Banks http://www.banks.am/ Բիզնես լուրեր Հայաստանից, ֆինանսական լուրեր, բանկեր, աշխատատեղեր, դոլար, եվրո, փոխարժեքներ en-us Fri, 28 Aug 2026 13:20:07 +0400 <![CDATA[ Wilco Model: “We’re like a co-pilot for the client” ]]> https://banks.am/en/news//31154 https://banks.am/en/news//31154 The name Wilco was not chosen at random. It comes from aviation: “Will comply” – meaning “the order has been received and will be executed.”
This idea lies at the heart of the company’s philosophy. Wilco positions itself as the client’s “co-pilot” – someone who does not take the controls or decide where to fly, but who helps the client stay on course and navigate turbulence when needed.

According to Wilco CEO Irina Belysheva, wealth management is based on a simple principle: not to make decisions for the client, but to help them better understand their own goals, risks, and opportunities. The client remains the pilot of their own “airplane,” determining the direction of their life, family, and business, while Wilco strives to be the expert who sees the entire route.

This approach is particularly important for families whose wealth has grown beyond the scope of simple investing, and for whom the focus extends beyond asset management to business structuring, tax and legal matters, succession planning, their children’s education, and preparing the next generation.

A New Chapter in the Company's History

Wilco’s current story in Armenia began about a year ago, when the company – which had been operating since 2008 – gained a new owner, adopted a new mission, and underwent a rebranding. Management has set a goal of transforming the company from a local investment company into a world-class wealth management company.

“For me, the biggest challenge wasn’t the business model or finding clients. The most difficult aspect was assembling the people. We had to figure out: would we be able to build a team that not only had extensive professional experience but also believed in Armenia’s long-term potential?” explains Irina Belysheva. 

Today, the Wilco team includes leading experts from Armenia and several other countries, some of whom have moved to Armenia with their families. The CEO considers building this team one of the most important achievements of the company’s first year.

According to her, the experience of professionals from different markets brings additional dynamism to the company. At the same time, beyond diverse professional and cultural backgrounds, a shared set of values is essential. At Wilco, these values are trust, creativity, and vitality.

The product isn’t the first thing – it’s the last
 
One of the key differences between wealth management and traditional investment services is in where the process begins. In the traditional model, a financial product is first created and then offered to the client.

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“Our approach is the opposite: first, we need to understand the needs and challenges of an individual or family, and only then develop a solution. Every family has its own circumstances, goals, and priorities. There are no one-size-fits-all solutions,” says Irina Belysheva. 

However, this approach can only work if the client is willing to speak openly about their financial situation.

“We, so to speak, act as a family doctor: if a person doesn’t tell us everything, we cannot offer a comprehensive solution,” notes Irina Belysheva. 

That is precisely why, for Wilco, trust is not simply one aspect of the service – it is its very foundation.

When money isn’t the most important financial issue

During Wilco’s first year operating under its new name in the Armenian market, several issues have emerged that are gradually becoming increasingly important to clients.

“In many businesses, the strategic horizon is still limited to a single year. But when we talk about family wealth, we need to think about the decades to come. It’s not just a matter of how to make more money. The more complex question is what will happen to that wealth afterward,” says Irina Belysheva. 

And this is where the issue of continuity and legacy comes to the forefront.

“What will happen if I’m gone tomorrow?”
 
Building capital, preserving it, and passing it on to the next generation are three distinct challenges. In Armenia’s business community, the first two have long been priorities since independence; the third, however, is now emerging with increasing urgency.

“For families, this is often one of the most difficult conversations to have, because it touches on both money and mortality. You may build a large business, but your children might live in another country, pursue a different career, or simply not want to carry on the family business,” says Irina Belysheva. 

This raises a question: Does the next generation understand what has been built? Is it ready to take on this responsibility? And if not, how to design a structure for transferring this capital? For Wilco, this is no longer simply a matter for individual families. The company views the issue of intergenerational wealth transfer as one of the keys to Armenia’s long-term and sustainable economic development.

Knowledge – before passing on a legacy to the next generation

Based on this logic, Wilco has launched its Next Generation and Financial Literacy initiatives. The company aims to work with the generation that will one day decide what businesses to build, where to live, how to invest, and how to manage their own capital.

The programs are designed to engage the children and heirs of Wilco’s clients of different age groups. Topics range from financial literacy and career guidance to understanding how businesses operate.

“We’ve already held a pilot Discovery Day, during which children aged 11-14 learned how our business works. They showed tremendous interest and expressed a desire to learn about other industries as well,” says Irina Belysheva. 

No one knows what the market will be like in 10 years

When discussing the future of Armenia’s financial market, Irina Belysheva highlights several trends that could reshape it: greater financial literacy, a broader range of investment instruments, and the gradual integration of household savings into the financial system.

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“Attitudes toward money must also change. Instead of simply holding onto savings, they need to be gradually integrated into the financial system. The government, the Central Bank, and private financial institutions – banks, brokers, investment firms, and wealth management companies – all have a role to play here. But financial instruments alone are not enough. For investment to grow, confidence and trust are also essential – in financial institutions, the regulatory environment, and the country as a whole,” says Irina Belysheva. 

Armenia is a country that not only attracts capital but also channels it

According to Wilco’s vision, one of Armenia’s key priorities should be to establish stronger capital flows between the Diaspora and Armenia.

“I don’t see this as simply an attempt to attract capital from the Armenian Diaspora to Armenia. It’s about building bridges. These bridges should enable Armenians living outside Armenia to participate in investment projects in Armenia, while those living in Armenia gain access to international markets,” says Irina Belysheva.

Under this model, Armenia could gradually become not just a country that attracts capital, but also a hub connecting different financial markets.

Wilco’s goal is to enable its clients to move in both directions: to maintain strong ties with Armenia while also gaining access to other markets.

“The plane is already in the air”

According to the company’s management, the first year following the relaunch laid the foundation for the next phase of development.

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“Our top priority right now is to grow our assets and revenue. If our first goal was to build an airplane, I can say that today the plane is already in the air and gaining altitude. Looking ahead, we also do not rule out international expansion and the development of new partnerships,” says Irina Belysheva. 

This year, Irina Belysheva was honored with the “Leading Woman in Wealth Management” award in Dubai. For her, the recognition is not only a personal achievement but also an opportunity to discuss Armenia’s financial market on the international stage.

Astghik Hovhannesov ]]> Tue, 25 Aug 2026 10:02:00 +0400 <![CDATA[ The AI Threat to Financial Stability ]]> https://banks.am/en/news//31140 https://banks.am/en/news//31140
US Federal Reserve Chair Kevin Warsh recently announced a new task force that will “survey the pace, the reach, [and] the economic impact of new general-purpose technologies, including AI, and explore the implications for the Fed” as it pursues its “employment and inflation mandates.” Notably absent from Warsh’s statement was any mention of the impact of AI on financial stability, the Fed’s de facto third mandate.

The Fed has shown some awareness of the risks AI poses for financial stability. In April, Warsh’s predecessor Jerome Powell, together with US Treasury Secretary Scott Bessent, convened a meeting to assess how advanced AI models could affect cybersecurity in the banking system. But even this approach was far too narrow.

In the United States, both the financial system and asset markets have become a one-way bet on AI. If current trends persist, outstanding AI data-center debt will surpass mortgage debt by the end of this decade. The Fed should now be asking whether the revenues from these data centers will generate enough cash to repay creditors on time.

That question is often conflated with two others: whether AI is a bubble and whether it is a transformative technology. One might be tempted to position this as a dichotomy—AI is either a bubble or a transformative technology—but this would be a mistake. The US railroad boom of the 19th century ended in the Panic of 1873, and the telecom and dot-com boom of the 1990s culminated in a stock-market crash. In both cases, the technology was genuinely transformative, but creditors and shareholders were wiped out anyway, because investment outpaced any plausible near-term return.

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Likewise, when it comes to AI, technological success will not guarantee financial success. The revenues AI will generate remain uncertain, but borrowers’ repayment schedules are fixed. AI tools can be widely adopted, and a data center can be heavily used, without producing enough cash to service their owners’ debts. The financial-stability concern arises from the mismatch between speculative future revenues and present contractual obligations.

The arithmetic is daunting. David Cahn of the venture capital firm Sequoia estimates that this year’s roughly $750 billion in hyperscaler AI capital expenditure will need to generate about $1.5 trillion in end-customer revenue over the life of the equipment to pay for itself. By his calculation, the entire AI buildout since the 2022 launch of ChatGPT now carries a cumulative payback minimum of some $3 trillion. Anthropic is rumored to have annualized revenues of around $60 billion.

The consulting firm Bain & Company calculates that funding the compute needed to meet anticipated AI demand by 2030 will require some $2 trillion in new annual AI revenue. Given that a bubble is what happens when an asset’s price far exceeds the cash flows it generates, such projections seem to support warnings that AI is indeed a bubble.

Already, funding for the AI buildout has shifted decisively from the tech giants’ cash flows to capital markets. Circular financing arrangements abound: chipmakers invest in AI labs, which use the money to buy chips, and cloud providers fund the startups that rent their servers. The result is a positive feedback loop between rising valuations and capital expenditures.

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Chip giant Nvidia has emerged as a backstop for the “neoclouds,” allowing thinly capitalized cloud providers to raise private financing on attractive terms. Tech giants accumulate massive off-balance-sheet liabilities through joint ventures and leasing structures. And a growing share of the capital comes from private credit funds, which often lend to projects affiliated with their own sponsors.

Unlike the railroads or fiber-optic cables produced by earlier manias, this investment does not leave behind durable assets. Chips comprise roughly half the cost of an AI data center, and they are effectively unusable after 3–5 years. The collateral might lose value faster than the debt is repaid.

Moreover, the broad-based productivity gains and labor-market effects that AI is widely expected to deliver are not yet visible in the data. A recent Fed staff note concludes that this is because AI remains in its “buildout” phase. But a productivity surge will also require businesses to make immense internal investments to reengineer their processes. Nevertheless, markets are already pricing in robust earnings growth, driven in part by AI-driven productivity gains, raising concerns about an “earnings bubble.”

Most discussions of the downside risk of the ongoing AI boom have focused on the stock market. But the bigger risk is to credit markets. We now have a “market-based” financial system, in which credit is intermediated less by banks than by bond markets, securitization vehicles, and nonbank lenders. The danger is not a 1930s-style run on bank deposits, but a 2007-style run on the shadow banking system: doubts about credit quality trigger a contraction in short-term funding, and borrowers must sell into a falling market, leading to further price declines. 

With short-term funding markets seizing up, the Fed would come under enormous pressure to backstop nonbank lenders and data-center debt, just as it backstopped money-market funds in 2020, at the start of the COVID-19 pandemic. But AI is even less popular today than Wall Street was in 2007. A bailout of both would likely destroy what remains of Fed independence.

There is a chance that massive AI capital spending will be vindicated, generating the revenues required to service trillions of dollars in debt. In that case, however, the implied labor-market dislocation would be without historical precedent. It is the coin-flip of nightmares: heads is financial instability, and tails is a biblical employment shock.

In any case, financial stability must be central to the Fed’s AI agenda. Even if this time proves to be different technologically, it might not be different financially.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Fri, 21 Aug 2026 22:30:00 +0400 <![CDATA[ Global Tax Reform Is the Key to a Fair AI Economy ]]> https://banks.am/en/news//31116 https://banks.am/en/news//31116 Zorka Milin is Co-Director of the Financial Accountability and Corporate Transparency (FACT) Coalition.

AI’s rapid advance and the resulting popular backlash have lent new urgency to an old question: How can we promote equitable economic growth from technological innovation while mitigating the negative social and environmental consequences? Both domestically and globally, the answer starts with corporate tax policy.

Anxieties about AI have less to do with any philosophical unease than with the societal effects. Financial gains are increasingly concentrated among a handful of firms and their shareholders, while the costs—from job displacement to rising energy prices—are borne by everyone else. In democratic societies, taxation is the primary mechanism for translating private gains into public benefits. When that mechanism breaks down, a backlash is inevitable.

Distributive justice is an equally salient concern at the global level. While the Global North is preoccupied with the significant public pushback against AI, the Global South faces a pressing need to mobilize domestic tax flows from multinational corporations, particularly tech firms, in the wake of drastic aid cuts. These problems stem from the same source: when companies shift profits out of the countries where they are generated to tax havens, that reduces public revenues for all governments.

