India has world’s best digital financial setup, positioned to soar: Nobel laureate Michael Spence

"I don’t think there’s going to be a catastrophic collapse, but there could be a pretty big shock," Spence told The Economic Times. He added that if market valuations drop alongside high debt burdens, "a whole lot of chaos" could emanate from the financial system.

He further noted that interest rate hikes by the US Federal Reserve are driving up the US dollar, exerting inflationary pressures on emerging markets due to currency depreciation and dollar-denominated energy costs. As a defensive measure, many developing nations may be forced to raise their own interest rates, Spence told The Economic Times.

"On the digital economy side, especially the digital financial thing, India is not only first class, it’s the best in the world," Spence told The Economic Times, pointing to the country’s biometric identification framework, the Unified Payments Interface (UPI), and robust data-mobility systems that empower consumer consent. Spence noted that other emerging nations are already seeking to replicate India's architecture, which India has offered to share down to the source code.