Financial Newspaper – Santiago
Russia’s invasion of Ukraine has upset the World Order in force since the end of the Cold War, more than 30 years ago, with ramifications that overlap the profound effects of the pandemic and an impact that will reverberate for decades to come in ways that cannot yet be predicted, he said. BlackRock Chairman and CEO Larry Fink in his annual letter to shareholders.
“The Russian invasion of Ukraine has put an end to the globalization that we have lived through for the last three decades,” said BlackRock’s chief executive, the largest investment fund manager in the world, which closed 2021 with a volume of assets under management of US$10 trillion.
“We have already seen connectivity between nations, businesses and even individuals strained by two years of the pandemic. It has left many communities and people feeling isolated and looking inward. I think this has exacerbated the polarization and extremist behavior that we are seeing in society. current,” he added.
Fink recalled that the invasion has catalyzed nations and governments to come together to sever financial and commercial ties with Russia. Capital markets, financial institutions and companies have gone even further than the sanctions imposed by the government, he added. BlackRock has joined, suspending the purchase of Russian securities in its portfolios.
“These actions taken by the private sector demonstrate the power of capital markets: how markets can provide capital to those who work constructively within the system and how quickly they can deny it to those who operate outside it,” he said in the letter.
“Russia has been essentially cut off from global capital markets, demonstrating the commitment of leading companies to operate in a manner consistent with core values. This “economic war” shows what we can achieve when companiessupported by their interest groups, unite against violence and aggression,” it added in the 10-page document.
The CEO indicated in the letter that the invasion of Ukraine and Russia’s subsequent disengagement from the global economy will prompt companies and governments around the world to reassess their dependencies and re-examine their manufacturing and assembly lines, something the pandemic of Covid-19 had already prompted many to start doing.
Energy transition and cryptocurrencies
And while dependence on Russian energy is in the spotlight, he commented, companies and governments will also look more broadly at their dependence on other nations. “This may lead companies to conduct more operations in their territories or near their shores, resulting in faster withdrawal from some countries. Others, such as Mexico, Brazil, the United States or manufacturing centers in Southeast Asia, could benefit,” he added.
Fink also estimated that although Russia’s invasion of Ukraine will “inevitably slow” the global shift to green energy and move towards net-zero transition in the immediate term, it will accelerate the use of renewable energy sources in the long term. “During the pandemic, we saw how a crisis can act as a catalyst for innovation,” she said.
On digital currencies, Fink said the war will cause countries to reconsider their reliance on traditional money and payment systems. “A carefully designed global digital payment system can improve the settlement of international transactions while reducing the risk of money laundering and corruption,” Fink said.
In a sign of the growing importance of digital currencies, Fink said that BlackRock is now looking into how these and stablecoins can be used to help their clients.s.