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The digitalization of the global economy has demonstrated the insufficiency of the international tax system. But the need to shatter the status quo has never been clearer. AI has supercharged the trend of taxable value being decoupled from physical corporate presence—long a prerequisite for a country’s right to tax. Training data, compute, and intellectual property can be scattered across many jurisdictions, far from where workers or users are located, fueling debate about where value is created.

US-based multinational tech giants, some of which are poised to win big from the AI revolution, have created a playbook that companies like OpenAI and Anthropic could follow. Because their profits are mostly generated from intangible assets such as software, they can shift them to tax havens, manipulating decades-old norms to pay rock-bottom rates. It is no wonder that so many Big Tech firms have been embroiled in tax controversies.

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For example, a 2013 US Senate investigation and a subsequent 2016 European Commission investigation revealed that Apple had shifted a large portion of its billions of dollars in global earnings to its Irish subsidiaries, which then paid a tax rate on Apple’s European profits as low as 0.005%. The uproar culminated in European Union authorities ordering Apple to pay Ireland a staggering €13 billion ($15 billion) in back taxes and sparked a major international tax overhaul at the OECD.

The inability to tax the profits of digital companies demands nothing less than an overhaul of the international tax system. Policymakers have attempted to arrest the global tax race to the bottom by introducing minimum taxes at both the national and global levels. The United States enacted a corporate alternative minimum tax in 2022, but it has since been diluted. The same is true of the global minimum corporate tax adopted under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, whose planned reallocation of taxing rights from headquarters to market countries has stalled.

Tax-justice groups have criticized the Apple court decision and the OECD reforms for failing to consider developing countries’ interests. To create a fairer and more predictable system, African governments have proposed a Framework Convention on International Tax Cooperation under the auspices of the United Nations, with negotiations currently underway in New York.

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The world ultimately needs a robust and durable multilateral tax framework (whether at the UN, the OECD, or elsewhere) to capture the value of AI-driven economic activity where it occurs. But a global minimum corporate tax and the reallocation of taxing rights, while both necessary, would not help governments tax AI companies in the near term, as many have yet to turn a taxable profit. That is why a growing number of jurisdictions are looking beyond taxes on net income and introducing digital-service taxes (DSTs) on gross revenues.

More than 20 countries are considering or have already implemented DSTs, prompting threats of retaliatory US tariffs. Moreover, different versions of such taxes are currently in effect or have been proposed in several US states. In all these cases, policymakers recognize that DSTs are a valuable release valve, be it globally or at the subnational level.

While not a long-term substitute for reforming an obsolete global tax system, DSTs are at least a stopgap. They provide proof of concept by normalizing the once-radical idea that taxing rights should align with where users are located, not just where companies choose to incorporate or play accounting games. DSTs may not be the final destination, but they are an important and necessary first step toward a fairer international tax order.

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DSTs, like broader multilateral tax reforms, have come under fire from short-sighted politicians and experts who insist on defending the status quo. But these leaders fail to recognize that the status quo is fiscally and politically untenable. This was the case before AI arrived but has come into sharper focus as the technology spreads.

If AI-driven profits are subject to the same asymmetric global tax architecture that has allowed digital activities to be undertaxed, there is a good chance that Big Tech’s outsize power will only grow. There is also the risk of resistance to AI hardening into a legitimacy crisis, which means that society may miss out on its potential benefits. Corporate tax policies are the battleground where public trust in this new technology, and our governing institutions, will be won or lost.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Sat, 15 Aug 2026 00:10:00 +0400 <![CDATA[ How AI Could Reinforce Dollar Dominance ]]> https://banks.am/en/news//31104 https://banks.am/en/news//31104 Chenxu Fu is an economist at the ASEAN+3 Macroeconomic Research Office (AMRO). 

Xianguo Huang is Senior Economist at the ASEAN+3 Macroeconomic Research Office (AMRO).

The signing of a 20-year data-center lease probably does not register as a monetary event. Even the announcement of a dollar-pegged stablecoin linked to the AI boom would not necessarily be given this label. But such developments are proliferating—and contributing to the formation of a system in which a critical input for the global economy is priced, paid for, and ultimately recycled into dollar assets.

This is not a new concept. Since the 1970s, the pricing of oil in US dollars has increased global demand for the currency and generated export revenues for oil producers, which often directed them toward US markets. But the petrodollar is a template, not a prophecy. It shows that when production, payments, and asset-recycling reinforce one another, an indispensable input can embed a currency in global markets.

AI might generate its own version of this dynamic. Discussions about who will “win” in the AI economy often focus on the race to build the most advanced models. But the true transformation begins when model performance converges, and companies integrate AI into everyday operations. At that point, just as we talk about dollars per barrel today, we may find ourselves considering dollars per unit of compute.

Energy underlies this metric. AI is far from weightless. Data centers convert electricity into billable computing capacity, which is now being secured years in advance. When Anthropic signs a 20-year lease with TeraWulf, an infrastructure provider, it looks a lot like an industrial firm securing long-term production capacity. This is a supply-side wager that demand for compute will persist.

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The demand side may well reward that bet. To be sure, though many firms are experimenting with AI, few have reengineered their operations around it. But OpenAI’s new consulting arm Deployment Company (DeployCo) aims to change this by embedding engineers within companies to integrate AI into their workflows. Once such systems are in place, compute will become a recurring operating expense.

This brings us to the first channel that will reinforce dollar dominance. If the AI supply chain is dominated by US-linked firms and priced in dollars, global digital production will have to source dollar liquidity, and the revenues will land inside a largely dollar-based financial system. Unlike oil revenues, these proceeds would not accumulate abroad before being recycled into US markets.

But the invoice is only the visible layer. Beneath it, invisible infrastructure is forming: the payment rail on which agentic commerce will increasingly run. OpenAI’s partnership with Visa, which aims to build this infrastructure, points to a more programmable future. Should AI agents begin procuring services, arranging logistics, and reordering inventory with minimal human intervention, payments must be automated and machine-native.

This is the second channel that will reinforce dollar dominance. Dollar-pegged stablecoins, in particular, could provide the programmable settlement that agentic commerce requires. The announcement of Open USD—a dollar-pegged stablecoin with the backing of more than 140 payment, financial, and crypto firms—signals that dollar tokens are already being positioned for this transformation.

The two channels could eventually merge. The same rail that enables programmatic settlement of agentic commerce through dollar-pegged stablecoins could facilitate compute payments as easily as any other. Dollar invoicing would thus be combined with stablecoin settlement, turning technological dependence into monetary dependence.

In principle, tokenized deposits or central bank digital currencies could do the same job as dollar-pegged stablecoins. But payment systems reward early network effects. The question is not whether dollar stablecoins are the only option, but whether they become the first to work efficiently across borders at scale.

This infrastructure also recycles, as demand for programmable dollars is translated into demand for the safe assets that back them—notably, US Treasuries. Agentic commerce has barely gotten off the ground, and already stablecoin issuers rank among the largest buyers of Treasury bills.

Collectively, these developments point to the possible emergence of an energy-compute dollar loop. Electricity powers data centers; data centers produce compute; compute enables the automation of business activity, including payments that favor programmable settlement; and stablecoin reserves flow into US Treasuries. The result would be a self-reinforcing cycle linking AI infrastructure, digital payments, and US financial markets.

Remarkably, no government appears to be orchestrating this process. Whereas the petrodollar was built on official agreements, its AI-based successor is being constructed largely through commercial decisions. Cloud providers secure land and power. AI firms package models into services. Payment groups construct stablecoin rails. Stablecoin issuers purchase Treasuries. Each step is logical on its own; together, they quietly reinforce dollar dominance.

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This has important implications for policymakers outside the United States—particularly in countries that have spent years trying to reduce their dependence on the dollar. The ASEAN+3 countries, for example, have sought to settle trade in local currencies, link national payment systems, and pool reserves to protect against dollar shortages.

While the ASEAN+3 cannot prevent the self-reinforcing dollar loop from forming, they can limit their dependence on it. The key will be to combine energy, AI, and payments into a single strategic agenda. Regional data centers, powered by affordable and increasingly clean energy, could increase local firms’ access to compute. And the development of local-currency tokenized settlement for agentic commerce would reduce dependence on dollar systems and keep transactions visible to regulators.

The goal for other countries is not full technological self-sufficiency, which is probably not possible any time soon. Rather, it is to participate in digital production without accepting a new layer of dollar dependence as the price of entry. After all, unlike petrodollar arrangements, the emerging AI system offers countries no seat at any summit table.

While policymakers and economists debate the future of dollar dominance, AI companies, cloud providers, and payment networks might already be writing it into the next chapter of international monetary history. Those who hope to shape that chapter must act now—or risk being left off the page.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Wed, 12 Aug 2026 22:35:00 +0400 <![CDATA[ EY Armenia: Recent Tax Changes will Significantly Affect Businesses in Armenia ]]> https://banks.am/en/news//31080 https://banks.am/en/news//31080 Armenia has introduced a broad package of tax legislative changes that will affect businesses across multiple industries, including e-commerce, retail, manufacturing, tourism, jewelry production, and cross-border operations. 
While some amendments are already in force, others will take effect from 1 January 2027 and may require companies to review their tax reporting, compliance processes, and accounting methodologies.

“The recent amendments represent one of the most extensive packages of tax changes adopted during the year. Companies should carefully assess how the new rules may affect their tax compliance, reporting processes and business operations, particularly in areas such as e-commerce, tax administration and foreign currency transactions accounting,” said Kamo Karapetyan, Partner and Head of Tax Practice at EY Armenia.

What's new?

New VAT framework for EAEU e-commerce marketplaces

One of the most notable changes concerns the taxation of cross-border electronic commerce within the Eurasian Economic Union (EAEU).

Under the new rules, electronic marketplace operators may become responsible for calculating, reporting, and remitting Armenian VAT on certain cross-border B2C sales to consumers in Armenia, regardless of VAT registration thresholds. The new rules will enter into force on 1 January 2027 and are expected to impact online platforms and businesses engaged in cross-border e-commerce.

Special VAT regime for gold and jewelry industry

Armenia has introduced a new VAT mechanism for manufacturers and traders of gold and jewelry. 

Instead of taxing the entire sales value, VAT will generally be calculated based on the value added during production or resale, bringing taxation more closely in line with the economic substance of these transactions.

Expanded Powers for Tax Authorities

Businesses may also face increased scrutiny from tax authorities.

Tax authorities now have broader powers during thematic reviews and may initiate up to three reviews per year in certain circumstances. The changes are designed to strengthen tax compliance oversight and expand the authority's ability to verify taxpayer positions.

Tax professionals note that companies should ensure their internal records, supporting documentation and tax reporting procedures are sufficiently robust to withstand increased review activity.

Higher criminal liability thresholds for tax offences

Another important development concerns tax-related criminal liability.

The monetary thresholds triggering criminal liability for tax violations have been significantly increased. As a result, many lower-value tax disputes may be addressed primarily through tax administration measures, including additional assessments, penalties, and fines.

Foreign currency accounting reform and other amendments

The reform package extends beyond VAT and tax administration matters.

Among other changes, the legislative package revises the tax accounting rules for foreign currency transactions, expands opportunities for transaction adjustments and goods returns, introduces new VAT exemptions, and includes various changes affecting profit tax, VAT administration, and non-resident taxation.

Businesses engaged in international transactions and foreign currency operations may be particularly affected by the updated accounting methodology and exchange rate application rules.

Why it matters for businesses

According to EY Armenia, the reforms could require companies to:

• Review existing tax accounting methodologies and exchange rate application rules;

•Adapt to new VAT requirements applicable to certain industries and transactions;

• Strengthen focus on tax compliance and tax reviews;

• Update internal controls, tax reporting, and documentation processes; and

• Reassess existing tax positions and compliance risks

A detailed overview of the legislative changes and their potential implications for businesses is available in EY Armenia's latest Tax Alert: 

https://www.ey.com/en_am/technical/tax-and-law-alerts/major-tax-and-vat-changes-affecting-businesses-in-armenia ]]> Thu, 06 Aug 2026 00:05:00 +0400 <![CDATA[ The EU’s Incredible Shrinking Banking Sector ]]> https://banks.am/en/news//31074 https://banks.am/en/news//31074 Howard Davies, a former deputy governor of the Bank of England, is a professor at Sciences Po.

