As we head towards a snap general election in both the UK and France, an election in the US later this year and following elections in countries as diverse as the Russian Federation, India and South Africa, the influence politics has over the financial industry is palpable. In our latest free report, we delve into the politicisation of financial regulation and consider what regulatory developments might be on the horizon as political changes approach.
Which side are you on?
Though the financial markets should strictly-speaking be independent from politics, the rules governing them are determined by which government is in power and so inevitably political influence trickles down into banking, often most easily observable in currency exchange rate fluctuations. Global events, such as the 2008 financial crisis, often make this influence more discernible and are a catalyst for regulatory change. “Since the 2008 financial crisis triggered a global regulatory crackdown, the rule books that govern the world’s banks, insurers and asset managers have been drawn into ideological splits between Republicans and Democrats, and Conservative and Labour in a similar way to gender identity and climate change,” writes Patrick Jenkins in the Financial Times’.
In the US in particular, the link between politics and financial regulation is very apparent and is a topic of much debate, especially during election campaign season. The recent resignation of Marty Gruenberg, the Democrat chair of the US Federal Deposit Insurance Corporation (FDIC) in the wake of sexual discrimination allegations at the organisation, is the perfect example of this. “On the face of it, the departure has nothing to do with politics,” says Jenkins. “The Wall Street Journal last year published an investigation into sexual harassment and bullying…But the affair, whether politicised from the start or not, certainly is now. Only with Gruenberg in place does the FDIC board have a 3-2 Democrat majority to push through a tougher set of bank capital requirements, dubbed the Basel III Endgame, over the coming months. Republicans, echoing the protests of Wall Street, have opposed the new rules.”
The impact of political interference was notably felt in March 2023, when two major US banks, SVB and First Republic, collapsed in quick succession. Barack Obama’s presidency had built legislation designed to protect banks’ capital reserves in order to prevent collapse. But Donald Trump’s subsequent time in office swiftly unravelled these safeguards, arguably resulting in the demise of SVB, Signature Bank and First Republic.
The UK financial industry is not immune to political meddling either. UK Chancellor Jeremy Hunt recently waded into the discussion about the Financial Conduct Authority’s (FCA) controversial new policy initiative, which involves the public naming of banks under investigation by the regulator. The Labour party’s stance on the banker bonus cap has also been highlighted by some as an example of the potentially problematic relationship between the finance industry and UK politicians (more on this below.)
Transparency: seeing through the political fog
In the US, the general public is arguably more aware of the influence politics has over business, perhaps because of more stringent investment disclosure requirements. Members of US Congress have to declare within 45 days any trade in stocks over the value of US$1,000. In the UK, MPs are only required to register stock holdings which are greater than 15% of the value of a company, or valued at more than £70,000. In the House of Lords, the threshold used to be £50,000, but this was quietly raised to £100,000 in November 2023, citing inflation among other reasons. In Scotland and Wales, MPs must register shareholdings that equate to more than 50% of their annual salaries.
These rules mean that for investments inside of the stated parameters, there is no requirement for MPs to declare stakes in companies, even if they might be impacted by legislation currently going through parliament. “Voters are mostly left ignorant of the tension that almost certainly exists for such MPs between shielding financial interests and advancing the public good,” said The Guardian in an editorial expressing the publication’s views on MP’s declaring their interests.“ Can it be right for a former Tory minister to criticise windfall taxes on oil and gas companies, including BP, without declaring his wife’s shares in the company, worth more than £50,000? The answer is, surely, no. Parliamentarians could argue that such ethical dilemmas don’t occur. But the system is such that the perception of these quandaries never arises.”
Steve Goodrich, the head of research and investigations at Transparency International UK, agrees with this viewpoint. “If an MP has shares in a company affected by legislation going through parliament, there’s invariably a tension between them protecting their financial affairs and advancing the public good. Having these details out in the open is a key safeguard against abuse of public office,” he said. “The public have the right to know what role money plays in our politics. Cumulatively, financial interests undoubtedly influence – whether consciously or otherwise – the outlook of MPs and ministers, and how they set about tackling the big issues of our time. Understanding who has skin in what game is essential to unpicking policy inertia, be it on housing, climate change or the cost of living.”
