7This is about the size of the entire Chinese economy. In Asia, many families will soon see a transfer of assets from an aging first generation of business founders to the next generation. About 35% of Asia’s wealth will be in the hands of millennials in the next five to seven years. 8 There are stark differences in outlook between the next generation and their parents. Born into a globalised world, the younger generation is more socially aware. While wealth preservation is important, they are also concerned about the impact their wealth will make on society and the environment. They are twice as likely to invest in companies targeting social or environmental goals. 9 Nonetheless, the financing gap to build the green economy of the future remains large. Not enough of global wealth is being channelled towards sustainable development at the scale and speed necessary to achieve the goals of the Paris Agreement. The gap is particularly large in Asia – which is where the outcome of the battle against climate change will be determined. Asia accounts for almost half of global greenhouse gas emissions. 10 It also bears the brunt of economic losses from natural disasters – and climate change will amplify the impact. To sustain economic development and eradicate poverty while mitigating carbon emissions, Asia needs $ trillion a year of investments in sustainable infrastructure through 2030. 11 Investors are beginning to mobilise capital to support Asia’s development.
The Maastricht Treaty impressively illustrates this changed approach with respect to the European area. This new political focus was also a reaction to the disillusionment with regard to the central banks’ ability to generate permanent growth effects. There was fairly widespread agreement that price stability should be the prime monetary policy objective. Second, it was of decisive importance that the currencies of the two leading countries, the US and Germany, achieved a high degree of price stability. Numerous countries gained credibility by pegging their exchange rates to the US dollar and the DM, thus seizing the opportunity to successfully import the stability policies of the Federal Reserve and the Deutsche Bundesbank. Third, the deregulation and globalisation of financial flows have increasingly disciplined the national authorities. These days, an excessively relaxed monetary policy is sanctioned much more severely and much more quickly than in the past by growing inflationary expectations, rising long-term interest rates and a persistent devaluation pressure. Correspondingly smaller are the incentives to run the higher risk of a long-term inflationary problem for reasons of short-term opportunism. On looking ahead, most of these factors promise to remain relevant. Such confidence, however, should not detract from the dangers and risks involved. Fiscal discipline is facing a difficult test phase in a number of countries. It is foreseeable that the combination of demographic trends and non-funded statutory pension claims will lead to intensive discussions on distribution in many places which, in turn, might easily trigger a rise in public indebtedness.