A quarter-century ago, each of the five biggest European Union banks had a market capitalization larger than that of the biggest US bank. Now the market capitalization of the biggest US bank, JPMorganChase, is higher than that of the top five EU banks combined. (The EU is coy about names, but we can presume that the EU banks include France’s BNP Paribas, Germany’s Deutsche Bank, and Spain’s Santander).

This striking fact about market capitalization is cited in a European Commission report on banking regulation published in late July. The Commission is not noted for lauding the achievements of the US financial sector, so the purpose must have been to sound a wake-up call to those EU member states that remain resistant to the reforms recommended in reports on European competitiveness written in recent years by former European Central Bank President Mario Draghi and former Italian prime minister Enrico Letta.

The reasons for this dramatic turnaround in relative values are many and various. One obvious factor is that the US economy recovered far faster from the 2008 financial crisis than the EU did, outperforming Europe by almost 20 percentage points since 2009. Another is that US capital markets are deeper and more flexible, giving companies more sources of capital and allowing banks to manage their balance sheets more actively.

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Moreover, cost-to-income ratios in EU banks have remained stubbornly high, and many local regulations stand in the way of a genuine single market. The convoluted merger dance involving Unicredit and Commerzbank may turn out to have a happy ending, but the time it has taken illustrates how difficult banking consolidation has been to achieve. We still have no pan-European banks worthy of the name, except perhaps Revolut.

The EU’s legacy banks would also blame excessively conservative prudential regulation by the ECB. There are signs that the European Commission itself, more directly exposed to political pressures than the ECB, is coming around to that view.

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The Commission is becoming more receptive to the argument that the need to encourage bank lending, especially to small and medium-size enterprises, which are more dependent on bank borrowing in Europe than they are in the US, should be a consideration influencing the setting of capital requirements. Maybe, as the saying goes, the ECB is achieving the stability of the graveyard, where nothing moves.

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The difficulty is that the evidence on the relationship between bank capital and growth is mixed. Recent research by the management consultancy Oliver Wyman and financial research firm Autonomous points to a reduction in return on equity of about 1%—significant, but not transformative—arising from the ECB’s more conservative approach by comparison with the US Federal Reserve. The ECB, no surprise, contests that conclusion, and points to the long-term advantages of a highly resilient banking sector.

But that is a static approach, and there are, from the EU banks’ perspective, worrying signs of a growing transatlantic divergence. The Fed has clearly abandoned the Basel Endgame proposals which provoked such hostility a couple of years ago. The Fed’s current proposals, articulated by Vice Chair for Supervision Michelle Bowman, include a reduction in the supplementary leverage ratio, a lower G-SIB (Global Systemically Important Bank) surcharge, and other changes which, together, would reduce required capital for a large US bank by about 5%. That would suit President Donald Trump’s administration.

The Bank of England is moving cautiously in the same direction, and earlier this year announced a reduction in the benchmark Tier 1 capital requirements from 14% to 13% (down to the equivalent of a CET1 ratio of around 11%). That is hardly a radical move, and the British banks want more, but it is a step in the direction of a more competitive approach, which the government itself has called for.

But the ECB remains hawkish for now. Its head of supervision, Claudia Buch, argues that tough capital regulation has not constrained credit expansion in practice. She agrees with the need for simplification (hands up if you oppose simplification) but resists arguments for any overall reduction in capital.

Instead, the ECB continues to argue that banks could do more to help themselves by controlling costs more effectively. And while the price-to-book ratios of big EU banks remain below those of their US competitors, they have at last been rising.

In fairness, the ECB is not alone. While Canada has modestly relaxed its capital requirements, other significant economies have not. Australia and Japan remain conservative and resistant to change. China’s regime is hard to compare, but on the face of it, policymakers are sticking to their traditional line—“Basel plus one” percent—on capital requirements.

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In each case, the political and economic contexts are different. Europe is stuck in a low-growth equilibrium, and its leaders are desperately searching for an escape route. However weak the argument, cutting capital requirements seems to offer the prospect of some relief. That is clearly driving current thinking at the European Commission.

That could set the stage for an interesting confrontation between the Commission and the ECB this autumn, pitting the Brussels doves against the Frankfurt hawks. Normally, the outcome of that fight would be easy to handicap: the ECB holds most of the cards. But there are other considerations to bear in mind. The issue could play into discussions about who succeeds Christine Lagarde as ECB President in 2027. If the German economy remains stagnant, Chancellor Friedrich Merz might be well-disposed to someone a little less keen on ever-stronger capital buffers than his compatriot Frau Buch.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org ]]> Wed, 05 Aug 2026 00:10:00 +0400 <![CDATA[ Where Will Global Financial Fragmentation Lead? ]]> https://banks.am/en/news//31035 https://banks.am/en/news//31035 Şebnem Kalemli-Özcan, Professor of Economics at Brown University and Director of the Global Linkages Lab, is a former senior policy adviser at the International Monetary Fund and former lead economist for the Middle East and North Africa at the World Bank.

Şebnem Kalemli-Özcan 

The global monetary order is fragmenting. Each use of financial sanctions by the United States raises the option value of an alternative to the dollar, making diversification a form of strategic insurance. But while managed diversification is healthy, a disorderly scramble for the exits would not be.

Europe learned a version of this lesson in 2010, and its experience remains the best evidence we have about what currency unification can and cannot deliver. Since debates about geopolitical fragmentation always revive the late economist Robert Mundell’s dream of a world currency—or its modern variant of two leading currencies, the dollar and the euro—we should be mindful of the euro’s real-world experience over the past quarter-century.

The euro crisis was the perfect test of the optimal currency area (OCA) theory that Mundell had presented in his 1961 paper, because his criteria—factor mobility (especially that of labor), fiscal transfers, and symmetric shocks—turned out to be exactly the dimensions along which the eurozone would be challenged. A monetary union without a fiscal union and labor mobility, facing asymmetric shocks, behaved precisely as the theory predicted: it transmitted stress it could not absorb. The crisis thus seemed to vindicate Mundell’s OCA theory.

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Of course, OCA criteria are not fixed in time, but rather are shaped by economic integration itself. In a 2001 paper, my colleagues and I showed that regions and countries with more specialized production structures have output fluctuations that are less correlated with everyone else’s. Combined with our earlier finding that capital-market integration causes such specialization, we concluded that financial integration pushes shocks toward greater asymmetry.

We then described the mechanism behind this pattern in a 2003 paper, showing that the more a group can share risk—across German regions, US states, or EU countries, for example—the more its members can afford to specialize and trade. Thus, insurance buys specialization, which in turn buys trade and output asymmetry. The empirical upshot of Mundell’s theory is that regions within federations share risk heavily and specialize extensively, whereas sovereign countries share almost no risk at all. The euro, on this reading, still cannot be an OCA. It had the integration that drives specialization and asymmetry, but it lacked the federal insurance that makes asymmetry survivable.

Without such insurance, a single currency misallocates capital, leading to declining productivity. As we show in a 2017 paper, the interest-rate convergence that accompanied the euro’s arrival did send a flood of cheap capital into Spain, Italy, and Portugal—exactly the “downhill” flow the textbook promised. But the textbook also predicted that this capital would find its most productive uses, and it did not—a misallocation story. In economies with size-dependent financial frictions, the falling cost of capital drew investment toward firms with high net worth rather than high productivity. As the dispersion of returns to capital across firms widened, total factor productivity fell.

This pattern appears in Spain, Italy, and Portugal, but notably not in Germany, France, or Norway, where financial markets are deeper. The euro did not merely expose its members to asymmetric shocks they could not insure against; the capital it attracted was systematically misallocated, dragging down the productivity of the periphery.

So, these mechanisms explain why monetary union has proved so much harder in practice than its architects hoped. Could the world nonetheless converge to a durable dollar-euro duopoly? Current trends suggest not. Geopolitical fragmentation is pushing the system toward many currency blocs, not toward one or two central banks. The political logic of the moment favors assertions of monetary sovereignty of every nation, not its surrender.

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A generalized version of the European story is also the story of the past four decades of financial globalization. The textbook case for globalization in the 1990s promised that capital would flow downhill from rich economies to poorer ones, equalizing returns and accelerating convergence. Instead, the paradox that Robert Lucas had observed in 1990 held. Instead of capital flowing from developed to developing countries, China’s savings flowed to the US, producing the persistent imbalances and domestic grievances that now drive US trade policy. Likewise, integration was supposed to let countries insure one another against shocks. Instead, consumption remained less correlated than output across countries. It was the reverse of what efficient risk sharing predicts. The world got the contagion without the insurance.

What about the current digital-currency revolution? A naive reading casts it as a global-single-currency enabler; but, in practice, the opposite is happening. Stablecoins, the fastest-growing form of cross-border digital money, are roughly 97% dollar-denominated, and US legislation now deliberately channels digital-dollar activity into privately issued Treasury-backed tokens, with the explicit strategic aim of entrenching the dollar. As a response, China’s e-CNY—and perhaps a future digital euro—is being built as an instrument of national monetary sovereignty, for the express purpose of creating payment rails that can operate outside the dollar system. The technology that could in principle have delivered Mundell’s single world money is instead deepening dollar dominance and fortifying national monies. It is fragmenting, not unifying, the monetary order. It is only a matter of time before every country pushes for its own digital currency.

Mundell’s wished-for destination is unreachable because the world is nowhere near an OCA: labor does not move freely across borders; there is no global fiscal authority to transfer resources from booming regions to slumping ones; and shocks are profoundly asymmetric across countries. 

A single global currency would do to the world what the euro did to its periphery. It would drive further specialization and more asymmetry over time, with no fiscal union to insure against it. The man who gave us the tools to evaluate OCAs also gave us the decisive argument against the single world currency.

The international monetary system today is best understood not as Mundell’s map of regions choosing exchange-rate regimes, but as a network of trade and financial linkages through which monetary influence propagates. Resilience in such a system will come neither from a single global currency nor from a scramble into national fortresses, but from the deliberate management of the linkages that constitute the network.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Thu, 30 Jul 2026 22:30:00 +0400 <![CDATA[ The Mismeasure of Europe’s Economy ]]> https://banks.am/en/news//30993 https://banks.am/en/news//30993 Sami Mahroum, Founder of Spark X, previously held posts at INSEAD, the OECD, and Nesta.

The debate over European competitiveness has long focused on the widening gap with the United States. But that is the wrong question. What matters is not whether the gap is widening, but the fundamentally different mechanisms through which each economy creates wealth: Europe derives much of its wealth from accumulated assets; the US relies on the continual creation of new ones.

This distinction is at the heart of the debate over how to measure the US-EU productivity gap. Paul Krugman argues that, in terms of purchasing power parity, Europe’s relative position has remained broadly stable. Fellow Nobel laureate Philippe Aghion and his co-authors, for their part, contend that at constant prices, Europe has steadily lost ground since the 1990s. Both, however, are measuring the gap; neither explains what drives it.

Europe is indeed less productive than the US, and the gap has widened by constant-price measures. But Europe is also richer than it was a decade ago: output per capita has risen, and the European Union’s employment rate reached a record 76.1% in 2025. Moreover, Europe does not feel poorer, since much of its wealth is embodied in its cities, institutions, and reputation.

What has slowed, then, is not wealth accumulation itself but the rate at which it is renewed. Slower renewal, rather than decline, is the defining feature of what might be called a “stock economy,” in contrast to America’s “flow economy.”

“Stock” and “flow” are ideal types of wealth creation, not accounting categories. A stock economy generates steady returns from assets accumulated over time: historic cities, supplier networks, legacy brands, regulatory credibility, technical know-how, and the trust that lowers transaction costs. A flow economy must continually create new wealth through frontier innovation, entrepreneurship, and rapid scaling. Europe relies heavily on inherited coordination, whereas America depends on perpetual renewal.

To be sure, Europe’s stock is far from passive. Dense supplier networks, reputational capital, and institutional credibility generate genuine productive efficiencies. Once such assets are in place, however, some of the value they generate takes the form of economic rents instead of rewards for productive investment. Landowners in prime locations, incumbents sustained by legacy brands, and protected sectors capture that surplus by controlling inherited assets. The same stock that creates efficiency also fosters entrenchment.

Milan’s fashion ecosystem illustrates how accumulated cultural resources translate into what economists call “amenity value.” As Leïla Kebir and Olivier Crevoisier’s work on the cultural geography of Swiss watchmaking shows, such inherited cultural resources continue to shape contemporary production. Simply by carrying a Milan address, a new fashion label can command an instant premium, as the location itself signals heritage, taste, and authenticity.

