with international companies such as PayPal and MoneyGram, and an FX clearing hub for African banks, FirstRand has been a trailblazer in the African FX market over the past year.

The company says its mobile application and online enhancements for FX are a “continuous focus for individuals and commercial clients,” adding that “smart messaging such as SMS, emails, and [app push notification] are in progress” for 2024.

Straight-through processing enhancements have made a difference in getting clients to move away from manual payments to platform transactions, with the FNB banking application bringing FX transactions to a readily accessible mobile platform.

FNB and RMB are also building a foothold in the world of cryptocurrency transactions and FX blockchain payments. With an FX staff complement of 599, FirstRand accounts for approximately 33% of all banking sector FX volume in its primary market of South Africa.

A further presence across Africa in countries such as Mozambique, Zambia, Botswana, Namibia, Nigeria, and Ghana saw FirstRand’s regional FX profits grow in 2023 by 15% over the previous year. In August 2023, RMB launched a foreign currency clearing solution for African banks.      

—Tawanda Karombo

DBS Bank is the largest bank in Southeast Asia, with global operations across 19 markets. With its vital FX centers in London, Tokyo, and Singapore, the bank presents itself as a seamless connectivity and liquidity provider with FX products, including nondeliverable forwards, FX swaps, and precious metals. As of 2023, DBS’ one-stop global cross-border payment solution has covered 132 currencies across 190 countries.

The bank’s FX business supports large corporations, multinational corporations, and small and midsize enterprises (SMEs) by offering a spectrum of services, such as sophisticated FX payment with integrated, competitive, and committed FX rates—as well as access to transparent pricing and analytical tools. Regardless of size, corporate clients all have access to efficient and secured FX and forward transaction platforms that safeguard against currency fluctuations.

DBS’ commitment to the FX business is also reflected by the increasing number of employees who have dedicated themselves to it over the years and by the bank’s ongoing effort to build global distribution channels with new technology investments and initiatives.

—Lyndsey Zhang

Raiffeisen Bank International (RBI) has long been a significant player in the Central and Eastern Europe (CEE) banking market—it founded its first CEE subsidiary in Hungary back in 1986—and is today active across 12 countries in the region, with almost 18 million customers and some 45,000 employees.

FX is a large part of the bank’s business, and RBI is actively trading in the currencies of most countries of the region, offering a comprehensive product portfolio with competitive pricing and reasonable rates for more than 100 currency pairs. It has been at the forefront of digital innovation, using cutting-edge systems to speed trading, improve accuracy, and reduce trading costs.

Two years ago, RBI established partnerships with AxeTrading, a fixed-income-trading software company, and with Integral, a leading FX tech provider, to provide real-time streaming of FX prices into bond trading. Since 2021, it has also been rolling R-Flex, a digital solution for FX conversion, across CEE, starting in Romania before RBI in Croatia and Hungary adopted what it describes as a simple yet secure user-friendly platform that prioritizes clients’ needs. The plan is to extend R-Flex across RBI’s operations in other CEE countries, giving customers access to a state-of-the-art system that simplifies and speeds FX trading.

—Justin Keay

Amid the volatile FX landscape of 2023, BBVA managed to secure the top market position in several key markets across Latin America, thus providing its customers with unmatched opportunities and products.

In addition to its unique market knowledge, one of the main secrets behind BBVA’s success throughout the year was its relentless dedication to boosting its award-winning technological capabilities. The Spanish-based bank’s FX operations underwent significant enhancements, showcasing this dedication to innovation and client-focused services.

The onboarding process for eMarkets clients saw substantial improvements, incorporating DocuSign for streamlined and efficient client interactions. The introduction of direct market access marked a pivotal moment, providing FX spot clients with a new algorithmic execution service. Real-time FX application programming interface offerings for external clients, encompassing FX and payments, strengthened the bank’s connectivity.

BBVA further implemented dynamic pricing in Colombia and introduced FX SBP (single bank platform); and BBVA eMarkets in Argentina, covering spot and nondeliverable forwards. Enhancements in FX online services for enterprises in Colombia allow for payments from accounts held in other banks.

These strategic improvements earned BBVA recognition in the Global Finance awards and position the bank as a leading force in the dynamic landscape of FX operations in Latin America.

—Thomas Monteiro

The winner as the Best Foreign Exchange Bank in the Middle East, Saudi Arabia’s Al Rajhi Bank is the largest Islamic bank worldwide and has a dominant franchise in the Gulf Cooperation Council’s biggest banking market. Al Rajhi is ranked as the No. 1 bank in the Middle East for remittances by payment value.