In July 2023, The Guardian published a list of MPs who at the time had undeclared shares in companies including Barclays, HSBC, BP and Sainsbury’s – all of which could be affected by legislation or new policy introduced by parliament. “The investigation has identified ministers who have met lobbyists for companies, including BP, while not declaring the shares held by themselves or their close family members,” said the report. “MPs have also voted against amendments that would have increased windfall taxes on oil and gas companies in which they had undisclosed shares…The shareholdings identified are all within companies that would have been affected by recent government policy or where there has been parliamentary debate that could result in actions that would have an impact on a company’s bottom line.” Seven MPs or close family members were found to have shares worth more than £60,000 in total in Barclays and four MPs had shares in HSBC.
The shareholdings identified in The Guardian’s report were only uncovered after a six-month long, complex investigation with the help of lawyers in order to gain access to shareholder registers. Software engineers were then needed to analyse tens of thousands of pages of data. This demonstrates the extent of the complexity of relationships between banks and other large corporations and politics.
What would another Trump presidency mean for US financial regulation?
According to a recent Bloomberg Markets Live Pulse survey, if Donald Trump is re-elected president in November, the US Federal Reserve could face a significant risk of losing its independence due to increased political interference. 44% of survey respondents said they believe that Trump, a twice-impeached Republican and now a convicted felon, would attempt to politicise the central bank or curtail its power if he returns to the White House. On average, they estimate a 40% chance that the Fed would lose its autonomy under Trump.
When elected, the new US president will be able to appoint two new members to the Supreme Court, which at the moment consists of six Republican-selected members and three from the Democrats. The US Supreme Court has power over all US court cases and often has the final say on controversial laws and federal disputes. It recently passed a ruling to limit the Securities and Exchange Commission’s (SEC) power to enforce penalties and seek monetary fines against firms and individuals for certain violations. The ruling means that cases that are usually dealt with by the SEC will now be able to be taken to federal court and put before a jury. As a result, the SEC now has less authority to impose financial penalties for infractions and the decision could impact how the SEC regulates and disciplines entities in the financial sector. The current US Supreme Court lineup is already considered to be the most conservative-leaning in modern US history. The impact of another Trump presidency on financial regulation is not to be underestimated.
But that doesn’t put everyone off. “High prices and interest rates are big reasons why voters consistently give Trump better marks on the economy than President Joe Biden,” writes Sam Sutton for Politico. “And while the financial services crowd generally has a sunnier outlook on the Biden-era economy than does the public, they also want the boost that Trump says he could provide through lower taxes and softer regulation. That combination has been central to the former president’s appeal in 2024.”
In March 2023, we witnessed firsthand the potential impacts of political influence on regulation. “For those of us who were executives or senior managers at Washington Mutual in 2008, this felt like déjà vu – we had been part of the largest US bank failure in history,” says Annie Searle, an associate teaching professor at the University of Washington’s Information School and a former senior executive at Washington Mutual. “Some of us had worked subsequently on banking and finance regulation that was designed to ensure that such bank failures would not take place again. The Dodd Frank legislation included a ‘too big to fail’ clause, that required banks of a certain size to hold reserves against moments of crisis. Ironically, that requirement on capital reserves had been modified by the Trump administration after lobbying from (among others) the CEO of Silicon Valley Bank, Greg Becker.”
Lobbying
The term “lobbyist” refers to both individuals and whole organisations dedicated to building up political support for their causes. Lobbyists often fund studies into specific topics to help influence a politician in their favour. Some argue that without lobbyists, there would be no way (other than voting) for the general public to have any influence over the laws passed by politicians. Others argue that this sometimes shady and definitely opaque area of politics is akin to bribery and should be outlawed.
“The impact of lobbying is massive,” says Investopedia. “It affects policy by influencing policymakers and therefore citizens, rather than just individuals. Whether made directly by entities or through professional lobbying firms, the contributions – this ‘special interest money’ as it’s imaginatively known – lead the act of lobbying to be associated with bribery.”
A study by Americans for Financial Reform in 2021 found that during the last US election cycle in 2020, Wall Street executives, employees and trade associations spent at least US$2.9bn on political campaigning and lobbying. “Year in and year out, this torrent of money gives Wall Street an outsized role in how we are governed, while driving and protecting policies that help this industry’s super wealthy amass even greater fortunes at the expense of the rest of us,” Lisa Donner, executive director of Americans for Financial Reform, told CNBC.