The distinction between stock and flow economies has significant implications for the productivity-measurement debate. Because national accounts record both actual and imputed rents as output, part of what both Krugman and Aghion treat as productivity gains reflects returns on inherited assets rather than newly created wealth.

The productivity gap, in other words, reflects not only varying levels of dynamism but also the extent to which output comes from inherited assets rather than new wealth creation. A study of the economic impact of UNESCO World Heritage designations in Italy found that listed localities experienced faster growth in both resident populations and the share of high-income taxpayers, fueling demand for luxury housing. Strip away those passive legacy rents, and Europe’s dynamic core might look thinner than either Krugman or Aghion acknowledges. Viewed this way, Europe is less an economy in decline than one living comfortably off a remarkable inheritance while struggling to convert it into new growth.

Nowhere is the distinction clearer than in each economy’s signature industries. Europe’s defining global industry is luxury: a stock-based sector in which heritage and reputation become more valuable with time. America’s economic flagships are software and, increasingly, AI, where value depends on pushing the technological frontier.

The limits of the stock economy become apparent when firms try to scale. While Europe is home to more than 35,000 startups and many world-class companies, scaling is fundamentally a flow process. Europe’s capital is abundant but rooted, its talent is embedded in existing institutions, and its markets remain fragmented.

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As a result, European savings are largely invested abroad. According to the European Parliament, roughly €300 billion ($343 billion) in savings leave the EU each year, much of it funding American innovation. In his 2024 report on European competitiveness, former Italian Prime Minister Mario Draghi reached a similar conclusion: Europe struggles to translate its scientific excellence, vast savings, and industrial depth into rapidly scaling firms.

Yet Europe has several institutional mechanisms for turning stock into flow. The first is the corporate spin-off, which allows incumbents to serve as incubators. ASML, the Dutch maker of the advanced lithography machines essential to semiconductor manufacturing, emerged as a joint venture between Philips and ASM International before becoming an independent company. NXP and Signify were spun off from Philips, and Infineon from Siemens. Each converted accumulated capabilities into firms built for a new technological cycle.

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The second mechanism is the joint venture, which pools established capabilities into a new industrial champion. Airbus, created by combining Europe’s national aerospace champions, became Boeing’s only serious rival. The creation of STMicroelectronics through the merger of French and Italian semiconductor firms followed the same logic.

Last but not least is the recycling of accumulated wealth into patient capital. The Novo Nordisk Foundation, for example, channels the returns from one generation’s success into the next generation of research and firms.

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These mechanisms are not European versions of the Silicon Valley playbook. They represent Europe’s own way of turning inherited assets into new growth engines. Europe’s mistake over the past few decades has been trying to graft a venture-capital‑driven flow economy onto a stock‑based socioeconomic architecture built around powerful incumbents, stable rents, and incremental change. The result has been a series of sporadic VC booms that failed to transform the broader economy.

Rather than imitating Silicon Valley wholesale, Europe’s challenge is to build institutions capable of unlocking trapped resources: incumbents that spin off new firms, national champions that pool capabilities, and foundations and family capital that support startups as they scale.

Seen through this lens, the Krugman-Aghion debate is less about choosing the right productivity metric than about what those metrics leave out. Although they do a good job of measuring productivity at the technological frontier, they do not capture how much of Europe’s apparent performance rests on inherited assets whose productive potential remains unrealized.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Fri, 24 Jul 2026 22:15:00 +0400 <![CDATA[ Postmodern Economics ]]> https://banks.am/en/news//30997 https://banks.am/en/news//30997 Angus Armstrong is a research professor at the Institute for Global Prosperity at University College London, Director of Rebuilding Macroeconomics, and Chief Economic Adviser at Lloyds Banking Group.

If it is true that art imitates life, works of imagination can reflect underlying truths about our own experience. The English artist David Hockney, who died last month, certainly understood that. In reflecting on his brilliant and endlessly joyful work, even the most dismal-minded economist might learn something about how to interpret reality.

Hockney saw that art comes not just from the mind but, more precisely, from memory. Like memory, art is always necessarily interpretative—never a perfect copy—and different artistic schools and movements reflect different ways of interpreting reality.

Modernists, for example, consider the world to be generally knowable as a domain where structure is roughly stable and scientific discovery always leads to progress. Such a perspective is rather idealistic, relying on minimal principles to reveal an inherent order, as in Piet Mondrian’s mesmerizing abstract lines and blocks of bright color.

Modern macroeconomics is similar. On the basis of a few simple axioms about human decision-making and an assumption about how we form consistent expectations, economists have developed a grand theory of how the economic system works. With the right parameters, the thinking goes, we can study the workings of the economy with confidence that we have the right representation of reality.

The validity of this approach goes back to 1954, when the discipline developed a formal proof of the existence of a perfect equilibrium under ideal economic conditions. This work elevated the profession to the “queen of the social sciences,” thanks to its quantitative rigor and application to related disciplines.

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For policymakers the message could not have been simpler: Fashion the world in the image of economists’ ideal conditions and you can be free of messy normative or political judgments about the distribution of resources. Yes, reality is a bit more complicated, but complexities can be ironed out by using inflation targets and fiscal rules to head off any wandering expectations.

We have now seen six British prime ministers in the past decade set out their economic strategies using almost exactly this framework. It has not gone particularly well, but we seem to be trapped in the same way of thinking.

Hockney had a different sense of reality. Eschewing the idea of a single truth, he showed that the world unfolds before us in ways we cannot fully understand. We have different perspectives on reality, which is itself indeterminate.

The actual economy is not some isolated knowable system of causal relations that are occasionally perturbed by an external shock. Economist Armen Alchian reminded us long ago that our axioms are not a description of human behavior and decision-making processes, only a simplification.

Yet uncertainty need not leave us paralyzed. On the contrary, Frank Knight suggested a century ago that intelligent life probably would not even exist without uncertainty, and George Shackle maintained that living with uncertainty is the price we pay for having an imagination. We don’t just rationally choose between existing products. We create knowledge for ourselves by seeking to harness the inherent uncertainty of experience.

We all must plan ahead. But if the future cannot be known, the question is how we approach forecasting. Former US Federal Reserve Chair Ben Bernanke recommended that the Bank of England consider “alternative modeling frameworks,” even heterodox models. This is consistent with Hockney’s insight. If economic forecasting is to be a useful practice, it must account for different perspectives.

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If economists were to reduce the weight on equilibrium models, we could then explore other potential outcomes. Doing so might call our attention to parameter values where dynamics change, causing cascades of economic activity (or tipping points) that are much more important for decision-makers to be aware of. It may well reveal areas where the economy is developing serious problems—a truly worthy contribution to the debate.

Since a single model tells only a single story, those who cling to it can easily end up trapped in TINA (there is no alternative) thinking—as British prime ministers have done. The only logical response is to use alternative models. When these contradict one another, we can still make decisions on the basis of John Maynard Keynes’s “balance of evidence,” rather than sticking to the pretense of knowledge.

Even in the messier world of fiscal policy, we continue to estimate the precise long-term impact of public investment by using a very conventional production function. Alfred Marshall may have established organization as a fourth factor of production, but since such functions ignore any change in organizations, alternatives are never considered. Robert Solow was right to caution that production functions are only illuminating parables.

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Accepting radical uncertainty means accepting that knowledge is always fallible and incomplete, even with all the information that could possibly be gathered. This distinction will matter more and more as we deploy AI. Corporate board members still will need to “feel” satisfied—rather than simply being told—that all reasonable eventualities have been considered. That requires human involvement and knowing where outputs come from.

We will eventually follow Hockney’s footsteps into a world of postmodern macroeconomics, with uncertainty at its core, rather than an exogenous shock to an otherwise stable equilibrium. This economics will invite different perspectives and experimentation, and different institutions will support the creation of new knowledge. Our challenge will be to find the right structures, and to make way for a world in which crude utilitarianism gives way to justice, dignity, and fairness—values to which Hockney was deeply committed.

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Fri, 17 Jul 2026 22:35:00 +0400 <![CDATA[ Net profit of the Armenian banking sector in 1HY 2026 equals to approximately $573 million ]]> https://banks.am/en/news//31004 https://banks.am/en/news//31004 We are presenting to your attention summary of the results of the Armenian banking sector for 1HY 2026, prepared and published exclusively on Banks.am by a specialized consulting company RUMELS Management Solutions.

Ruben Melikyan has more than 25 years’ experience, as a successful c-level executive (CEO/CFO), with a successful track record leading diverse management teams in different areas, like audit, micro-finance, retail, FMCG and banking. Ruben Melikyan is an ACCA member; he graduated from Oxford University (EMBA) and received a Certificate on “Advanced Corporate Valuation” from NYU.

The purpose of this study is to analyze the main financial indicators of the Armenian banking system in 1HY 2026.

Net Profit

The total net profit of all Armenian banks during 1HY 2026 is equal to 214.3 bln AMD (USD 573 million), which is by 13,6 bln AMD, or by 6,8% more than it was recorded in 1HY 2025.

All banks registered a profit during the mentioned period.

The largest profit was recorded by Ardshinbank, amounting to 68,8 bln AMD. 


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Total loan portfolio

The total loan portfolio of the banking sector during 1HY 2026 increased by 11,4%.

As of 30.06.2026, the total loan portfolio amounted to 8,56 trillion AMD, and its share in total assets is 62%.

The mentioned total loan portfolio includes retail and corporate loan portfolios.


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The market share of 5 largest banks (Ameriabank, Ardshinbank, Acba bank, Inecobank  and Amio bank) by total loan portfolio is 65,1%.

Ameriabank has the largest market share - 22,9%.

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Bonds

During 1HY 2026, the total balance of bonds issued by Armenian banks increased by 304 bln AMD, or 57,8%.

The significant increase was primarily attributable to Ardshinbank’s issuance of USD 600 million in Eurobonds.

As of 30.06.2026, the total balance of issued bonds amounts to 830 bln AMD.

13 out of 17 banks issued bonds.

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Total Equity

During 1HY 2026, the total equity of the Armenian banking sector increased by 77 bln AMD, or 3,6% and amounted to 2.23 trillion AMD. 

This growth was mainly attributable to:

- Net profit of 214 bln AMD; 
- Increase of share capital of Amio bank and Fast Bank by 20 bln AMD and 5 bln AMD, respectively
- Declared dividends amounting to 169 bln AMD.
 
During 1HY 2026, 11 banks declared dividends amounting to 169 bln AMD

Ardshinbank - 100,3 bln AMD,
Ameriabank - 25,4 bln AMD,
Unibank - 9,3 bln AMD,
Inecobank - 9 bln AMD,
Acba bank - 7,5 bln AMD,
Evocabank - 5 bln AMD,
Converse Bank - 4,3 bln AMD,
AraratBank - 4 bln AMD,
Armeconombank - 2 bln AMD,
ArmSwissBank - 1,1 bln AMD,
VTB Bank (Armenia) - 0,76 bln AMD,

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To learn more about the financial analyses for mentioned and other periods, please follow this link. ]]> Fri, 17 Jul 2026 16:20:00 +0400 <![CDATA[ Europe's Competitiveness Bogeyman ]]> https://banks.am/en/news//30946 https://banks.am/en/news//30946 Daniel Gros is Director of the Institute for European Policymaking at Bocconi University.

Daniel Gros 

China looms large in trade-policy discussions everywhere, but the precise concerns vary. Whereas the United States has long regarded China as a destroyer of American industry and a geopolitical rival whose rise must be contained, Europe has been more concerned about the national-security implications of Chinese dominance in a few strategic sectors, such as rare-earth minerals. Recently, however, European policymakers have begun sounding more like their American counterparts, arguing that surging Chinese imports threaten domestic industry. 

While China’s dominance in sectors like rare earths always had strategic implications for Europe, it did not mean much for European employment or output. And the competitive pressures European Union firms did feel from China were largely offset by European industry’s strong foothold within China. 

This is now changing. European companies find it increasingly difficult to compete in the Chinese market, even if they are heavily invested there, while Chinese exports to Europe are surging. The EU’s bilateral trade deficit with China reached nearly €360 billion ($419 billion) last year—almost double that of the US—affecting many of Europe’s core industries, such as automobiles. 

