Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Economist’

Payments: A penny here, a penny there

Posted by hkarner - 13. Mai 2015

Date: 12-05-2015
Source: The Economist

If you have money—and even if you don’t—you can now pay for your purchases in myriad ways

FINANCE, THE ADAGE goes, is the art of passing money from hand to hand until it finally disappears. This will ring true to anyone who has tried to send cash overseas and found their remittance whittled away by commissions and lousy exchange rates. Shopkeepers typically pay around 3% on sales made by credit card. Banks are involved in over $400 trillion of transfers every year and extract over $1 trillion in revenues from them, according to the Boston Consulting Group. As consumers in both rich and poor countries eschew cash in favour of paying with plastic or, increasingly, online and on their mobiles, that figure could reach over $2 trillion by 2023. But the banks no longer have the field to themselves.

Few consumers give much thought to what happens after they present their credit card at their local coffee shop, unaware of a tangled web of ever-shifting alliances and rivalries below the surface. Banks dominate an ecosystem which includes technology providers and payments networks—mainly Visa and MasterCard, which were themselves owned by a consortium of banks until a few years ago. The payments chain can contain up to seven links, every one of which will claim a tiny cut of each transaction. Most of the money ultimately goes to banks. Beyond collecting commissions on purchases, they profit because card users often pay with money they do not have, running up credit-card debts or overdrafts on which the banks charge steep interest. Den Rest des Beitrags lesen »

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Germany and economics: Of rules and order

Posted by hkarner - 9. Mai 2015

Date: 07-05-2015
Source: The Economist

German ordoliberalism has had a big influence on policy during the euro crisis

“NO MATTER what the topic, it’s four to one against me,” laments Peter Bofinger, one of the five members of Germany’s Council of Economic Experts, which advises the government. The other four, he says, consider deficits and debt bad, oppose the European Central Bank’s quantitative easing as “monetary meddling” and believe austerity is the answer to the euro crisis. In Germany, says Mr Bofinger, “I’m the last Keynesian—and I feel like the last Mohican.”

The relationship between Mr Bofinger and his colleagues mirrors the gap that exists between German and Anglo-Saxon (or Latin) views of economics. German thinking on economics has long differed from the mainstream in other countries, including other euro-zone members. In the past six years of euro crisis, the gap has become larger, more visible and more controversial. Sebastian Dullien of the European Council on Foreign Relations, a think-tank, says that this amounts to a “decoupling” of Germany from the rest of the world. Den Rest des Beitrags lesen »

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Emerging markets: The bank in your pocket

Posted by hkarner - 9. Mai 2015

Date: 07-05-2015
Source: The Economist
Mobile finance for the unbanked masses

AS MARKETING COUPS go, getting your logo onto more than 100m national-identity cards takes some beating. MasterCard is about to pull off this branding feat as Nigeria’s electronic ID and payment card, currently being piloted, is introduced nationally. Providing financial services to customers who previously had no access to them is another side to fintech, often starting with payments.

Globally, an estimated 2.5 billion people—over half the adult population—lack bank accounts. This financial exclusion leaves the poor relying on informal ways of saving (eg, cash under the mattress) or borrowing (eg, exorbitantly priced payday lenders). Development experts used to try to get banks to open branches in out-of-the-way places. Now they gush about bank-free finance, based on mobile payments or ID-based schemes of the sort Nigeria is bringing in.

In Africa, only one in four people has a bank account but eight in ten have access to a mobile. An early fintech success was M-Pesa, a Kenyan phone-based payments scheme launched in 2007 by Safaricom, a telecoms group. By knitting together a network of agents selling airtime into something akin to a banking grid, the scheme opened up cheap and instant payments to the masses. It is now used by three-quarters of Kenya’s 22m adults. It has already spawned a savings-and-loans cousin, M-Shwari, which has signed up 9m customers and attracted deposits of 135 billion Kenyan shillings ($1.6 billion) in its first two years. It issues plenty of loans, too, which are far cheaper to administer and easier to scale than the micro-lending schemes once favoured by the development crowd. Den Rest des Beitrags lesen »

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Financial services: The fintech revolution

Posted by hkarner - 8. Mai 2015

Date: 07-05-2015
Source: The Economist

A wave of startups is changing finance—for the better

fintechIN THE years since the crash of 2007-08, policymakers have concentrated on making finance safer. Regulators have stuffed the banks with capital and turned compliance from a back-office job into a corner-office one. Away from the regulatory spotlight, another revolution is under way—one that promises not just to make finance more secure for taxpayers, but also better for another neglected constituency: its customers.

