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Home » Daily Briefing » Daily briefing - 28 January 2019

Daily briefing - 28 January 2019

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Niti Bhan tweets as @prepaid_africa

Davos looks less relevant with each passing year. Can we agree that re-thinking the terminology around the global economy is instructive? Recent research by Niti Bhan suggests that the definitions of formal and informal need serious re-invention, and it's borne out by the continuing success of mobile money in Kenya. As we're fond of pointing out, the idea for M-Pesa emerged from traders who work in the informal economy, and it continues to live and thrive there. So, how can an economy where most people work, and which produces most economic activity, be informal? "Central Bank of Kenya (CBK) data shows that mobile money transactions stood at Sh3.98 trillion ($38.5 billion) last year, having increased by Sh346 billion (10%) from 2017," reports paymentcardsandmobile.com. "This translates to an average value of Sh10.92 ($108 million) billion mobile cash transactions per day. In short, Kenyans moved nearly half the equivalent of the country's gross domestic product (GDP) through their mobile phones last year, underlining the growing importance of digital wallets to the economy."

The Huawei story is going to keep on growing. In pole position as the provider of both mobile infrastructure and handsets, the Chinese manufacturer is suddenly hitting hurdles. An FT article over the weekend hinted that European countries would rather give up on 5G than hand control to a Chinese company. While Westerners tut about China's social credit system, we're all aware now that the new business model of the past fifteen years has been surveillance capitalism. Even the unsuspecting among us believe that our digital overlords and phone manufacturers are spying on our day-to-day lives through our phones and computers. Huawei may be totally blameless in this situation, but when we believe Apple, Google and Facebook to be watching us every moment of the day, how can we suspect Huawei of less?

It's not a good look when a bank refuses to give back your money, and the Bank of England is playing a nakedly political game in its negotiations with its Venezuelan customer, aka the state. The Bank of England has reportedly declined to return gold bullion to Venezuela, after opposition leader Juan Guaido said he requested the bank keep the money to prevent Venezuelan leader Nicholas Maduro from using it to cement his rule. "In letters to British Prime Minister Theresa May and Bank of England Governor Mark Carney, Guaido said Maduro government officials were seeking to sell the gold and move the proceeds to Venezuela's central bank." Of course there are bigger conflicts at work, not least the West bristling at the Russia-Venezuela alliance. But Venezuela remains a significant player in the global oil business. Many countries have accepted Guaido's claim to be legitimate president, with Maduro's government seen to be dragging its feet on a midterm recall election. Under sanctions, Maduro's government last February launched the petro, a digital asset backed by state oil assets, in turn backed by Venezuela's vast reserves. The petro however failed to attract investors, and ordinary Venezuelans turned to bitcoin to hedge their savings instead. If anything, this episode reminds us that despite constant assertions to the contrary, central banking remains nakedly political.

When Curve launched its cards-on-a-card service in 2016, Amex failed to come on board, an early blow to the company. But now Amex has seen the light — at least in beta. In a statement Curve founder Shachar Bialick said that Amex can now be used with Curve. "In an era of Open Banking and PSD2 regulations we are delighted to bring such an important innovation to our customers."

Is the QR code a security dilemma?

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