Chinese exporters are bolstered by vast government subsidies and policies focused on ensuring dominance in high-tech industries, compounding Europe’s frustration. Now, calls for European leaders to protect domestic industry from Chinese competition are growing louder, with even figures who have criticized US President Donald Trump’s tariffs advocating for Europe to respond to “unfair” Chinese subsidies with levies of its own. 

It’s a politically potent argument, but it is not based on sound economics. Fairness does not factor into a rational economic policy. What matters is whether a given action—such as introducing tariffs or even disregarding World Trade Organization rules (because “others are doing it”)—would bring net benefits to the economy. And, in this case, the answer is no. 

It might seem obvious that imposing a tariff on imports from China would give European industry a leg up against its strongest competitor. But this protection comes at a high cost. For starters, intermediate inputs comprise over 40% of total EU imports from China, meaning that tariffs would increase the costs of production throughout the European economy. A tariff on batteries, for example, would place considerable strain on producers of battery electric vehicles, imperiling the EU’s large trade surplus in the sector. 

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This surplus is important. Warnings that Chinese imports pose a threat to European automakers usually focus on the number of Chinese vehicles entering Europe, noting that China-made cars now account for 7% of car sales in the EU. But nearly 40% of the EU’s total car production is for export, and the unit value of European auto exports is twice as high as that of imports from China. This implies that export markets may account for up to half the value of production. 

For the auto industry, like many others, success in export markets is necessary not only to survive, but also to retain technological leadership. For now, Europe is often exporting high-end differentiated products, which are not interchangeable with the imports China has to offer. But Europe’s advantage on this front is rapidly being eroded, as Chinese producers climb the quality ladder. 

It is far from clear that tariffs would preserve European competitiveness against Chinese exports that can compete in global markets on price, standards, and innovation. In fact, recent data show that the key problem for Europe is not so much surging imports, but the weakness of extra-EU exports, which have been declining for four consecutive quarters (until Q1 of this year). 

Tariffs might offer temporary relief to a few sectors, but they cannot restore technological leadership, industrial dynamism, or export competitiveness. Recent experience in the US reinforces this view: while Chinese exports to the US have fallen, this redirection of trade flows has not been accompanied by an American industrial renaissance. Production instead shifts to third countries, while higher input costs weigh on downstream industries. 

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The challenge for Europe today is not to shield itself from Chinese exports, but to remain competitive in spite of them. To this end, it should increase investment in innovation, pursue greater integration of the Single Market, work to lower energy costs, and pursue policies that strengthen its ability to compete globally. 

Where China raises genuine security risks—such as through its dominance in critical minerals or other strategically important products—targeted measures like stockpiling, supply-chain diversification, and expansion of strategic reserves are justified. But these are exceptions. For the bulk of European industry, success will depend not on keeping Chinese products out, but on ensuring that European products are still in demand globally. 

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Fri, 10 Jul 2026 22:30:00 +0400 <![CDATA[ “The determined succeed:” Discussion by Mughnetsyan and Parikyan Law Firms ]]> https://banks.am/en/news//30973 https://banks.am/en/news//30973 On June 19, a discussion on global business mobility, international investment opportunities – particularly in the United States – and investment-based immigration pathways was held in Yerevan. The event was initiated by Mughnetsyan & Partners Law Firm in cooperation with its U.S. partner, Parikyan Law Firm, and organized by AxelMondrian & Partners.

Banks.am attended the discussion and highlighted some of its key moments.

“15 years of experience – more than 10,000 legal cases and projects”

Edik Harutyunyan, Business Development and Communications Specialist, AxelMondrian & Partners, Discussion Coordinator

Today’s discussion is hosted by two respected law firms. Representing Armenia is Mughnetsyan & Partners Law Firm, with its Founding Partner Gnel Mughnetsyan and Managing Partner Tsoghik Muradyan. Representing the United States is Parikyan Law Firm, with its Founding Partner Kristine Parikyan.

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Founded in 2009, Mughnetsyan & Partners has grown into one of Armenia’s leading full-service law firms. Over more than 15 years of operation, the firm has handled over 10,000 legal cases and projects. This firm delivers innovative and practical solutions to complex legal challenges by combining deep legal expertise with extensive professional experience. Parikyan Law Firm, based in the United States, specializes in U.S. immigration law. The firm provides comprehensive legal services to individuals and businesses seeking to live, work, invest, or establish operations in the United States.

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It is no secret that when making business and investment decisions, entrepreneurs and investors primarily evaluate factors such as expected returns, potential risks, and the overall feasibility of a project. In recent years, however, investors – including those from Armenia – have increasingly taken into account the additional opportunities offered by the countries in which they invest. These may include more favorable tax and legal frameworks, greater global mobility, improved access to international markets, as well as pathways to residency or citizenship. 

Today, we will explore these opportunities through the insights and experience of representatives from these two law firms.

Residency opportunity: “Escape tool” or additional means for business development?

Gnel Mughnetsyan, Founding Partner, Mughnetsyan & Partners Law Firm

The idea of global business mobility should by no means be interpreted as an “escape tool.” In today’s economic environment, it should be understood that economic and entrepreneurial activities can also be carried out beyond the borders of the Republic of Armenia, within the framework of a transnational approach, creating numerous opportunities for business expansion.

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Today, we see that entrepreneurs who have concentrated their capital in one place, within a single jurisdiction, face numerous challenges. The primary goal of today’s meeting is to show our partners that there are opportunities to decentralize capital, on the basis of which one can also obtain residency status while carrying out transnational entrepreneurial activities.

Why has the U.S. been and continues to be viewed by investors as the most attractive destination?

Tsoghik Muradyan, Managing Partner, Mughnetsyan & Partners Law Firm

Summarizing the experience of our partners, I would like to mention a few reasons why the United States has always attracted investors.

The first factor is business scalability and global reputation. When a company transfers its assets to the United States, it makes its brand more reliable and stable. This also opens new opportunities in relations with financial institutions.

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Asset diversification is another significant factor, as the United States offers a stable economic and political environment, which has always been attractive to investors.

The third factor is the independent judicial system, under which property rights in the United States are protected as the highest value.

As mentioned, making investments and transferring assets can also lead to a certain legal status. In other words, by making an investment, you not only achieve a business outcome but also have the opportunity to obtain residency status.

“Making an investment alone is not enough to obtain residency status in the United States”

Kristine Parikyan, Founding Partner, Parikyan Law Firm

When investing in the United States, it is important to have proper planning from the very beginning. Setting clear goals is essential.

Today, several visa options are available to Armenian citizens. For example, the E-2 visa is one of the most common, based on the trade agreement between the United States and Armenia. 

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This type of visa allows you to obtain non-immigrant status if you invest more than $100,000. There is also the EB-5 program, which requires a larger investment and allows you to obtain a Green Card. Another option is the L-1 visa, intended for companies opening branches in the United States, which allows company managers or founders to relocate to the United States. Therefore, it is important to choose from the outset the option that best suits the company or the individual.

At the same time, it is important to understand that making an investment alone is not enough to obtain residency status, permanent residency, or citizenship. First, you need to demonstrate that your company is ready to begin operations and that you have employees in place.

“Can we get citizenship right away?”: stereotypes about the process

Kristine Parikyan, Founding Partner, Parikyan Law Firm

The first question we usually hear from clients is: “If we make a large investment, can we immediately obtain citizenship?” (smiles – ed.). Of course not. First, you need to obtain residency status, and only then can you talk about citizenship. In addition, you need to demonstrate the source of the investment, its legality, and undergo thorough checks of both the invested funds and the person making the investment.

Legal issues an Armenian company or individual interested in the U.S. market may face 

Tsoghik Muradyan, Managing Partner, Mughnetsyan & Partners Law Firm

First of all, as my colleague mentioned, it is important to demonstrate the source of the invested funds. This process must be completely transparent.

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The intellectual property sector is also an important consideration. If you have a registered trademark or another intellectual property asset in Armenia, you need to understand the mechanisms for protecting it in the international market as well. You should decide whether the company will operate under the same trademark and discuss this possibility with an American partner. The market is much larger, and a particular name may already be in use. Depending on the type of business, there may also be a need to relocate employees. Therefore, employment contracts, as well as all related formalities and regulatory requirements, should be clearly prepared.

Existing risks and “tempting” offers on social media

Kristine Parikyan, Founding Partner, Parikyan Law Firm

From an immigration perspective, the primary risk is, of course, denial. In particular, if an immigrant investor or another immigrant visa application (such as EB-5 or EB-1) is denied, the system records your immigration intent. This may later affect your ability to obtain non-immigrant visas (such as a B-2 tourist visa or other temporary visas), as applicants must be able to demonstrate that they do not intend to reside permanently in the United States.

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Today, social media is full of inaccurate information and “tempting” offers that can create risks. The only way to avoid them is to work with qualified professionals who have many years of experience in the field of immigration law.

“Armenian business is interested in the U.S. market”

Tsoghik Muradyan, Managing Partner, Mughnetsyan & Partners Law Firm

Armenian companies are definitely very interested in the U.S. market. I can say this based solely on the number of clients who have approached us on this issue. Moreover, the circle of interested businesses is quite broad. We are being contacted by representatives of companies operating in many different sectors. This strong interest served as the basis for today’s discussion. We want to clearly inform our partners about the challenges they may face and the solutions available to them.

Success comes only to those who make decisions

Gnel Mughnetsyan, Founding Partner, Mughnetsyan & Partners Law Firm

We have talked about procedures, but the number one guarantee of success in any business is determination. Ninety percent of the people in this hall are truly determined, and together with our professional knowledge, we will be able to make the right decisions.

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I believe that if a person is able to make decisions, they will definitely be successful. The people gathered here today are decision-makers.

Yana Shakhramanyan
Photos by Emin Aristakesyan

]]> Thu, 09 Jul 2026 16:55:00 +0400 <![CDATA[ Europe Needs the Digital Euro ]]> https://banks.am/en/news//30945 https://banks.am/en/news//30945 Brian Judge is Research Director of the Program on Finance and Democracy at the University of California, Berkeley.

Brian Judge 

After years of preparation, the EU’s three governing bodies—the European Parliament, the European Council, and the European Commission—are finally ready to begin formal negotiations on the digital euro. When they do, a project once conceived as a technocratic modernization of monetary infrastructure will become one of the most politically contested items on the bloc’s agenda. 

The Commission and the European Central Bank (ECB) have described the digital euro as an effort to adapt fiat currency to the digital age. That framing, while incomplete, carried the project through the technical preparation phase. It will not carry it much further. 

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The digital euro is not merely a technical upgrade. It is a political project in the long tradition of European institution-building, and its success or failure will ultimately depend less on engineering than on whether Europe’s leaders are willing to defend it. 

Resistance is likely to emerge from several directions. US President Donald Trump’s administration has adopted an openly hostile stance toward central bank digital currencies while promoting dollar-denominated private stablecoins. Russia will almost certainly treat the digital euro as another front in its hybrid war against Europe. And within the EU itself, Euroskeptics will seize on the project as proof of technocratic overreach and turn it into a magnet for conspiracy theories. 

European policymakers have spent years laying the technical groundwork for the digital euro. They must now approach the political struggle over its future with the same rigor. 

For nearly 80 years, Europe has pursued what the late British historian Tony Judt described as the construction of collective capacity to compensate for individual weaknesses. The European Coal and Steel Community, the common market, the single currency, the Schengen Agreement, and EU enlargement—each was an act of political will that helped turn the catastrophe of World War II into a durable system of shared institutions. Taken together, these efforts constitute one of the most successful political experiments in modern history. 

But Europe’s decades-long integration project is under immense strain. As Russia continues to wage war on Europe’s liberal democracies, American security guarantees can no longer be taken for granted. Meanwhile, China is reshaping global trade in ways that pose an existential threat to Europe’s industrial base. 

As German historian Kiran Klaus Patel has argued, the EU’s self-image has often outpaced its actual achievements. In practice, integration has been uneven, fueling resentments that far-right parties across the continent have exploited to gain power and undermine the European project. 

For many Europeans, “Europe” registers less as a political community than as a distant abstraction—a source of regulations, constraints, and acronyms that rarely improve daily life. The freedoms European integration has delivered are real but easily taken for granted. The costs, by contrast, are concrete and easy to resent. Any political project sustained by elite consensus and treaty law would be inherently fragile. 

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At the heart of this fragility is what the late German philosopher Jürgen Habermas described as the “lure of technocracy”: the temptation to advance European integration through mechanisms that circumvent the democratic publics in whose name it is pursued. 