The bank’s FX performance has been boosted by digital transformation. Retail, SME, and corporate businesses have expanded, with escrow accounts growing substantially. Its FX franchise has strengthened, with an increasing number of global counterparties and an extensive peer network of banking and financial institutions, further developing its treasury capability to deal in large FX trades. Al Rajhi’s Treasury Group has increased interbank FX counterparties to improve price and FX flow coverage and to access new markets and currencies. Onboard banknote and bullion interbank counterparties have been introduced to enhance supply, storage, and price economies. Several new module enhancements have been carried out on the core treasury management system to onboard new products.      
—Darren Stubing

Like all global banks, JP Morgan has invested heavily in its IT infrastructure and trading networks over the past decade. Headquartered in New York, the bank is in all major world financial centers. It provides corporate clients with everything from FX trading services to international payment processing, cash flow, and working capital management.

In a more volatile environment for global currencies, size matters. JP Morgan, UBS, and Deutsche Bank are the three largest players in the FX trading markets, accounting for roughly 30% of global FX transactions. The bank has an enormous pool of liquidity, with millions of customers across its consumer, commercial, and investment banking operations. It can execute large spot trades in up to 300 currency pairs internally by matching up customers, or it can work complicated orders across multiple external electronic markets. It is also one of the largest providers of FX derivatives contracts globally.

Technology is a significant selling point for JP Morgan. It employs artificial intelligence to enhance its FX trading algorithms that optimize execution services in all market conditions. It also helps companies to fully digitalize their treasury functions across global operations to give them a clearer picture of their FX and risk management needs.

—Andrew Osterland

Already a powerhouse in the European market, UBS skillfully took advantage of Credit Suisse’s March collapse to achieve once-in-a-lifetime boost to customer growth.

By combining its former rival’s market shares with its own, the bank was able to gather unrivaled positioning, which should remain for years to come, in the continent’s FX market.

Naturally, the M&A came with challenges, as UBS faced the need to regain confidence among former Credit Suisse clients and to onboard its rival’s top-line staff. This process led to a challenging yet rewarding second half of 2023, as customer satisfaction grew while FX margins temporarily compressed.

But despite the intricacies of the merger, the bank has continued to invest in deepening its already best-in-class suite of technological offerings for FX.

With significant improvement across the currency-trading spectrum, from FX swaps with its Neo STIR Analytics platform to improved FX liquidity algorithms with a new smart order router, UBS’ European-based customers enjoy a unique combination of unrivaled market positioning and knowledge with state-of-the-art technological FX products.

—TM

Tusk’s return after serving as president of the European Council was a personal victory for the centrist politician and his Civic Platform party. It was also cheered by other veterans of the Solidarity movement, including former president Lech Walesa and former foreign minister Radek Sikorsky, who had not concealed their opposition to the populist course Poland took under the rightist Law and Justice Party (PiS).

Tusk’s return to power was also greeted with relief in Brussels, which has been facing off against the populist governments of Viktor Orban in Hungary and Robert Fico in Slovakia, and which who almost immediately unlocked some €5 billion in grants and loans for Poland from its post-pandemic recovery fund.

The markets’ reaction has also been upbeat.

“The zloty has been supported by positive sentiment towards Central and Eastern Europe and expectations related to the improvement of relations between the new government and the EU and the imminent unblocking of EU funds in 2024,” says Leszek Kasek, a senior economist with ING Bank.

Poland stands to receive an additional €30 billion in funds over 2024 out of an estimated €111 billion still outstanding, provided it can address the rule-of-law violations that soured relations with the EU during eight years of PiS rule and bring governance and civil rights legislation into line with EU norms.  

But Tusk’s in-tray is full, including promised reforms in business legislation, the judiciary and energy, with a new policy aimed at reducing Poland’s fossil fuel dependence. Getting these to-dos done will take every ounce of his political skills.

A major constraint will be President Andrzej Duda, who delayed naming Tusk prime minister for as long as possible, instead supporting his PiS colleague Mateusz Morawiecki, who emerged as leader of the largest party but without sufficient partners to form a government. With presidential elections slated for May 18 of this year, Duda could be around for another 18 months. However, Tusk will be helped by an improving economy—growth is returning, inflation and unemployment are falling, and the current account is healthily positive—and his own good relations with Brussels, nurtured over the past 10 years. The day after Tusk was sworn in, EU Budget Commissioner Johannes Hahn said, promisingly, “I’m sure we will find ways to help Poland.”

“Since Covid-19, Serbia has been one of emerging Europe’s better performers,” says Paul Gamble, senior director in the Sovereign Group at Fitch Ratings. “The government has rationalized spending, enabling it to reduce debt, which has been backed up by strong growth and investment. The FDI story is a good one, with inflows typically equivalent to 5% to 7% of GDP, while the business operating environment is positive.”

