Transformative Global Financial Markets: Navigating Sustainability, Digital Risk, and Investor Literacy

Well-functioning financial markets are fundamental for fostering economic growth and ensuring financial stability. They serve as platforms that enable the efficient allocation of capital, facilitate risk management, determine asset prices, and guide investor decisions. The OECD's work on financial markets is dedicated to promoting market-oriented financial systems through sound policies related to capital markets, sustnable finance, digital finance, public debt management, financial literacy and consumer protection, pensions, and insurance.

The transformation of global capital markets over recent years highlights their evolving role in the economy as businesses and governments seek financing for addressing challenges such as decarbonization, aging populations, and technological advancements. The importance of well-regulated financial markets lies in upholding investor confidence through transparency, frness, and clearly defined regulatory frameworks.

In light of these developments, focuses on key aspects such as:

• The crucial role capital markets play in funding businesses and governments.

• The growing demand for sustnable finance necessitating adaptability in regulations.

• Understanding the implications of digital finance's risk profile and opportunities.

• The significance of efficient and transparent public debt markets in well-managed fiscal policies.

As sovereign and corporate bond markets have grown significantly since 2008, reaching a total volume of nearly USD 100 trillion by the of 2023-equivalent to global GDP-a substantial portion of this increase has come from government bonds. Total OECD government debt is forecasted to rise to USD 56 trillion in 2024, marking an uptick of USD 30 trillion since 2008.

The sustnable bond market's emergence over the past decade and its rapid growth post-2018 have become a pivotal source for both governments and companies ming to accelerate their transition towards low-carbon economies. In this market segment, the corporate sector now accounts for more than half of total issuance.

As digital financial fraud escalates, there is an increasing emphasis on enhancing financial literacy as it empowers individuals with the knowledge necessary for navigating complex capital markets and sustnable finance options effectively.

Key Messages

Capital Markets:

• Capital markets are essential conduits that enable access to financing for businesses and governments.

• Growth in sovereign and corporate bond markets necessitates careful consideration of fiscal policy frameworks.

Sustnable Finance:

• The expanding demand for sustnable finance requires regulatory adaptation and innovative solutions.

• Collaboration between public, private sectors, and market participants is vital for the transition towards sustnability.

Digital Finance:

• Digitalization streamlines processes and broadens access to financial services globally.

• Balancing innovation with security concerns poses significant challenges that need careful management.

Financial Literacy Consumer Protection:

• Equipping individuals with financial knowledge is pivotal in supporting their financial well-being.

• Enhanced consumer protection policies should be integrated alongside financial inclusion efforts for inclusive growth.

By addressing these focal areas, the OECD foster a resilient and robust global financial landscape that promotes sustnable economic development while safeguarding agnst potential risks.
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