The digital euro, conceived by experts in Frankfurt and Brussels, risks falling into the same trap, because decisions that are technically sound but poorly understood are easy targets for political attacks. A recent Bundesbank survey underscored the problem, finding that only 42% of Germans had heard of the digital euro, and just a quarter of those could accurately explain what it is. 

Habermas, however, pointed toward a remedy: a shared European identity grounded in broad participation in common institutions. The digital euro could provide precisely that kind of shared experience. Most forms of European integration, from regulatory harmonization to fiscal rules, remain invisible to ordinary citizens. But a digital currency would allow hundreds of millions of Europeans—most of whom know little about the institutional mechanics of integration—to interact daily with the same payments system, using the same interface, wherever they are in the eurozone. 

The single market has proved remarkably easy for American companies to dominate. About two-thirds of the eurozone’s credit-card transactions rely on Visa and Mastercard, and 13 of its 21 members lack a domestic alternative. Each transaction carries fees that function as a private tax on European commerce. The EU’s current push for strategic autonomy in defense, semiconductors, and cloud infrastructure means little if it does not extend to the payment systems that underpin Europe’s economy. 

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For a generation that has experienced integration primarily as a set of constraints, the digital euro could become a highly visible European institution that makes life easier. Few initiatives on the European agenda could demonstrate the tangible benefits of integration and cross-border cooperation as effectively. 

Whether the coming years re-establish the European project for a radically reconfigured world or mark the beginning of deeper fragmentation may well depend on how the debate over the digital euro plays out. A united EU would remain a continental power uniquely committed to liberal democracy, human rights, and a sustainable future, while a fractured Europe would be far more vulnerable to external coercion. 

The ECB cannot make the political case for the digital euro. The European Commission, national governments, and the European Parliament must do so. And they must be honest about what they are defending: the digital euro is not simply an effort to modernize the eurozone’s payments system; it is a European institution that happens to take the form of a payments system. 

Policymakers must make that case clearly and forcefully. The digital euro must not become another technocratic artifact, imposed from above and widely distrusted. It must be a living expression of Europe’s highest ambitions. 

Copyright: Project Syndicate, 2026.
www.project-syndicate.org 

]]> Sat, 04 Jul 2026 00:04:00 +0400 <![CDATA[ The Microfinance Debate Is Missing the Point ]]> https://banks.am/en/news//30918 https://banks.am/en/news//30918 Sophie Sirtaine is CEO of the CGAP. 

Buhle Goslar is Executive Committee Chair of the CGAP and Chairman of the Board of Directors of Lula.

Over the past five decades, microfinance has grown into a $1.5 trillion global industry, reaching hundreds of millions of households that conventional banks have never served and likely never would. It has enabled unbanked people around the world to start businesses, build assets, keep children in school, and withstand shocks that might otherwise have been devastating. 

Yet microfinance has also faced vocal criticism. In some markets, rapid expansion has outpaced consumer protections, leading to over-indebtedness and encouraging lenders to prioritize commercial interests over client welfare. 

These concerns should be taken seriously. Any industry that serves millions of people—from consumer goods to construction and manufacturing—has had to confront issues like poor governance, bad actors, and harmful practices by strengthening safeguards and improving standards. Microfinance is no exception. 

For too long, however, the industry has been focused on the wrong question: Does microfinance work? Decades of randomized controlled trials, whose findings on average were often treated as definitive yes-or-no verdicts, have reinforced a deeply misleading framing. Asking whether microfinance works is like asking whether a certain medicine works without specifying the patient, dose, or condition being treated. 

A recent analysis by the CGAP—an inclusive finance innovation lab (of which one of us is CEO)—helps move the conversation forward. Drawing on more than 400 impact studies, it replaces the facile question of whether microfinance works with more useful ones: When does credit create opportunity? When does it strengthen resilience? When does it leave people worse off? Why do outcomes vary so dramatically across borrowers and markets? 

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These questions can offer microfinance institutions—as well as the investors, donors, and capital markets that fund them—a stronger basis for decision-making. Identifying the conditions under which microcredit creates value or causes harm can lead to better investment strategies, more effective regulation, and ultimately, better outcomes for the people it aims to serve. 

The analysis highlights five factors that largely determine whether credit helps or harms: who receives the loan, how the loan is designed, what it is used for, where it is offered, and when it becomes available. 

Microcredit tends to work best when borrowers already have some experience running a business and control how the funds are used. It is also more effective when repayment schedules are aligned with household cash flows, rather than following demanding, rigid weekly installments, and when loans finance investments that generate steady returns over time. 

Pay-as-you-go solar is a prime example. Households that cannot afford a large upfront purchase can often manage small monthly payments that are lower than what they previously spent on kerosene. Here, microcredit finances an investment that quickly pays for itself. 

Microcredit can play an equally important role in strengthening resilience, though its benefits are often underestimated by randomized trials that focus on short-term changes in income or consumption. A family that uses financing to acquire a productive asset—a solar panel, a water pump, or income-generating equipment—is often better positioned to withstand a bad harvest, a medical emergency, or an economic shock. While this buffer effect may not show up in an 18-month trial, it is real and well-documented. 

The evidence on enterprise growth is similarly encouraging. For existing business owners, access to well-structured loans is consistently associated with higher profits, greater investment, and expansion. The mechanism is straightforward: credit acts as a lever, enabling entrepreneurs who already have customers, skills, and viable opportunities to invest and grow faster. 

Women’s economic empowerment offers another powerful illustration of how the same loan can produce very different outcomes. Women account for the majority of microfinance borrowers worldwide, and when they control how loans are used, the benefits often extend throughout the household, leading to higher spending on children’s health and education, more diversified income sources, and greater financial security. 

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But a loan issued in a woman’s name and controlled by someone else, such as a spouse or male relative, can leave her with the obligation to repay without any power over how the money is used. Direct disbursement into women-controlled accounts, transaction privacy, and products that reflect how women actually work and make decisions are therefore essential for credit to translate into genuine economic empowerment. 

The practical implications for providers and investors are clear. Rather than focusing solely on point-in-time repayment capacity, they should assess the viability of the opportunities borrowers intend to pursue and design products that align with how people earn and invest. 

To be sure, responsibility does not rest with providers alone. Regulators also play a critical role in facilitating responsible lending at scale, while evaluators must measure the impact of microcredit over periods long enough for its full effects to become apparent. 

The debate over the virtues and limitations of microfinance has obscured a crucial fact. Microcredit itself is neither inherently good nor inherently bad; its impact depends on how it is designed, delivered, and regulated. And even then, credit is only part of the financial toolkit people need, alongside insurance, savings, and payments. 

Responsibility therefore rests with all participants, from the institutions that provide credit and the investors and donors that fund it to the governments that oversee it. 

Rather than continuing to ask settled questions, the focus should be on the hundreds of millions of people who depend on microcredit. We now have a far clearer understanding of what separates success from failure than we did a generation ago. The challenge is to put that knowledge into practice. 

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Sat, 27 Jun 2026 10:10:00 +0400 <![CDATA[ The AI Economy's Permanent Underclass ]]> https://banks.am/en/news//30901 https://banks.am/en/news//30901 Kenneth Rogoff

The San Francisco Bay Area is in the midst of an AI frenzy that makes the California Gold Rush of the mid-19th century look like a scavenger hunt. Top programmers and developers are being offered compensation packages worth hundreds of millions of dollars to switch firms, while young engineers lucky enough to have joined leading AI startups early are contemplating retirement before age 35. 

Driving up the Bayshore Freeway from San Francisco International Airport into the city, you pass hyper-specific billboards advertising obscure AI applications seemingly aimed at absurdly niche audiences. How can that possibly be profitable? The answer is that in a city crawling with startups, getting the right software product in front of a founder whose company could soon be worth billions of dollars is far more lucrative than using billboard space to sell burgers or laundry detergent. 

Yet beneath the frenzy lies a palpable anxiety, as members of this young super-elite fear that their startups may not be the ones to win the AI sweepstakes. Failure, in their eyes, means being left behind while AI automates large swaths of white-collar work—especially coding jobs, which until now have been a veritable license to print money—and falling into the ranks of the permanent poor. 

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Though economists still debate whether AI will destroy jobs or create them, the prevailing mood in Silicon Valley is far more pessimistic. Either your startup makes it within the next five to ten years, the conventional wisdom holds, or you’d better pray the government provides a generous universal basic income. 

Despite US President Donald Trump’s efforts to pull Silicon Valley into the MAGA orbit, American-style progressivism continues to dominate Bay Area culture. Most of California’s young tech strivers still see themselves as dyed-in-the-wool progressives—enthusiastic supporters of taxing the rich, at least until they become rich themselves. 

Yet for all their virtue signaling, Silicon Valley elites seem strangely oblivious to the fact that the vast majority of people left behind by the rise of AI will not live in the United States. Nor will they live in countries that have secured a place in the AI supply chain, such as South Korea, Japan, and Taiwan. 

While South Korean firms like Samsung and SK Hynix have become trillion-dollar giants on the back of AI’s insatiable demand for advanced memory chips, Europe has produced far fewer success stories. ASML, the Dutch firm that holds a near-monopoly on the high-end lithography machines needed to manufacture the world’s most advanced semiconductors, is a rare exception. The picture is even bleaker in Africa and Latin America, which have yet to produce anything remotely comparable. 

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Countries that fail to carve out a place for themselves in the emerging AI economy risk ending up on the losing side of this century’s most consequential economic transformation. With no windfall profits to redistribute and no surge in tax revenues to finance universal basic income, they could find themselves with no way to cushion the shock of mass job displacement. 

This is not simply a story of political incompetence or lack of ambition. How can African firms compete when hundreds of millions of people across the continent still lack access to electricity, the most basic prerequisite for AI infrastructure? And how can Latin American countries finance massive investments in data centers when savings rates remain low and a history of recurring debt crises continues to deter foreign capital? 

To be sure, some African and Latin American countries stand to benefit enormously from AI’s voracious appetite for minerals like copper, rare earths, lithium, nickel, cobalt, gallium, and germanium. Chile, Peru, and Mexico are obvious candidates, but even the cobalt-rich Democratic Republic of the Congo could reap substantial rewards if its brutal civil war ever subsides. 

Natural-resource wealth, however, has often proven to be as much a curse as a blessing. Mineral-rich countries may find themselves flush with AI-driven revenues and still lack the political and economic institutions needed to spread the gains across society. 

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India, meanwhile, faces a very different set of risks. With AI devouring mid-level white-collar workers like plankton, India’s vast outsourcing industry could be among the hardest hit. Given its deep reserves of creative and technical talent, India could still emerge as one of the major winners of the current tech race, alongside the US and China. But the country has struggled to harness that potential at home, allowing many of its brightest minds to migrate to California. Trump’s immigration crackdown may slow that brain drain, though whether that ultimately benefits India remains an open question. 

China, for its part, is already an AI powerhouse. But even there, the government is only beginning to grapple with the implications of AI-driven job displacement. Even if the country wins the AI race, maintaining social stability could prove difficult without expanding the social safety net. 

The US may be more dynamic, but it is hardly better prepared for AI’s likely impact on labor markets. To avoid deepening social fractures, it will need to find ways to distribute the benefits of AI more broadly rather than allowing them to remain concentrated in the hands of a small group of first movers and tech billionaires. 

But the danger is not confined to national borders. AI threatens to widen the gulf between technological winners and losers, enabling wealthy countries to reap the rewards while consigning billions of people across the developing world to fall ever further behind. No one really knows what such a world would look like, let alone how to keep it from tearing itself apart. 

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Wed, 24 Jun 2026 22:35:00 +0400 <![CDATA[ The Root of Today's Global Imbalances ]]> https://banks.am/en/news//30884 https://banks.am/en/news//30884 Lee Jong-Wha, Professor of Economics at Korea University, is a former chief economist at the Asian Development Bank and a former senior adviser for international economic affairs to the president of South Korea.

Global imbalances are again dominating international economic debates, and with good reason. Large and persistent imbalances often end badly, whether in abrupt capital-flow reversals, exchange-rate volatility, geopolitical conflict, or, as in 2008, financial crisis. And with the United States now running significant current-account deficits, and China having returned to substantial surpluses, fears that the world is headed toward another reckoning are mounting. 