A recent IMF report concluded that while Serbia’s economy—like others across emerging Europe—has been hit by the rise in food and energy prices, with challenges including “continuing global financial instability and uncertainties over trading partner growth,” it has also shown resilience and budgetary restraint, with the 2.2% of GDP deficit planned for 2024 “consistent with a conservative policy stance.” The IMF is expected to reach agreement by end 2023 on the second review of its Stand-by Arrangement (SBA). 

Compared with regional peers, Serbia’s growth has held up, with GDP expected to rise around 2% this year and 3.5% the next, close to the medium-term potential of 4% a year. Inflation is expected to drop from 8% this year to 5.6% in 2024 and 4% in 2025. Meanwhile, the current account deficit should fall below 2.5% by end 2023, while forex reserves are over €24 billion.

Serbia’s success story dates further back than post-Covid. Over the past 15 years, Belgrade has followed a successful program of economic reform that has helped overhaul one of Southeast Europe’s more moribund economies. It has diversified away from light manufacturing and agribusiness—the traditional mainstays of its economy—toward information and communication technology (ICT), the information economy and new technologies. Serbia recently signed a memorandum of understanding with Ginkgo Bioworks of the US to launch a startup accelerator for bioeconomic engineering. And Ananas, the e-commerce division of Serbia’s Delta group, has expanded into North Macedonia, acquiring two local e-commerce groups—Grouper and Paopao—in a first step toward larger-scale regional expansion, with its aim of becoming the Amazon.com of the Balkans.

Gamble says ICT is now the fastest-growing sector, boosted by inflows of young Russians—around 200,000, according to media reports—keen to escape being drafted into that country’s war on Ukraine and enabled, by the nature of the industry, to easily relocate and set up a new business. Indeed, Russian and Ukrainian business registration in Serbia has jumped dramatically since Moscow’s invasion of its neighbor, with young professionals clearly wanting to avoid the war and benefit from Serbia’s EU links. According to the Serbian Business Registers Agency, some 1020 Russian-owned companies were established in Serbia in 2022, against just 82 in 2021. 

All this has helped underpin rising living standards and is transforming Serbia’s international reputation as a magnet for investment. With good connections to its neighbors, its labor is cheaper than Croatia. And the country is much less volatile than Bosnia, North Macedonia or Albania, with one of the most proactive foreign investment agencies.  

But continued reforms are vital, says Peter Tabak, regional lead economist for the Western Balkans at the EBRD. “Serbia has benefited from near-shoring and from its Stabilization and Association Agreement with the EU. But, especially with skilled labor getting scarce and more expensive, the challenge will be raising the value-added component of what it produces. Boosting education and training is key, as are reforms in the system of public administration.”

Tabak says Belgrade also needs to focus on more infrastructure investment, notably in the railway, energy and wastewater sectors. “Belgrade also needs to do what it can to support local SMEs [small and midsize enterprises]—which are vital for Serbia’s becoming better integrated and positioned in the global value chain—and also agribusiness, as agriculture still accounts for 7% of GDP thanks to the country’s high-quality soil,” he says.

What does the future hold? On November 1, President Vucic unexpectedly called early parliamentary and mayoral elections for December 17; they had been scheduled for June, but Vucic and his Serbian Progressive party clearly hope their economic record will stand them in good stead with voters, especially with a divided opposition. As Global Finance went to press, few were expecting a change of government after the vote. 

Eyes will also be on preparations for Expo 2027, to be held in Belgrade between May and October of that year. It will be the first time an Expo has been held in South-eastern Europe, with Serbia beating other contenders including Spain, Thailand and the US. Some €12 billion in investment is planned, including a new exhibition site, new stadiums, museums and river ports, and upgraded infrastructure. The event is expected to attract three million tourists.

“Expo 2027 will mean a quantum leap for the economy and will change the whole country, not just Belgrade,” said Vucic after Belgrade’s win was announced in June 2023.

The Central and Eastern European region (CEE) has faced significant economic challenges in 2023, including shrinking growth rates and declining living standards. Also contributing to the economic strain were a recession in Germany; a challenging international political environment, including the ongoing war in Ukraine; monetary tightening; and fiscal crises.

These situations have added new worries for the region’s banking sector, driving a consolidation trend. CEE private banking operations nevertheless have been resilient, with assets under management steadily rising thanks to a growing clientele of high net worth (HNW) individuals.

While larger Western European banks maintain a presence in their smaller neighbors’ private banking markets, regional champions are enhancing their client services through digital innovation and artificial intelligence (AI).

OTP, Hungary’s former state savings bank, secures the award as regional champion for the third consecutive year. Its presence extends across 12 countries, serving nearly 18 million customers in CEE, Southeastern Europe, and Central Asia after acquiring Uzbekistan’s Ipoteka Bank late last year.

OTP Group’s 2021 merger of its two Serbian banks has made OTP Bank Serbia the second-largest bank in the country. OTP stands out for introducing digital banking to CEE, building on an innovative hybrid model that blends a contact center with investment advisory services, including video banking.