Virtually all industries have lobbyists working on their behalf, so this is an issue that is not unique to banking. But the degree of influence lobbyists have over banking policy makers has come under fire recently. As mentioned above, before its demise, CEO of SVB, Greg Becker, had backed two tech-industry lobbying groups that were pushing to make changes to the Dodd-Frank act. After everything went pear-shaped for SVB, Senate Banking Committee member Senator Elizabeth Warren wrote to Becker looking for further details about his involvement in efforts to roll back banking regulations. “These rules were designed to safeguard our banking system and economy from the negligence of bank executives like yourself – and their rollback, along with atrocious risk management policies at your bank, have been implicated as chief causes of its failure,” she said.
Following the events of March 2023 and the subsequent takeover of Credit Suisse a few months later, the US Federal Reserve decided to take action and raise capital requirements again. This new regulatory regime, known as the Basel III Endgame (B3E), is due to take effect in July 2025. It will extend the application of two risk-based capital ratio approaches for assessing capital adequacy to banks with US$100bn or more in assets. Previously, this applied only to Category I (US global systemically important banks) and Category II banks (those with US$700bn or more in total assets or US$75bn or more in cross-jurisdictional activity).
“B3E represents a sea change for the US banking industry, significantly altering the regulatory capital regime for US banks,” says EY. “The proposal would modify how the largest US banks think about regulatory capital and extend more granular, rigorous requirements to US regional and mid-sized banks.”
As you might imagine, Wall Street lobbyists have heavily criticised the B3E. They claim that raising capital requirements will have unintended consequences for consumers, such as increasing the cost of lending and – according to one study – could cost the banks US$35bn in lost revenue. US bank lobbyist group, The Bank Policy Institute, says it will “create a drag on our economy for years to come – and will hurt working families and small businesses.” Similarly, the Financial Services Forum claims it will “have very real impacts, leading to increased costs and reduced availability for credit to consumers and businesses while harming the competitiveness of the US economy.”
On the other side of the debate, Americans for Financial Reform (AFR), a “nonpartisan and nonprofit coalition of more than 200 civil rights, consumer, labour, business, investor, faith-based, and civic and community groups,” says banking lobbyists are simply scaremongering in order to put pressure on congress to loosen the regulations in their favour. “We can look at their rhetoric over the years and conclude that the Wall Street lobby always predicts doom – especially less access to credit – whenever regulators want to toughen capital rules. Those terrible consequences seldom, if ever, come to pass,” writes Carter Dougherty from AFR. “Banks raise capital either by issuing new shares of stock (equity) or by retaining earnings that would otherwise go to dividends and buybacks. Banks don’t like either option because they exert downward pressure on share prices, which are often also linked to executive bonuses…JPMorgan Chase, Wells Fargo, Bank of America and Citigroup reported about US$30bn in profit in the third quarter of 2023. Those four banks alone made 45% of the profit harvested by the nation’s 4,400 banks. So beware of bank lobbyists arguing that higher capital levels will lead to less lending and lower economic growth.”
Cronyism
Cronyism, or crony capitalism as it is sometimes called, isa pejorative term for businesses taking advantage of close relationships with politicians and other powerful state figures in order to benefit financially. Some would argue cronyism and lobbying are the same thing, but cronyism is the term generally used when those relationships are considered to be wrongly exploited.
A recent high-profile example of this was the Greensill Capital scandal. Former UK Prime Minister (and now current Foreign Secretary) David Cameron was accused of trying to exploit private contacts with former government colleagues during his time outside of government, when he was working for private investment company, Greensill Capital. The firm, which specialised in supply-chain finance, collapsed in March 2021 after revelations of risky lending practices and lack of sufficient insurance coverage. Founded by Lex Greensill, it had provided more than US$10bn in loans, many of which were funded by investors from Credit Suisse. It emerged that Greensill’s loans included significant amounts to companies that later defaulted, such as those within Sanjeev Gupta’s GFG Alliance. The scandal was exacerbated by Cameron’s lobbying for Greensill, seeking government-backed loans during the COVID-19 pandemic. The collapse led to ongoing investigations in multiple countries and significant financial losses for investors.
Ironically, Cameron had raised the issue of the “far-too-cosy relationship between politics and money” during his election campaign in 2010, making promises to crack down on the shady lobbying industry. But cronyism and lobbying is an issue on both sides of the political agenda. “Crony capitalism is widely blamed for a range of social and economic woes,” says Investopedia. “Both socialists and capitalists blame each other for the rise of crony capitalism. Socialists believe that crony capitalism is the inevitable result of pure capitalism. On the other hand, capitalists believe that crony capitalism arises from the need for socialist governments to control the economy.”