The magical combination of geeks in T-shirts and venture capital that has disrupted other industries has put financial services in its sights. From payments to wealth management, from peer-to-peer lending to crowdfunding, a new generation of startups is taking aim at the heart of the industry—and a pot of revenues that Goldman Sachs estimates is worth $4.7 trillion. Like other disrupters from Silicon Valley, “fintech” firms are growing fast. They attracted $12 billion of investment in 2014, up from $4 billion the year before. Many of these businesses are long past the experimental phase, as our special report this week explains. Lending Club and OnDeck, two new lenders, have gone public; users of Venmo, a payments app, transferred $1.3 billion last quarter. In his latest annual letter to shareholders Jamie Dimon, the boss of JPMorgan Chase, warned that “Silicon Valley is coming.” Den Rest des Beitrags lesen »

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Peer-to-peer lending: From the people, for the people

Posted by hkarner - 8. Mai 2015

Date: 07-05-2015
Source: The Economist
But will financial democracy work in a downturn?

SAVERS DO NOT get much in the way of interest from their banks these days. But a different logic seems to apply to borrowers, who still often pay double-digit rates for credit—if they can get it at all. That has attracted a number of outfits offering to connect those who need cash with those who have a surplus of it. The rapid growth of such “peer-to-peer” lenders has been one of fintech’s most visible successes. The biggest such firm, Lending Club, based in San Francisco, listed its shares in December to a clamour reminiscent of the 1999 tech boom.

Fans compare peer-to-peer lenders to other pioneers of the “sharing economy”. Like Uber with cars and Airbnb with accommodation, the newcomers are making available a commodity they do not provide themselves: in this case, money. Instead of a bank intermediating between savers and borrowers, the two parties deal with each other directly. The platforms do the credit-scoring and make a profit from arrangement fees, not from the spread between lending and deposit rates. Den Rest des Beitrags lesen »

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Managing bank balances: Deposits go walkabout

Posted by hkarner - 3. Mai 2015

Date: 02-05-2015
Source: The Economist

A startup puts idle money through its paces

OVER $13 trillion is sitting in American bank accounts and money-market funds, earning little or no interest. If consumers were even marginally more demanding, they could earn tens of billions of dollars in extra returns. That is the premise behind MaxMyInterest , a year-old electronic service aimed at slothful but yield-hungry savers. It offers to move money from banks that want to shed deposits, and that therefore pay savers low interest, to ones in need of them, and so willing to pay more. At the same time, it makes sure that each account holds no more than $250,000, the maximum amount insured by the government, providing not just higher returns, but risk-free ones.

The average interest paid on deposits in America is a microscopic 0.09% a year, according to BankRate, a data firm. MaxMyInterest’s clients receive 0.75% to 1.05%, with a weighted average of almost 1%. That may seem small, but it amounts to $2,000 a year for every $250,000 account, and should rise considerably whenever the Federal Reserve starts to raise rates. (At a meeting this week the central bank left rates unchanged, but it is still expected to start lifting them later this year.) Den Rest des Beitrags lesen »

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Deutsche Bank: That’s it?

Posted by hkarner - 2. Mai 2015

Date: 02-05-2015

Source: The Economist

Germany’s biggest bank tweaks its strategy

CORPORATE bosses hope for a bump in their share price when they present a new five-year plan.

Deutsche Bank’s leaders had no such luck on April 27th: their “Strategy 2020” was met by a 10% tumble over three days, reversing a six-week climb propelled by expectations of a more radical overhaul.