With the HNW market growing in emerging Europe, OTP is bolstering its commitment to private banking, leveraging digital innovation and AI with distinct service offerings under Prestige Private and Digital Private Banking.

Erste Group, Austria’s leading bank in the CEE region, caters to almost 16 million customers across seven countries. The bank emphasizes sustainability in its private banking operations and pushes its private banking clients to invest in environmentally responsible companies and projects.

Last year, Erste Group invested some €15 billion (about $16 billion) in sustainable assets and issued a record quantity of green bonds. The bank has adopted an ambitious decarbonization strategy aimed at achieving net-zero emissions and aims to play a leading role in driving the green transition across CEE. Erste Group is also known for its cutting-edge George banking app and various digital innovations.

By providing its clients with outstanding integration between traditional branches and modern digital channels, Akbank Private Banking has consolidated itself as the Best Private Bank Digital Solutions For Clients in the CEE region in 2023.

The Turkey-based giant’s success is rooted in a sophisticated mixture of advanced banking experience, personalized service, technological efficiency, and a comprehensive range of financial solutions, ensuring top-notch services across the private banking spectrum.

Leveraging advanced technology, Akbank enhances customer experiences through efficient and continually improved digital banking. Akbank Private clients can remotely access investment products, approve contracts, and conduct transactions via digital channels, including the bank’s outstanding offering of fixed-income products like treasury bills, government bonds, and private sector bonds, along with equities and mutual funds.

Moreover, in collaboration with affiliated companies, the institution provides comprehensive services for pensions, insurance, and leasing, catering to diverse client needs through a single point of contact. 

This holistic approach underscores Akbank’s commitment to delivering unparalleled financial services and puts it at the top of its class when it comes to digital solutions and holistic integration of channels. 

Tailoring offerings, services, and performance to cater to a diverse clientele ranging from those with established fortunes to emerging tech magnates and the next generation demands a blend of expertise and vision. It also requires an ability to see past headwinds and help clients plot a long-term course.

This year has been a singular year for private banking, as providers watched the almost simultaneous fall of one of the largest private wealth managers in history, Credit Suisse; and one of the most innovative, Silicon Valley Bank (SVB). Despite which, the industry has shown resilience as historical powerhouses such as J.P. Morgan, UBS, Deutsche Bank, Citi, and Bank of America stepped up to prevent a financial crisis in the wake of the collapse of SVB, Signature Bank, and First Republic Bank—later reaping the rewards, increasing their clientele, staffing, and structural capacities.

Moreover, J.P. Morgan Private Bank kept improving its offerings and global presence. This year, it opened a new US Family Office Practice and added to its teams in Asia and Latin America while making changes in upper management in both regions.          —TM

Westpac Private Bank acts on the belief that commitment to diversity begins at home. The Australian market leader has set specific targets for gender representation within its leadership ranks, with the aim of filling 50% of leadership positions and at least 40% of board seats with women.

In March, the bank introduced a set of initiatives to support female entrepreneurs as part of its 500 million Australian dollar (about $318 million) commitment to women in business. The initiatives include offering startup loans of up to AU$50,000 with a three-year tenor and providing scale-up loans of up to AU$1 million to assist existing businesses in their growth, also with a three-year tenor.

“Boosting women’s entrepreneurship in Australia is important to the economy,” said Chris de Bruin, who has since stepped down as group chief executive of consumer and business banking, in commenting on the initiatives. “The longstanding gender pay gap represents a missed opportunity for innovation, social and economic value creation, and job creation.”          —Jonathan Rogers

DBS initiated its digitalization journey in 2014, with the aim of developing artificial intelligence (AI) and machine learning models and utilizing cloud and open-source technologies to facilitate a transformation into a fully digital bank.

Since then, the Singapore-based bank has achieved several breakthroughs in the field, reducing costs by 30 million Singapore dollars (about $22 million) while increasing revenue by SG$180 million.

Among the most important developments are an internal self-service AI platform, an AI protocol, and a knowledge repository, enabling rapid AI deployment at scale. DBS’ integration of its relationship management systems with AI, referred to as the “phygital” (hybrid physical and digital) dynamic, has also played an important role in delivering optimal client service to its private banking clients.    —JR

Having been the top-rated bank on the Dow Jones Sustainability Europe Index three years in a row, BBVA is an undisputed global leader in the field. The Spanish giant’s success rests on two pillars: alignment of all loans and investments with the Paris Agreement and a comprehensive range of sustainable products and services for the bank’s clients.