Donations
In 2001, the Political Parties, Elections and Referendums Act (PPERA) was made into law, making it mandatory for UK political parties to disclose received donations publicly. In theory, this type of legislation should help to make the links between political parties and banks more transparent in the UK. But in fact, it is still actually quite hard to determine how much influence a bank has in the world of politics.
It is difficult to find specific details about political donations directly from banks. Political parties in the UK receive significant donations from various sources, including individuals and companies – some of which may have financial sector connections.
According to report by Open Democracy the Conservatives received £44.5m in political donations in 2023, while Labour received £21.6m. These donations included contributions from wealthy individuals and companies, but specific data on direct bank donations are less clear. The donations are reported quarterly to the Electoral Commission, which ensures transparency and compliance with legal requirements.
While banks might not be prominently listed as direct donors, individuals and companies from the financial sector do contribute significantly to political parties, suggesting indirect financial sector support. This might not be surprising from the business-centric Conservatives, but Labour has also recently been demonstrating closer links with financial industry figures and its most recent business conference was sponsored by HSBC.
“Much has been made of Labour’s increasingly close relationship with big business and the wealthy under Keir Starmer,” says the Open Democracy report. “Supporters of the party leadership argue that Labour has to be able to compete with the spending power of the Conservatives in the general election, and so has to look beyond the traditional funding source of the trade union movement toward people and businesses with deep pockets. Critics, however, might suggest that the interests of the trade union movement and the interests of those with the deepest pockets, may not accord.”
Another report by Open Democracyin February 2024exposed the £2m in donations made by finance firms in the two years leading up to the Labour party’s historic U-turn on bankers’ bonuses. “The party’s shift toward an increasingly pro-business policy platform over the last two years has coincided with a huge influx of money from international banks, professional services firms, consultancies and financiers, with campaigners suggesting this financial relationship could explain why Labour’s policies ‘read like a love letter to the City’.”
The EU introduced regulations in 2014 that capped annual bonus payouts at twice a banker’s salary to curb excessive risk-taking following the 2008 financial crisis. In 2022, then-Chancellor Kwasi Kwarteng announced the removal of this rule as part of his mini-budget during Liz Truss’s brief term as prime minister. It was widely assumed that Labour would reinstate this cap if they were elected, but Shadow Chancellor, Rachel Reeves, has said she has “no intention” of bringing it back and wants a Labour government to be a “champion of a thriving financial services industry”.
Debanking and Politically Exposed Persons (PEP)
JPMorgan and a number of other large global banks have been criticised by conservative activists who claim they have stopped working with some clients due to their right-leaning political views. Nigel Farage, the leader of UK political party, Reform, was famously (allegedly) “debanked” by private bank Coutts in July 2023. Leaked documents showed the bank was concerned about Farage as a client due to his “xenophobic, chauvinistic and racist views”. Dame Alison Rose, who has been chief executive of NatWest Group since 2019, said the comments made about Farage were “deeply inappropriate” and wrote a letter to Farage apologising. She did not offer to reopen his accounts. Rose said it is not bank policy “to exit a customer on the basis of legally held political and personal views.”
In September 2023, in response to allegations made by Nigel Farage that he was unfairly de-banked by Coutts, the FCA launched a review into how firms treat domestic PEPs. The review looked at firms’ arrangements for dealing with PEPs based in the UK.
By law, financial firms are required to do extra checks on political figures, their families and close associates. “However,” warns the FCA, “if rules are applied inappropriately by firms, then individuals may find themselves excluded from products or services through no fault of their own.” Although the regulator does not have the power to change the law, it can look into how firms are: applying the definition of PEPs to individuals; conducting proportionate risk assessments of UK PEPs, their family members and known close associates; applying enhanced due diligence and ongoing monitoring proportionately and in line with risk; deciding to reject or close accounts for PEPs, their family members and known close associates; effectively communicating with their PEP customers; and keeping their PEP controls under review to ensure they remain appropriate. The FCA has postponed releasing the results of its review until after the upcoming General Election.
In January 2024, the UK government implemented changes to the laws around how domestic PEPs must be treated in comparison with non-domestic PEPs. The regulations modify the enhanced due diligence (EDD) requirements and establish that domestic PEPs are initially assessed as posing a lower risk than foreign PEPs. “Accordingly, regulated firms must apply a lower level of enhanced due diligence to domestic PEPs compared to non-domestic PEPs, unless other risk factors are present,” Bim Afolami, the UK’s economic secretary to the Treasury, wrote in a statement. It will be interesting to see the impact this may have on how lobbyists and PEPs interact going forward.
