The energy and inflation crises have uncovered cracks in the long-standing global foreign exchange regime. A new approach to currency management is required to face the immediate challenges, and the rise of an alternative regime.

Dollar strength is causing strains, even in developed countries like Japan and Britain. Countries will have to intervene to fix misalignments in currency markets.

Europe's fiscal rules are too simplistic and have lost credibility. They need to be revamped to reflect new country and economic conditions.

The only way to tackle the new inflationary regime is a credible and abrupt change in the approach to policy: but this seems unlikely to happen.

Central banks will be aggressive in the short term as they try to re-establish credibility, with the European Central Bank a case in point.

After years of dormant peripheral risk, the recent resurgence of fragmentation issues in Europe, amid rising stagflationary risks at a time of Central Banks committing to tame inflation, puts the delicate fiscal and monetary equilibrium under the spotlight.

As holidaymakers resume their familiar summer breaks and crowds return to the Champs-Elysées to cheer on the final stage of the 2022 Tour de France, elsewhere established customs and trends seem less secure.

The H2 economic outlook will feature divergences in growth, inflation and policy mix across regions. Stagflation risk will be a common feature across Developed Markets (DM). In addition, since there will no longer be a synchronous global cycle, country risk is back.

Understanding how the legacies of the 'old economy' paved the way for a new macro-financial regime today, and implications for investors.