BBVA offers a family of sustainable mutual funds whose managers are committed to impact investing. It also constantly monitors the environmental, social, and governance (ESG) credentials of third-party funds through its proprietary Quality Funds platform. Sustainability-risk information goes digitally to private banking clients in compliance with the EU’s Sustainable Finance Disclosure Regulation. Finally, to ensure that its clients have confidence in its commitment, BBVA now requires all of its private bankers to hold an external sustainability certificate. —Jonathan Gregson

BTG has built an investment-solution ecosystem that aims to meet all of its wealth management clients’ medium- and long-term goals with an integrated, one-stop-shop approach. The platform leverages cutting-edge technology and up-to-date analytical information, enabling BTG’s team to upgrade clients’ financial experience into a user-friendly, easy-to-navigate environment.

One of the main features is constant dialogue with clients over their developing needs. For this, BTG focuses on three vital aspects: recruiting and nurturing top professionals for the front, back, and middle office and product areas; deepening its understanding of clients’ financial needs and objectives; and staying ahead by anticipating global and local market opportunities, especially during challenging periods.            —Estela Silva

Reliability, investment performance, and tailor-made solutions are requisites for high net worth (HNW) and ultrahigh net worth individuals (UHNWI) shopping for a private bank. Banque Richelieu Monaco, which takes home our award this year as Best Boutique Private Bank in the World, checks all of these boxes, along with above-average staffing and growth of assets under management (AUM).

With nearly 40% of its AUM base landing in the UHNWI category, Richelieu maintained its focus on offering rapid, tailor-made decision-making, enabling clients to navigate wealth management seamlessly. It was rewarded with stellar growth this year, as AUM grew 17% and net profits an impressive 47%.

Richelieu’s strategic focus encompasses markets including Monaco and other European countries, which account for 60% of AUM; while Africa, Asia, the Middle East, and the US account for the rest. Nonetheless, it has kept on building foreign partnerships, notably with Banque Richelieu GCC in Cyprus and Abu Dhabi. A recent collaboration with banking and wealth management software developer ERI has enabled the bank to improve efficiency and upgrade its technology offerings, improving client service.  —TM

Hana Private Bank has made a name for itself as an innovator by offering new digital assets, accessible and manageable on Hana’s 1Q Bank app, to its HNW clients. The new products include security token offerings and fractionalized stakes in blue-chip artworks by artists such as Picasso, Warhol, Kusama, and Basquiat using nonfungible tokenization backed by blockchain technology.

The South Korean bank established Hana Art Bank in July 2023 in alliance with an alternative investment platform company to appeal to “microcollectors” via fractional ownership.

Hana teamed with KPMG in February to launch two more new offerings: succession planning services, including valuation and M&A advisory; and a private community linking younger HNWIs with CEOs for networking and business-opportunity creation.          —JR

J. Safra Sarasin sees sustainability as the most critical aspect of its approach to socially responsible investment. The Swiss private bank has closely integrated two key sets of standards: the Paris Agreement on climate change and the UN’s Sustainable Development Goals. Both are embedded in Safra’s corporate strategy and core investment offering.

Safra has been ahead of the curve since it launched its first sustainable investment mandate in 1989, and it has consistently directed resources to companies that embrace energy efficiency and decarbonization. A founding signatory of the UN Principles for Responsible Investing in 2006, Safra launched its own proprietary Sustainability Matrix more than 20 years ago and today requires that all of its mandates be sustainable. —JG

As the private banking world buckles up to help manage one of the most significant generational wealth transfers in history over the next couple of decades, BTG Pactual Wealth Management is working to stay ahead of the pack. The bank’s Future Leaders program is dedicated to preparing heirs for roles in shaping future legacies through comprehensive education in legal, economic, and tax aspects of estate planning.

Recognizing the pivotal role women will play in guiding the next generation of wealth management, BTG also offers Financial Journey–Women Investors, a financial education and leadership initiative aimed at helping participants make informed financial decisions and explore diverse investment strategies.     —ES

Managing approximately $1.3 trillion across the globe, Scotiabank has evolved into a powerful worldwide force. Since 2018, the Canadian bank has grown and diversified on the back of a series of multibillion-dollar acquisitions in areas including asset management and foreign exchange hedging.

Intergenerational wealth transfer and transition services are central to Scotia Wealth Management’s Enriched Thinking offerings. Scotiabank backs these up with the stability of its Canadian operations and its expertise across the globe. This helps entrepreneurs facing uncertainty in their home country to invest in more-secure markets.

A tailored fee structure helps Scotiabank to create a more customized practice with each of its business clients, backed by a five-year program that identifies customer needs and delivers solutions in one plan. Thanks to this approach, Scotiabank’s commercial banking business has seen sixfold volume growth in referrals over the past six years, to $13 billion.       —Nic Wirtz

Combining a deep knowledge of local markets with best-in-class global capabilities, Fifth Third Private Bank won high marks this year for service to entrepreneurs amid a volatile global economy. Its team of senior strategists, CPAs, and attorneys combined to produce a financial advisory offering that earned Fifth Third outstanding numbers in its customer satisfaction survey.