JPMorgan: walking the tightrope
Recent developments at JPMorgan Chase’s shareholder meetings are a perfect example of the political push and pull often felt by banks. David Bahnsen of The Bahnsen Group, a conservative investor at JPMorgan, filed a resolution earlier this year calling on JPMorgan Chase to issue a report looking into how its diversity, equity and inclusion (DEI) policies might negatively impact employees “based on their religion (including religious views) and political views.”
In other words, Bahnsen felt JPMorgan Chase’s policies were becoming a little too “woke”, to the extent that they were potentially discriminating against more conservative employees and clients. One such policy was a requirement for merchants using JPMorgan’s We Pay service to agree not to process payments in connection with “social risk issues.” The bank defined these as payments “subject to allegation and impacts related to hate groups, systemic racism, sexual harassment and corporate culture.”
Bahnsen withdrew his resolution after JPMorgan Chase removed the above statements from its policy documents. A JPMorgan spokesperson told Reuters in response to questions about new language adopted in its DEI policy: “While the language may look new, the policies and practices are not. We support clients around the globe and in every state in the US, across industries, religions and political affiliation…We do not and would not close an account due to a client’s political or religious affiliation, and we’re making sure to articulate that long-held policy wherever and whenever possible.”
The firm’s attempts to avoid political backlash by managing the risks involved with processing payments linked to “social risks” meant it potentially alienated some of its key investors. Or did it? Financial advisor John Tamny, writing for Forbes, argues that banks are only ever in the business of courting customers, not alienating them. “Banks are in the business of competing for savings. They ‘rent’ savings in order to carefully lend those savings out. Simple truths like this are sometimes easily forgotten, particularly by politicians.” He adds that the criticisms made by right-wing politicians that banks are discriminating against customers for their political beliefs don’t stand up to logic. “Texas legislators claim some of the big national banks are actively refusing oil and gas finance work on the corporate level. If we ignore that some of those accused are among some of the biggest global financiers of – yes – oil and gas commerce, we can’t ignore the strange contention that banks would refuse individual or corporate business in the locales where they’re actively pursuing it. Such a view is contradictory. Think about it. Banks operate where there are savings, and where they expect more. To pretend they would be in the business of discriminating against the very commerce that instigated the savings, is much less than serious.”
The green initiative
Environmental and social issues, much like other important topics, have become inherently politicised. Using the United States as an example; efforts to prioritise climate change mitigation and initiatives aimed at enhancing social mobility are typically championed by the left. Conversely, right-wing politics often leans towards climate change scepticism, favouring regulations that promote economic growth and capitalist interests. This is often a key focus in election campaigns.
How the world of banking fits into this situation is important because of the extent to which banks have historically relied upon the fossil fuel industry for profits. Banks are now feeling the pressure to take better accountability for social and environmental issues and to stop providing finance for fossil-fuel projects.
However, the latest Banking on Climate Chaos report, which analysed the world’s 60 largest banks’ underwriting and lending to fossil fuel firms, found US$6.9tn worth of funding was provided to oil, coal and gas companies from 2016–2023; US$3.3tn of which was used to fund fossil fuel expansion.
Trump’s approach to climate change has centred on questioning the scientific consensus that burning fossil fuels is a major cause of global warming, and downplaying the threat of rising sea levels. He has even urged fossil fuel executives to contribute US$1bn to his election campaign, promising to roll back environmental regulations and promote increased investment in oil and gas drilling if he is elected.
Environmental lobbying in banking
Environmental groups lobby for stricter environmental regulations and policies that affect the banking sector. Regulations might include mandatory climate risk disclosures, carbon pricing, or requirements for banks to align their portfolios with climate goals.
The pressure applied by these groups can lead banks to adopt more sustainable practices in order to protect the environment, their reputations and customer bases. The rise of ESG and sustainable investing in recent years has largely been viewed as a positive outcome of this, although it comes with its own problems, such as greenwashing.
Environmental charities must remain politically neutral in order to maintain charity status, but some, like Greenpeace, also have a registered company arm within the organisation, which allows them to be involved in political campaigning. Greenpeace has been vocal about its disdain for the banking industry and it relies on its team of political lobbyists to continue putting pressure on banks and policymakers. “Pulling the levers of power happens in many different ways,” says Greenpeace on its website. “Protesting outside Barclays’ head office to stop them funding oil pipelines gets lots of attention, but we also need to talk directly to the people in power. With 650 MPs – plus local councillors and other decision makers – there’s a lot of ground to cover. Volunteers around the country lobby their local politicians, talking to them about Greenpeace’s campaigns.”