Deutsche’s new tack is to do a little less of most things. Postbank, a German retail bank it only finished buying in 2012, will be spun off through a relisting. Deutsche will leave up to ten of the 70 countries it does business in. Its dominant investment bank will be trimmed a little, too. Instead, it will invest more in its asset-management arm.  Den Rest des Beitrags lesen »

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The economy: Oil be damned

Posted by hkarner - 2. Mai 2015

Date: 01-05-2015
Source: The Economist

The economic boost from lower oil prices is smaller than you might expect

WTI Oil priceIN 2014 oil prices crashed. Americans jumped for joy. Small wonder: each year the average American consumes more energy than a Briton and a Japanese person put together. The oil-price drop pleased economists, too. Many were sure that it would give the economy a nice boost. However, the oil bust was followed not by a boom but a slowdown (see chart). Figures released on April 29th showed that growth in the first quarter of this year was just 0.2%. All this leads wonks to wonder: are lower oil prices such a good thing?

Gross domestic product (GDP), the total annual output of an economy, is made up of four things: government spending, net exports, consumer spending and investment. The oil price does not much affect government spending, but has a big impact on the other three.

Net exports (ie, exports minus imports) have certainly been boosted by the lower oil price. America exports very little oil, but imports a lot: about 9m barrels a day. With the oil price roughly $60 below its peak, Americans now send $500m less abroad every day—or about $200 billion a year.

Add to this the lower price of domestically produced oil, and Americans have received a windfall, akin to a juicy tax cut. That cash could be spent or invested at home. But consumers are reluctant to splash out, perhaps because wage growth has been so miserable. The monthly growth rate of retail sales—not including those at petrol stations—has stumbled in the past few months. Den Rest des Beitrags lesen »

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The economics of low wages: When what comes down doesn’t go up

Posted by hkarner - 1. Mai 2015

Date: 01-05-2015
Source: The Economist

Salaries in rich countries are stagnating even as growth returns, and politicians are paying heed. They may struggle to improve things—and could make them worse.

ACCORDING to the rich world’s politicians, economics has a new villain. The modish scoundrel of the past seven years—the immoral banker outwitting inept regulators—has been edged out by a returning blackguard: the tight-fisted boss crushing the hopes of honest workers with miserly pay. In America workers have been demonstrating for higher pay and stronger union rights in the profitable but poorly paying food industry. Hillary Clinton has blasted CEOs who earn 300 times what the average worker does, pledging that her run for the presidency will champion the “everyday Americans” who have the “deck stacked” against them. In Britain Ed Miliband, leader of the opposition Labour Party, has told the electorate that he plans to punish “predatory” capitalists that exploit the low-paid; his electoral rival David Cameron retorts that his Conservatives are the “party of working people”. In Japan Shinzo Abe has sworn to lift salaries, and cajoles and threatens Japanese bosses to deliver on his promise. Den Rest des Beitrags lesen »

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The rouble: The worst is yet to come

Posted by hkarner - 1. Mai 2015

Date: 30-04-2015
Source: The Economist

Don’t mistake a stronger rouble for a Russian economic recovery

Rouble dollrRUSSIA’S currency, the rouble, had a terrible 2014. As oil prices collapsed and Western sanctions bit, export revenues slumped. Nervous investors pulled $150 billion from the country. As a result, the rouble lost about half its value against the dollar (see chart). But over the past few months, it has climbed out of its trough. Russian bonds and stocks have done well, too. The Central Bank of Russia (CBR) has been cutting interest rates—an unthinkable prospect just a few months ago. On April 30th it lowered its main rate from 14% to 12.5%. All this, some say, is proof that investors are too pessimistic about the Russian economy. They are wrong.

Oil prices have risen slightly since the start of the year. That is helpful for an economy where the stuff provides half of all exports. The cheaper rouble has buoyed exports, too. A new deal to end the Russian-backed insurgency in Ukraine, signed in February, has also made investors less jittery.

Nonetheless, the rouble’s strength is a puzzle, since in many ways the Russian economy looks worse than it did in December. Inflation, at 16.9%, is 5.6 percentage points higher, a jump that would normally spur depreciation. Real wages are tumbling fast. The foreign-exchange reserves of the CBR have fallen by about $30 billion so far this year, and by $130 billion since this time last year. The IMF thinks that the economy will shrink by 4% in 2015—and it is a relative optimist. Den Rest des Beitrags lesen »

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