The bank continued to improve its tailored offerings to business owners. Last year, it partnered with a group of universities across the US on an exclusive survey aimed at understanding the strategies that middle-market business owners use in planning and executing transitions. The research yielded insights into the hurdles facing wealth managers in this market segment, particularly in the post-pandemic landscape, prompting further improvements in Fifth Third’s offerings.          —TM

With dedicated teams spread across Western Europe, Switzerland and the US, Santander Private Bank has expanded its client base of family offices by 16% over the past year to 3,090 families globally.

Recognizing the unique needs of UHNW clients, the Spanish-based bank recently introduced a team focused on offering a comprehensive suite of strategic investment banking solutions for family offices. Santander’s flagship Private Real Estate Advisory (SPREA) program helps UHNW clients identify promising investment opportunities and efficiently execute transactions. SPREA has dedicated teams in key regions, including Spain, the US, Portugal, Mexico and Brazil.

This strategic positioning allows the bank to tap into cross-border investment flows between the continents on which it operates. In 2022 alone, SPREA enjoyed 20% YoY growth in net revenue while overseeing €321 million (about $343 million) in total transaction value, underscoring its success in serving UHNW clients’ real estate investment needs.  —ES

Emirates NBD is becoming more and more of a global bank. The Dubai-based bank has developed a strong network in emerging markets from Africa to Asia, with a presence in Egypt, Turkey, Bahrain, Russia, Singapore, Indonesia and China.

In 2022, the bank opened two additional branches in India to complement its Mumbai offices. It also expanded its network in Saudi Arabia, the Middle East’s biggest market, with a booking center and 13 branches.

In these countries, Emirates NBD offers first-class private banking services but is also leveraging its ability to act as a bridge institution facilitating wealth transfers and providing investment solutions to large expatriate communities from the Global South.

Adapting to youth and new technologies, Emirates NBD also operates Liv, a digital bank, and just launched ENBD X, a new mobile app with an embedded digital wealth platform that allows clients to access over 11,000 global and regional equities with just a click.     —Chloe Domat

The initial success of this strategy is reflected in the bank’s excellent financial performance, which underscored the resilience of its balance sheet. Notably, the Federal Reserve’s annual stress test reaffirmed PNC’s financial strength and stability across economic cycles even while other banks faced difficulties.

As its rivals stuck to the basics, PNC focused on environmental responsibility and economic empowerment through private bank inclusion, committing more than $1 billion to bolstering African American–owned businesses in underprivileged communities and comprehensive sustainable investment offerings.     —TM

The Netherlands’ leading bank, which has long provided bespoke private banking-style services to its wealthier clients, recently lowered its entry threshold to €500,000. Given that this is by far the fastest-growing segment of the private banking market, the move has yielded healthy growth in a challenging year.

ING’s new cutoff point is part of a broader strategy of guiding existing clients into more value-added services. The bank currently fields a team of 450 advisers and investment specialists furnishing a full range of discretionary, advisory, and execution-only services to the rapidly expanding clientele.

The bank differentiates between clients, says Katja Kok, head of Private Banking and Wealth Management, Netherlands. The advice on financial planning and asset management needed by an individual with €5 million in assets is “perhaps even more relevant for someone with an invested capital of €500,000,” she says.      —JG

Bradesco Global Private Bank is working to grow its HNW and UHNW client base by focusing on the midmarket. To appeal to prospective customers with a net worth ranging from $1 million to $24 million, the bank is increasing its international offering, promoting better services for multinational Latin American fortunes.

Since 2020, that strategy has including acquiring other providers, including the Brazilian private banking operations of JP Morgan and BNP Paribas, further cementing its position with the country’s inbound transnational wealth.

It is also pushing into US market, building on its 2020 acquisition of Coral Gables–based BAC Florida Bank. Bradesco aims to bridge the gap for US-based Latin American customers in search of a trusted brand to manage their transnational fortunes.   —ES

Catering to one in four of the world’s billionaires—nearly 15,000 HNW and UHNW clients in over 130 countries, and more than 1,700 family offices—Citi Private Bank’s strong position helped it weather the year’s challenging conditions, including higher interest rates and geopolitical tensions.

As a division of Citi Global Wealth, Citi Private Bank maintains clear strategic priorities, focusing on the high end of the UHNWI market and clients whose net worth exceeds $25 million. That concentration helped the bank to achieve robust client growth in 2023, adding over 900 new clients representing a 21% increase over the previous year, a new record for the bank. The average net worth of Citi newcomers rose as well, by 12% to $450 million. That growth spurt gives Citi Private Bank a total of $461 billion in client assets, an 11% increase from 2022. Despite the adverse market environment, total revenue remained steady.         —TM

After a win that many observers thought was highly improbable following ring-wing populist victories in Hungary last year, Turkey earlier this year, and in neighbouring Slovakia in September, Tusk’s supporters—and the EU in general—had reason to believe they had turned the political tide. 