Campaign groups are also targeting financial regulators directly about the issue. The campaign group Make My Money Matter has recently written to the FCA asking it to consider launching an investigation into potential greenwashing in some of the UK’s largest high street banks. Tony Burdon, chief executive of Make My Money Matter, said: “Our five largest high street banks [Barclays, HSBC, Santander, NatWest and Lloyds] all financed companies involved in fossil fuel expansion in 2023, the hottest year on record. Their climate and sustainability statements create a situation where the public believes them to be more sustainable than they actually are. We look forward to hearing whether the regulators agree and what next steps they may take.”
Greenpeace has also been lobbying for changes to the EU Deforestation Regulation (EUDR), which currently applies to commodities such as soya, palm oil and beef, banning from its market products linked to deforestation. “The EUDR, at present, does not regulate the finance sector” wrote Sigrid Deters, a biodiversity campaigner at Greenpeace Netherlands. “It is incomprehensible to exclude the finance sector from environmental regulations such as the EUDR and to let banks get away with business as usual.”
Shareholder activism
Environmentalists often engage in shareholder activism, purchasing shares in banks to influence their policies from within. By proposing and voting on shareholder resolutions, they can push for greater transparency and commitment to environmental sustainability. Some examples of this in banking include:
JPMorgan Chase (2020): A group of shareholders filed a resolution urging JPMorgan Chase to align its lending practices with the Paris Agreement. They demanded the bank set targets to reduce its financing of fossil fuel companies. In response to mounting pressure, the bank announced in early 2021 that it would work towards achieving net-zero emissions by 2050 and would finance US$2.5tn over 10 years to support climate and sustainable development.
HSBC (2021): Shareholders, including the campaign group ShareAction, filed a resolution calling for HSBC to publish a strategy and targets to reduce its exposure to fossil fuel assets The bank subsequently committed to phasing out the financing of coal-fired power and thermal coal mining by 2030 in the OECD and EU, and by 2040 globally.
Barclays (2020): Shareholders led by the group ShareAction filed a resolution urging Barclays to phase out the provision of financial services to the energy sector, including oil, gas, and coal. In response, Barclays committed to aligning all of its financing activities with the goals of the Paris Agreement and to achieve net-zero emissions by 2050.
Standard Chartered (2021): Shareholders, coordinated by ShareAction, submitted a resolution demanding that the bank improve its climate policies, particularly regarding the financing of fossil fuels. In response, the bank announced that it would cease funding new coal-fired power plants and pledged to reach net-zero carbon emissions from its operations by 2030 and from its financing activities by 2050.
Citigroup (2020): Shareholders, influenced by activist groups, called on Citigroup to disclose more information about its climate change policies and practices. The bank committed to net-zero emissions by 2050 and pledged US$1tn in sustainable finance by 2030.
Wells Fargo (2021): Shareholders filed a resolution asking Wells Fargo to provide detailed reports on how it plans to reduce its exposure to fossil fuel assets. The bank subsequently announced its goal to achieve net-zero greenhouse gas emissions by 2050, including its financed emissions.
Mitigating political interference
Political influence in the world of banking regulation is inevitable – and perhaps in some cases, necessary. But if banks are to remain independent and exist to serve the needs of customers, not politicians, several measures need to be adopted:
Strengthening institutions: Ensuring the independence of central banks and regulatory bodies can help shield them from political pressures. This means creating a framework where these institutions operate autonomously, free from direct influence by political entities.
Transparent governance: Implementing transparent and accountable governance practices can reduce the scope for corruption and favouritism. Transparency in governance involves clear, open processes and decisions that are accessible to the public, fostering an environment where information flows freely and stakeholders are well-informed.
Adopting long-term policy frameworks: Developing and adhering to long-term economic and financial policies can provide stability and predictability, reducing the temptation for short-term politically motivated decisions. Long-term policy frameworks are strategic plans that outline the economic and financial goals and directions for a country over an extended period, typically spanning several years or even decades. These frameworks are crucial because they offer a stable environment for investors, businesses, and the public, who can make informed decisions based on predictable and consistent policies. By focusing on long-term objectives like sustainable growth, technological innovation, and infrastructure development, governments can avoid the pitfalls of short-termism – where decisions are made to gain immediate political advantage at the expense of future stability and prosperity.
