Every year, one of the most powerful men on Wall Street, Blackrock boss Larry Fink, writes a letter to the shareholders of the world's largest wealth manager.
This year, the letter, which received a great deal of attention in the financial sector, was marked by the Russian war of aggression against Ukraine.
The invasion was "heartbreaking," writes Fink.
Blackrock stands with the Ukrainian people who have shown true heroism in the face of relentless aggression.
Antonia Mannweiler
Editor in Business.
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In the ten-page letter, the Blackrock boss explains in detail what the invasion means from Fink's point of view for the world order, globalization and capital markets.
The effects of the war were therefore not limited to Eastern Europe and would continue to have an impact for decades to come in ways that could not yet be foreseen.
After the end of the Cold War, Russia was welcomed into the global financial system and the country was granted access to global capital markets, according to Fink.
The whole world has benefited from this global peace dividend and the expansion of globalization.
"But the Russian invasion put an end to globalization as we have known it for the past three decades." In response, nations and governments severed financial and commercial ties with Russia and began an "economic war."
But capital markets and financial institutions have gone further, according to Fink, whose company manages $9.5 trillion in assets globally.
Blackrock has joined efforts to isolate Russia from financial markets.
"Access to the capital markets is a privilege, not a right," writes Fink.
The actions of the private sector showed the power of the markets.
The Blackrock boss explains that capital is made available for those who work constructively within the system.
But it could be denied just as quickly to those who move outside the system.
The economic sanctions would also show what can be achieved in the face of violence and aggression.
Rethink dependencies
Larry Fink also describes the long-term implications of Russia's decoupling from the world economy.
Against this background, governments around the world are now also reviewing their dependencies on other countries - which could lead to a faster withdrawal from some countries.
On the other hand, he believes that production sites in Mexico, Brazil, the USA and Southeast Asia could benefit from this.
The Blackrock handlebar also addresses energy security, which has become a priority alongside the upcoming energy transition: In response to the energy shock triggered by the war, countries are currently looking to new energy sources.
The focus in the USA would be on increasing the capacity of oil and gas, while in Europe and Asia coal consumption would increase over the next few years.
"This will inevitably slow the drive towards net-zero emissions," Fink said.
In the long term, however, the longtime Blackrock boss remains optimistic: he believes that recent events will accelerate the switch to more climate-friendly energy sources in many parts of the world.
In his letter, Fink, too, cannot ignore the major topic of inflation.
In Germany and Europe, the inflation rate is currently over 5 percent, in the USA it climbed to 7.9 percent in February compared to the same month last year.
Fink writes that inflation in many countries is at its highest level in 40 years.
Low earners in particular are confronted with higher prices in the supermarket, higher energy bills and lower real wages.
Central banks are currently faced with a dilemma that has not existed in decades: they have to decide whether they can live with higher inflation or slow down economic growth and employment in order to curb inflation.
Fink also writes how the war is affecting digital currencies – an aspect that he thinks is less discussed.
Thus, war is causing countries to reassess their dependence on currencies.
A global digital payment system - if well thought out - could improve the processing of international transactions while reducing the risk of money laundering and corruption.