A student leader in Solidarity in the 1980s, Tusk established the liberal Civic Platform grouping in 2001, offering a vision of a dynamic, internationalist Poland closely aligned to the EU and NATO. He was prime minister for two terms, from 2007 and 2014 before leaving to become president of the European Council, a post he held until 2019. His departure coincided with the rise of the rural, ultra-Catholic Law & Justice (PiS) party, which went on to form two populist governments locked in an increasingly antagonistic relationship with Brussels.

October’s elections followed a barrage of controversial actions by the PiS government, including changes to the judiciary, curbs on media freedom, and increasing isolationism, making Poland, alongside Viktor Orban’s Hungary, a far-right outrider within the EU.

The contest was bitter—Tusk faced vitriol for being “insufficiently Polish”—and waged on an uneven playing field, with PiS and its allies taking the lion’s share of state media broadcasting time. Tusk warned this was a watershed election, with Poland’s future as a western democracy on the line. Voters seem to have listened, giving him 30.7% of the vote and two allies, Third Way (14.4%) and Left (8.6%) that together easily outpace the 35.4% of the leader, PiS.

President Andrzej Duda—a PiS member—will likely give PiS a chance to form a government, though it lacks support. Tusk’s team should take charge by mid-December. The to-do list will be long and will include undoing the damage PiS has done to Poland’s body politic—and its international image—through divisive policies. “Restoring institutional order, improving relations with the EU, and unlocking funds from the EU Recovery Fund are likely to be the priorities,” says Rafal Benecki, chief economist for Poland at ING Bank, suggesting the change of power could unlock more of the economy’s considerable investment potential.

For many central bankers, the central task of the past year has been to stabilize prices without sending the national economy into a tailspin. Even central bank governors whose mandates center on currency rates or financial system stability have had to cope with the same inflationary pressures.

So far, they seem to have pulled off this balancing act. “The inflationary scenario in Latin America improved for most large economies,” says Rosanna Costa, governor of the central bank of Chile, attributing the succcess to early rate hikes and fiscal deficit reduction. “The rapid initial monetary policy reaction and the recent progress in inflation have allowed the monetary easing cycle to begin in some economies, such as Chile and Brazil.”

Chile is not alone; Bank of Mongolia (BOM) tells a similar story. “The early signs of success are now becoming evident,” says Governor Byadran Lkhagvasuren. “The policy rate tightening and macroprudential adjustments have played a role in preventing second-round effects on inflation.”

Nevertheless, “uncertainty remains high,” warns Colombia’s central bank governor, Leonardo Villar. “Returning to the inflation target by the end of next year is likely to require a contractionary monetary policy stance for a relatively long period of time.” Yet with current production “well above the pre-pandemic trend,” he adds, “This slowdown will help the Colombian economy achieve a more sustainable growth path.”

Some central banks have limited policy tools. Research by the central bank of Azerbaijan showed inflation largely due to external supply factors over which monetary policy tools would have little impact, according to Governor Taleh Kazimov. “Our main strategy was to ensure that demand factors were under control by increasing the policy rate,” he says. “Additionally, we maintained the stability of local currency in periods of excessive foreign currency supply.”

Central bankers are also looking to the long-term future. Maintaining price stability and healthy financial institutions, says Amir Yaron, governor of the Bank of Israel, “necessitates [central bankers’] understanding of the economic implications of climate and environmental challenges and risks.”

“It is governments and legislators who lead the fight against climate change, yet central banks have an important role to play,” says Yannis Stournaras, governor of the Bank of Greece, an early mover on climate change. “The financing of climate adaptation and mitigation projects requires the significant upscaling of investment. In this regard, banks and financial institutions need to play their part.”

Meanwhile, digital innovations are driving rapid and dramatic change. Mongolia’s payment system is relatively advanced compared to other nations at a similar development level, and BOM has been actively exploring digital currencies, says Lkhagvasuren, finding some limitations to decentralized models. Banks themselves continue to innovate apace, buying fintech strength where they lack it. After some difficult years, banks are generally strong.

Still, cautions Boris Vujčić of Croatian National Bank, “Good times for banks will not last forever and they need to remain vigilant on improving efficiency and cutting costs in order to remain competitive in the changing financial landscape as new challengers arise, by finding new applications for technological innovations.” Good forward guidance in any era. —The Editors

Global Finance editors, with input from financial industry sources, grade the world’s leading central bankers on a scale of A to F, with A being the highest grade and F the lowest, based on objective and subjective metrics. Judgments are based on performance from July 1, 2022 to June 30, 2023. A governor must have held office for at least one year in order to receive a letter grade.