To be sure, today’s imbalances are smaller than those that preceded the 2008 global financial crisis. Last year, the US current-account deficit approached 3.6% of GDP, compared to its pre-2008 peak of 6%, and China’s surplus was 3.7% of GDP, compared to over 9% before the crisis. But the gaps are widening—and, unlike in the mid-2000s, this is happening against a backdrop of heightened uncertainty about economic security, supply chains, reserve currencies, strategic competition, and financial stability. 

These imbalances have contributed to a resurgence of protectionism, particularly in the US, with President Donald Trump using America’s trade deficits to justify sweeping tariffs. European leaders, for their part, have sharply criticized Chinese industrial overcapacity in electric vehicles, batteries, and solar panels. Because “China Shock 2.0” is concentrated in these higher-end sectors (which also include semiconductors and robotics), rather than low-cost consumer goods, it is putting pressure on advanced-economy producers and impeding industrial-upgrading efforts across the developing world. 

But today’s persistent imbalances are not just a trade issue. As recent analyses by the International Monetary Fund, the G7, and the Bank of England show, they are driven primarily by domestic saving and investment dynamics. 

In the US, the core problem is fiscal dissaving. While the US runs large budget deficits and racks up external liabilities, it continues to attract a huge volume of foreign capital. This partly reflects enduring demand for dollar assets—an upshot of the dollar’s reserve-currency status. America’s technological leadership has further made the US financial assets all the more appealing to foreign investors. 

As a result, the US has been able to sustain external deficits for far longer than most countries, contributing to growing financial vulnerabilities that extend well beyond the US. Global investors are heavily exposed to dollar assets and US equities and bonds, and their investment portfolios are highly concentrated in a narrow set of assets, particularly AI-related equities. A sharp correction in US markets would thus reverberate rapidly across the global economy. 

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China’s surplus reflects the opposite dynamic: weak domestic demand relative to productive capacity. The causes include the property-sector downturn, high precautionary household saving in the face of an incomplete social safety net, and demographic pressures. While industrial policy has reinforced these trends, it cannot fully explain China’s surplus. 

This distinction matters because it alters the policy implications. If industrial subsidies and trade barriers were the main problem, tariffs might offer a solution. But if the underlying issue is a structural imbalance between savings and investment, the impact of trade measures will be limited. In fact, recent IMF research shows that exchange-rate movements and supply-chain adaptation offset much of the tariffs’ long-run effect on current-account balances. 

Ultimately, global imbalances are domestic problems requiring domestic solutions. The US must gradually reduce its fiscal deficits and boost financial resilience, and China must increase domestic consumption by strengthening its social safety net, supporting household income, allowing gradual real exchange-rate appreciation, and facilitating greater two-way capital flows. Reining in support for manufacturing and expanding high-value services would also support China’s shift toward consumption-led growth. 

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These adjustments are in both countries’ interest. Debt-financed consumption and rising external liabilities are no more reliable a long-term growth strategy than dependence on external demand. 

While the prescription is fundamentally domestic, international coordination is also essential. After all, a disorderly adjustment could lead to financial instability, exchange-rate volatility, and sudden stops in capital flows, which would hit emerging economies hard. 

The central challenge today is thus not simply to reduce trade imbalances. It is to manage the financial vulnerabilities created by massive and concentrated global capital flows—vulnerabilities that are exacerbated by rising leverage in non-bank financial institutions, concentrated portfolio positions, bubbly valuations for US technology equities, and mounting pressures in sovereign-bond markets. 

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To this end, the US and China should correct their respective domestic imbalances gradually and responsibly. But other major powers and international institutions must also do their part. The IMF, the Bank for International Settlements, and the Financial Stability Board should strengthen surveillance of cross-border capital flows, leverage, and liquidity mismatches, while enhancing macroprudential coordination, stress testing, and crisis-prevention mechanisms. While grand macroeconomic bargains like the Plaza Accord of the 1980s are unrealistic at a time of geopolitical fragmentation, the G7 and G20 can also make a difference by promoting transparency, dialogue, and coordination. 

While today’s imbalances are linked to trade, they are driven primarily by domestic saving-investment dynamics and the interaction between geopolitical rivalry, technological competition, and concentrated global capital flows. Only by recognizing this and taking coordinated action to manage the associated risks can the world prevent today’s tensions from erupting in another global economic crisis. 

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Mon, 22 Jun 2026 22:30:00 +0400 <![CDATA[ PPLS Rooms Co-living and Villa3 Community Hub Open in Dilijan as Part of Green Rock’s Mixed-Use Development ]]> https://banks.am/en/news//30870 https://banks.am/en/news//30870 Two new projects — PPLS Rooms Co-living and Villa3 Community Hub — have officially opened in Dilijan. Both projects form part of Green Rock’s broader development strategy for Dilijan. The projects will be operated by Green Rock Operations. 

The new projects support a range of ways people engage with the city — from short stays and study programs to long-term living, remote work, and entrepreneurship. 

PPLS Rooms Co-living: Affordable and Modern Living in Dilijan 

Located at 142/3 Myasnikyan Street, just a few minutes from the city center, PPLS Rooms was developed in response to the growing demand for affordable, high-quality accommodation in Dilijan. The project is designed to accommodate both short-term visitors and long-term residents. 

The co-living features 60 rooms and can accommodate up to 120 residents at a time. The building combines shared and private living options: the lower floors are organized around a shared living concept, with shared kitchens and common areas, while the upper floors offer more private accommodation options. 

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PPLS Rooms is designed for a diverse audience, including students, professionals, company employees, freelancers, tourists, and long-term residents. The project is expected to welcome up to 8,000 guests and residents annually. 

The property is located in a part of Dilijan that has historically seen less tourism and business activity. By attracting a steady flow of residents and visitors, the project is expected to generate demand for local services and contribute to the development of the surrounding neighbourhood. 

Villa3 Community Hub: A Space for Work, Creativity, and Collaboration 

Villa3 Community Hub is a new community space designed to foster connections, exchange ideas, and support collaborative projects. 

The hub is intended for both local residents and visiting professionals, digital nomads, students, entrepreneurs, and members of the creative industries. Villa3 includes coworking areas, meeting rooms, a library, a lecture space, lounge areas, and an outdoor terrace. 

The interior design was developed in collaboration with the international architecture and design studio IND. One of the hub’s signature features is a central fireplace created from recycled plastic using 3D-printing technology. 

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Villa3 has also completed an EDGE assessment, an international standard that measures the environmental efficiency of buildings. According to the assessment, the project is expected to reduce energy use by 35%, water use by 30%, and the carbon footprint of building materials by 39%. 

The concept of Villa3 is inspired by the idea of the “third place” — a space that exists between home and work, where people can gather, connect, and build community. For growing cities, such spaces play an important role in modern urban development by helping attract talent, encouraging collaboration, and strengthening local communities. 

Vazgen Gevorkyan, Strategic Advisor of Green Rock: 

“Dilijan has changed significantly over the past few years and is becoming increasingly recognized as an international destination. At the same time, people’s expectations of the city are evolving — they need modern spaces for living, working, and learning. 

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PPLS Rooms and Villa3 are part of this transformation. Our goal is to create an environment that is attractive to young families, professionals, students, and everyone who sees their future in Dilijan. Green Rock views this work as a long-term commitment to the city and its community. 

We are grateful for the trust we experience from the local community. Meaningful development is only possible when it happens in partnership with the people who live here.” 

Katerina Danekina, CEO of Green Rock: 

“As Dilijan continues to grow, the city needs not only new jobs but also the infrastructure that supports everyday life. Over the coming years, Green Rock’s projects are expected to create up to 800 jobs, and it is important for us that housing, workspaces, and community infrastructure develop alongside that growth. 

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PPLS Rooms and Villa3 are part of this effort. These spaces help the city welcome more students, professionals, entrepreneurs, and visitors, while also creating new opportunities for local businesses and services.” 

About Green Rock and Green Rock Operations 

Green Rock is a company rooted in Dilijan, developing large-scale territorial projects by shaping ecosystems of the future. We work at the intersection of infrastructure, culture, education, and economy — designing spaces that are locally grounded and globally relevant. 

Green Rock Operations is an operational and management company focused on launching, developing, and efficiently running projects in the hospitality, real estate, and lifestyle sectors. It provides a full cycle of operations, from concept development and business model creation to day-to-day management and financial performance control.  ]]> Thu, 18 Jun 2026 12:25:00 +0400 <![CDATA[ Why Isn't Europe Poorer Than the US? ]]> https://banks.am/en/news//30841 https://banks.am/en/news//30841 Dalia Marin, Professor of International Economics at the School of Management of the Technical University of Munich, is a research fellow at the Centre for Economic Policy Research.

Dalia Marin 

The Nobel laureate economist Paul Krugman has kicked off an important debate by questioning whether Europe is really in decline, as former European Central Bank President and former Italian Prime Minister Mario Draghi argued in his 2024 report on European competitiveness. 

In several commentaries, Krugman shows that when relative European GDP is measured at current PPP prices (that is, GDP adjusted for differences in countries’ overall price levels), rather than GDP per capita at constant prices, Europe is holding up well relative to the United States. Europe should therefore not be overly concerned about technological inferiority and instead appreciate the standard of living it has achieved. If we want to know who enjoys a higher standard of living, the relevant measure is the purchasing power of income—namely, GDP per capita at current PPP prices. 

According to this measure, Europe is performing as well as the US. But, as Krugman himself points out, this raises an empirical puzzle: how can Europeans enjoy the same standard of living as Americans despite significantly lower productivity growth, as reflected in lower per capita GDP growth at constant prices? 

GDP at constant prices captures productivity growth over time because it measures the volume of output produced per hour worked. As Draghi emphasized, US productivity growth has been driven primarily by Silicon Valley. The US produces and consumes the leading high-tech products, whereas Europe largely consumes them without producing them. If Silicon Valley is excluded, the productivity gap between the two regions largely disappears. 

But the London School of Economics economist Luis Garicano responded that Krugman’s argument is flawed because it neglects the positive spillover effects of innovation in Silicon Valley, reflected in substantially higher wages throughout the economy than comparable workers in Europe receive. Nobel laureate economist Philippe Aghion, Antonin Bergeaud of HEC Paris, and Garicano further argued that Krugman relies on the wrong measure of productivity. 

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But does it really matter for Europeans’ standard of living where innovation occurs? Innovation certainly matters for economic growth, but not necessarily for a country’s standard of living. The goods produced in Silicon Valley have become steadily cheaper over time due to domestic and international competition, which forces IT firms to pass productivity gains on to consumers in the form of lower prices. 

As a result, the purchasing power of European consumers has risen alongside that of US consumers. Europe has benefited from adopting technologies developed elsewhere. Krugman’s “paradox” is resolved: Europeans produce less per hour worked compared to Americans, but their income can nevertheless buy just as much because Europeans have benefited from trade with the US. 

This argument is supported by the seminal work of Gene Grossman of Princeton and Elhanan Helpman of Harvard examining the determinants of economic growth and welfare in countries engaged in worldwide innovative activity. A country that falls behind in innovation, such as Europe, may lose an ever-growing share of world markets, and its growth rate may decline as international competition eliminates the duplication of innovation efforts. Yet despite slower growth, the lagging country may still gain in terms of economic welfare, because international competition among firms with monopoly power ensures that consumers benefit from innovations taking place in the more innovative country. 

In short, European consumers can enjoy all the benefits of the products invented in Silicon Valley. Large monopoly profits for US firms do not alter this conclusion, so long as IT prices decline as much in Europe as they do in the US, which they largely do. 

But Europe does need to worry about economic growth. Its largest economy, Germany, has been stagnating since 2019, as measured by GDP at constant prices. Germany’s weak economic performance has far more to do with China than with the US, despite US President Donald Trump’s tariffs. The turning point in Germany’s economic fortunes roughly coincided with China’s rapid growth in technological capacity and meteoric rise in high-value exports, reflected in its position as a global innovation leader in green and digital technologies. 

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This has hit Germany hard because China is now challenging several of its most R&D-intensive sectors, including automobiles, machine tools, and chemicals. With Germany losing global market share to China in precisely these core industries, economic growth has come to a standstill. If this continues, Germany—and Europe more broadly—may lose out not only in terms of innovation, but also in terms of living standards, despite benefiting from cheaper imports of Chinese electric cars and machine tools. 

Economic growth depends on the amount of inputs, such as labor and physical capital, that an economy employs to produce output. American GDP per capita is higher in part because Americans work more. Germany’s labor input, by contrast, is low compared with other countries: employees work about 1,350 hours per year on average, compared with 1,500 in France and 1,800 in the US. 

Concerned about falling living standards after seven years of economic stagnation, German authorities plan to increase the number of hours worked. In particular, policymakers want to strengthen incentives for women’s participation in the labor market by removing tax advantages that encourage mothers to stay at home. 

This has some logic. Average annual hours worked are relatively low in Germany because many women entered the labor market through part-time employment. While this increased labor-force participation, it reduced the average number of hours worked per employee. Germany has one of the highest labor-force participation rates in the OECD, but its average annual working hours are among the lowest. 

Unfortunately, increasing labor input is unlikely to be enough to revive Germany’s economy. By far the most important determinant of long-term economic growth is a country’s ability to innovate and generate new ideas. Yet Germany risks losing precisely those industries that have historically driven its economic success to China, where much of the recent innovation in these sectors has taken place. Not only is economic growth (GDP per capita at constant prices) at stake for Germany and Europe; so is their standard of living (GDP per capita at PPP prices). 

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The debate launched by Krugman ultimately highlights the distinction between economic growth and economic welfare. Europe has so far been able to maintain living standards despite lagging behind the US in innovation, largely because globalization has allowed European consumers to benefit from technological advances developed elsewhere. 

But this advantage cannot be taken for granted indefinitely. As Germany’s experience illustrates, a prolonged loss of innovative capacity and industrial competitiveness can eventually translate into slower growth, weaker incomes, and declining living standards. 

Increasing labor supply may provide a temporary boost to output, but it cannot substitute for the creation of new technologies and industries. Europe’s long-term prosperity depends not on working more hours, but on restoring its ability to innovate and compete at the technological frontier. 

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Sat, 13 Jun 2026 23:05:00 +0400 <![CDATA[ Fiscal Discipline Requires More than Rules ]]> https://banks.am/en/news//30828 https://banks.am/en/news//30828 Antonio Fatas is Professor of Economics at INSEAD and Vice President at the Centre for Economic Policy Research in Paris.

Government debt in several advanced economies is now at its highest level outside wartime, and emerging-market debt has been steadily rising over the past decade. With interest rates no longer at record lows (as they were after the global financial crisis of 2008), concerns about fiscal sustainability are growing. 

The question of how to restore sustainability is hardly new. Policymakers and academics have debated for decades the policies and institutions needed to support fiscal discipline and debt reduction. Many countries adopted numerical fiscal rules. Others strengthened the checks and balances on governments, including through the creation of independent fiscal councils. 

But the outcomes have been decidedly mixed: despite some successes, there have been many more failures. That should not come as a surprise, because fiscal policy is ultimately a creature of politics. Decisions on spending and taxation reflect social preferences, economic constraints, distributional conflicts, and electoral incentives. Fiscal sustainability is about reconciling these pressures in ways that place debt on a sustainable path. Given this, there is no easy fix. 

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Well-designed fiscal frameworks can, however, tilt policy choices toward financial discipline, even when there are other pressures pushing the other way. Research and experience have shown that better design makes a real difference in two areas: assessing debt sustainability and building fiscal rules that survive the political cycle. 

While the standard framework for assessing debt sustainability is widely accepted, there is a gap when it comes to capturing the feedback loop from fiscal-policy decisions to macroeconomic outcomes that reinforce sustainability. For example, fiscal tightening can lower debt ratios, but only when done at the right time and in the right way; otherwise, it can weaken growth to the point of damaging sustainability. 

Moreover, treating all spending as alike can be just as self-defeating: cutting public investment or spending on education or research for the sake of short-term consolidation can lower growth and raise debt ratios over the medium term. Nor is it accurate to claim that any spending will pay for itself through higher growth. What is needed is more guidance on which types of spending have the largest effects on sustainability, and under which conditions. That requires more modeling—beyond what current frameworks offer—of the link between fiscal choices and sustainability. 

Much more clarity is also required about fiscal rules, which have become the standard instrument of fiscal governance in much of the world. While evidence shows that they do improve fiscal outcomes on average, their effectiveness is uneven, and their durability depends heavily on the circumstances of their adoption. 

Rules introduced under market pressure during periods of economic stress often generate only short-term improvements. Once the immediate pressure fades, so does the political commitment to enforce them. Fiscal rules adopted when governments are compelled to build consensus, as opposed to when majority governments simply impose a framework, are more durable. As it turns out, credibility cannot be legislated into existence. The time to build robust fiscal frameworks is before a crisis hits, not after it is too late. 

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Ultimately, the underlying challenge is the same. Debt-sustainability analysis rests on technical judgments—from growth prospects to returns on different types of spending—that are genuinely difficult to make. And governments have incentives to use optimistic forecasts or selective accounting to shade these judgments in favorable ways. Similarly, the credibility of fiscal rules depends not only on consistent application, but also on sustainability assessments that are both rigorous enough to command trust and resilient enough not to be bent after the fact. 

Both areas require research that is technically sound and insulated from political pressures. This underscores the importance of independent fiscal councils, transparent budget processes, and strong technical institutions. Governments, of course, make all fiscal choices, but these technocratic actors raise the quality of those choices, challenge unrealistic assumptions, clarify trade-offs, and anchor rules in analysis that commands wider trust. 

Fiscal discipline, in the end, requires more than a framework. It requires public institutions with the technical capacity and the resources to conduct rigorous and honest research. A lack of analytical rigor and integrity produces bad fiscal decisions and short-lived fiscal rules. 

Copyright: Project Syndicate, 2026.
www.project-syndicate.org  ]]> Thu, 11 Jun 2026 00:05:00 +0400 <![CDATA[ "Soaring Growth in 6 Years": MB Legal Expands Its Services and Geography ]]> https://banks.am/en/news//30802 https://banks.am/en/news//30802 Founded in 2020, the law firm MB Legal has in recent years undergone a path of rapid and notable growth, becoming one of the country's largest and most multidisciplinary law firms.


Today it is not only expanding its range of services - adding new practice areas such as criminal law and the regulation of the cryptocurrency and gaming sectors - but is also growing its geographic reach, having already opened an office in Georgia as well.


The law firm's founder, Mesrop Manukyan, along with partners Grigor Grigoryan and Anahit Sargsyan, spoke with Banks.am about MB Legal's new stage of development, the changing demands of the market, the expansion of the partnership team, and the firm's upcoming goals.

"Today we are one of Armenia's largest law firms"

Mesrop Manukyan

Today MB Legal is a firm providing complete and comprehensive legal services in Armenia  across a variety of sectors and businesses. Having been founded just 6 years ago, I can now confidently say that we are one of the largest law firms in Armenia.

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Since our previous conversation, the firm has recorded significant growth - in headcount, in revenue, in geographic presence, and in the volume of services provided. Alongside all this, quality has in no way suffered, as evidenced by three key indicators. First, we hire only people with high professional expertise and a strong sense of purpose; our requirements are quite high, even for the firm's interns. The second indicator is our work with clients, which is grounded in long and in-depth analysis, ensuring the high quality of the end result. The third indicator is continuous development - both of the firm and of its specialists individually. At MB Legal, we always encourage our employees' growth and motivate them not to stay in the same place.

"At MB Legal, the criminal law practice is developing very rapidly"

Another testament to the firm's growth is its involvement in the field of criminal law, which was absent in previous years. We decided to develop this practice based on both the size of the market and client demand. 

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The field of criminal law is usually served by individual attorneys who have already established a certain name and reputation. For our firm, the best way to enter this field was precisely to collaborate with such a specialist. As a result, we made an offer to Artashes Hovhannisyan, who worked for about 6 years at the National Security Service of the Republic of Armenia, after which he also went into legal practice, accumulating very interesting and unique experience. Today, under his leadership, the criminal law branch at MB Legal is also developing very rapidly.

In parallel with this, it is a matter of principle for us to continue ensuring high quality in the practice areas that constitute the firm's "core" - the corporate and IT sectors, and the securities market.

"There is great interest in Armenia today"

In addition to the practice areas mentioned above, we are also working actively in the new, fast-growing field of gaming-sector regulation and in the cryptocurrency market. Client demand in these areas is now incomparably greater than it was three years ago.

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In a broader picture, I can say that Armenia is becoming more attractive to major investors. The construction of data centers, the energy sector - there are "big players" who want to make large investments in Armenia and need a reliable local representative to do so. There is quite considerable interest in Armenia today, and our firm stands, as it were, at the crossroads of these changes.

Time to share management

The firm's growth inevitably brought with it the need to restructure management as well. The decision to expand the number of partners was very organic and directly tied to the firm's overall growth, under which sharing management is the more effective approach.
At the time of its creation, MB Legal was a small firm, but in 6 years, as I noted, we have appeared on the list of Armenia's largest and leading law firms. This is also attested by the fairly high rankings awarded to MB Legal and its partners by the authoritative Chambers & Partners and Legal 500 platforms.

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New partner Anahit Sargsyan grew professionally within the firm itself - together with the firm. At many decisive moments she has been indispensable, and partner status is a recognition of this professional approach.
The other partner, Grigor Grigoryan, joined us from Ernst & Young, bringing with him serious international management experience.

"The firm's soaring growth influenced my decision to join the team"

Grigor Grigoryan

I joined the MB Legal team relatively recently. Before that, I worked at various firms both as a corporate-sector lawyer and as a consultant. At the heart of my decision were the soaring growth of this Armenian law firm and the great opportunities I see in terms of MB Legal's development. Today the firm is continuously expanding both its range of services and its geographic reach.

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I myself am mainly focused on corporate and business law, and I provide clients with advisory services precisely in these areas.

"The legal market is closely tied to economic activity"

As in any country, so too in Armenia, the legal market is closely tied to the country's economic situation: the more active the economy, the more active legal services are as well, because all the processes taking place in the economy require corresponding legal support.
Today I can divide our main clients into two large groups.


The first consists of foreign companies preparing to begin operations in Armenia and needing to find their bearings in this market. We present to them the country's general picture and existing regulations, including in the tax and legal spheres.

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The second group is our existing clients, for whom we carry out ongoing servicing. We often also take on the role of in-house lawyers, even in cases where a company has its own team of lawyers, since there is a need for an "outside perspective" or, for example, for court representation.

"The company and I are growing up together"

Anahit Sargsyan

I joined MB Legal in 2021 in the capacity of a lawyer. I was still a student, and I can say that I have matured here the most - both as a professional and as a person. The company and I are growing up together (smiles - ed.). For me it was a matter of principle to choose a workplace that has growth potential and strives to provide unique services in the market. I give the same advice to the young professionals who are choosing their path today.

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By working actively in the capital and securities markets, we today provide services in these areas that are unique for Armenia, and the quality of these services is reflected in our clients' steady trust. I myself have been actively involved in these fields from the start; in addition, I carry out ongoing servicing of investment service providers and financial institutions, provide support related to amendments to charters and the attraction of investment, and also work in migration law.

"Companies are making the decision to come to Armenia in a more conscious way - not fleeing some calamity"

Three years ago, in connection with the geopolitical situation that had arisen, we singled out only one migration bloc, driven by the Russia–Ukraine war and the relocation that followed it.

Today migration to Armenia has changed, and businesses we could not even have imagined years ago are often relocating to our country. This is happening not because of one calamity or another, but as a result of genuine interest in Armenia. 

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Companies are coming to Armenia by conscious choice - not fleeing one calamity or another. At the same time, clients today are more demanding and, before making an investment, want to thoroughly study the country's legislation and market.

"To become the indisputable leader in Armenia"

Mesrop Manukyan

Today we want and strive to become the indisputable leading law firm in Armenia, while at the same time also expanding the geography of our operations. The first step in this direction has been taken, and MB Legal's Georgian office has already been operating for several months, providing services to quite serious clients in the financial-banking sector. This is extremely important for us, because usually it is foreign companies that come to Armenia, whereas in this case it is an Armenian company expanding its geographic reach - becoming a trusted partner abroad as well.

Anahit Sargsyan

Especially over the last year and a half, MB Legal has truly been in a phase of lightning-fast yet stable growth. 

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This is noticeable not only in the increase in the number of employees, but also in the diversity and size of our portfolio.

Grigor Grigoryan

Yes, the law firm MB Legal is moving with steady steps toward expansion in every respect. We are approaching this stage with great responsibility, because it is a matter of principle for us that the pace of growth in no way affects the quality of the services provided.

Yana Shakhramanyan

Photo by Emin Aristakesyan

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