An algorithm supports consistency of grading across geographies. The proprietary formula factors in monetary policy, supervision of the financial system, asset purchase and bond sale programs, forecasting and guidance, transparency, political independence and success in meeting the national mandate (which differs from country to country).

The Central Bank of the Republic of Argentina (BCRA) has remained unable to control inflation, which was 94.8% in 2022 and was still high in the first half of 2023. A poll of private economists estimates that inflation could rise almost 150% and real GDP could shrink by 3% by year-end.

In mid-August, the government devalued its currency by nearly 18%. The central bank, meanwhile, hiked the benchmark interest rate by 21 percentage points to 118%.

“First, the credit channel in Argentina is incredibly small, which means that rate hikes do much less to slow the economy than in its peer countries like Colombia and Brazil, says Ash Khayami, a country risk analyst for BMI, Fitch Solutions. “Second, the BCRA lacks independence, not only because the serving finance minister—currently Sergio Massa, who is also running for the presidency—sets a great deal of the monetary policy, but also due to the current International Monetary Fund (IMF) Extended Fund Facility debt deal, which maintains that the BCRA must maintain a positive real effective interest rate.”

In 2022, the Bahamian economy bounced back from the pandemic as tourism began returning to normal levels. The Bahamian dollar remains pegged 1:1 to the US dollar, so the inflationary tensions that have appeared in the US were also reflected in the Bahamas. According to the IMF, inflation reached 5.5% in 2023, but it is now decreasing.

The Central Bank of the Bahamas (CBB) has maintained its discount rate at 4%, while foreign currency reserves have declined. According to a central bank March bulletin: At the end of March, the stock of external reserves stood at $2.7 billion, equivalent to an estimated 45.2 weeks of the current year’s total merchandise imports (including oil), as compared to 55.7 weeks in the same period of 2022.

The CBB actively promoted its digital currency (the Sand Dollar), strengthening the payment system by reducing the need to transport currency. It finished its integration with the ACH in 2022. All commercial banks completed upgrades of their online banking platforms to enable top-up transfers from deposit accounts to native Sand Dollar wallets.

According to IMF estimates, the Bolivian economy grew at a rate of 3.2% in 2022, and it is expected to contract to 1.8% in 2023. However, inflation has remained in check, at 4.74% in 2022 and a forecast of 4.9% for 2023.

The Banco Central de Bolivia (BCB) has kept the currency’s peg to the US dollar, which helped blunt inflation and often requires the BCB’s intervention in the exchange-rate market.

According to Ash Khayami, a country risk analyst at BMI, Fitch Solutions’ Country Risk and Industry Research service, nearly depleted international reserves and lack of transparency regarding those reserves likely will press inflation higher. “Several multilateral and bilateral loans and credit lines from development banks and agencies, as well as a law that allows the BCB to sell gold directly on the international market to boost reserve stocks, will provide some temporary support to reserve levels,” he says. “However, wide current account deficits in 2023 and 2024 and a costly currency peg will continue to threaten to spark a balance of payment crisis.”

The Banco Central do Brasil (BCB) cut its Selic reference rate by 50 basis points (bps) on August 2 to cool down expectations of further reductions.

“After one of the most aggressive rate-hiking cycles globally, the BCB has held the benchmark Selic rate at a quite elevated 13.75% since August 2022, even as inflation has come down sharply,” says Andrew Trahan, the head of Latin America Country Risk at BMI, Fitch Solutions.

Governor Roberto Campos Neto has garnered criticism for not heeding President Lula da Silva’s call for quick rate cuts to support growth. He has been exceedingly clear regarding the triggers for the start of an easing cycle: lower core inflation, fiscal progress and reduced inflation expectations, according to William Jackson, emerging markets chief economist at Capital Economics. “Because of this, the central bank has gained a lot of credibility among investors. And monetary policy credibility helped calm investors’ nerves during the more turbulent early days of the Lula administration when it looked like fiscal policy could take a more reckless direction.”

Bank of Canada Governor Tiff Macklem maintained a brisk tightening pace of Canada’s monetary cycle over the past 12 months, compensating for some delays in 2021. Nonetheless, economists debate whether the Bank of Canada’s January pause in rate hikes expressed caution or was a hasty move that compromised Canada’s economic stability.

 “Wary of overtightening given well-documented issues associated with household leverage, Governor Macklem sounded the all-clear too soon and was subsequently forced to jump back into tightening mode after January’s announcement of a conditional pause paved the way for a notable recovery in the housing sector and as progress in the fight against inflation stalled,” says Conor Beakey, associate director at BMI, Fitch Solutions. 

The January rate-hike pause was justified, agrees Stephen Brown, deputy chief North America economist at Capital Economics. “Back then, it was the right thing to do because the housing market was looking very weak; the economy looked like it was weakening. But then everything has worked out since then. And they have been quicker to react than people expected.”