Others

The Brexit “White Paper”: a dead end

The long-awaited Brexit “White Paper” came out yesterday afternoon and was promptly torn to shreds in the subsequent debate in the House of Commons. The government has succeeded neither in keeping the Brexit hardliners happy nor in garnering the support of the advocates of a “soft Brexit”. From the viewpoint of the hardliners the deal is too “soft”, from that of the Remainers too “hard”. At the beginning of the week there had been hopes that the resignation of Brexit hardliners Davis and Johnson as well as the new push by the government would finally lead to the long-sought unity within the British government, but today there is no sense of unity left to be seen. The EU has not commented on the government’s proposal to date, but we suspect that it will have many (critical) questions. While the government’s fundamental approach, at least as intimated at Chequers last Friday,…

The ECB is committing a strategic error

Possible key-rate hikes have been postponed until far into the future. From my point of view, the ECB is committing an error by embarking on such a strategy. The ECB ought to seize the current opportunity to at least lift the deposit facility rates out of negative territory. The point is that negative deposit rates have the effect of a special tax on the European banking sector, worsening its position in the global competitive stakes. The simmering trade conflict could well decelerate growth momentum, thus causing a significant deterioration in the environment for possible key-rate hikes in Q4 2019. The ECB would then be confronted with a dilemma. It emerges from the monetary-policy account published earlier today that Europe’s monetary custodians regard their promise to keep policy rates unchanged at least through the summer of 2019 as a good compromise – between providing the markets with sufficiently precise guidance about…

May wins the battle, but not the war

How interesting it would have been last Friday to be a fly on the wall and listen in on the meeting of the British cabinet in the countryside in Chequers. Tempers were no doubt heated, but at the end of the day the Prime Minister succeeded in emerging victorious. She managed to get support for her proposal in the face of stiff opposition from the Brexit hardliners. Her version hinges on a free-trade agreement with the EU in which the Brits accept EU product standards and in return the EU ceases to insist on the necessity of border controls. Only a few days on and May’s plan is already under fire: Brexit advocates in Great Britain feel betrayed and the response in the EU has also been noticeably muted. May will continue, in other words, to have to wage war on two fronts. On the domestic front she first of…

“Blockchaining” the Euro

“Stable Coins” are the attempt to combine the advantages of Blockchain technology with the stable value of the Euro, US Dollar or Yen. Put simply, these are cryptocurrencies that are meant to be 100% covered by a customary Fiat currency (or another underlying asset). Although the advantages promised must first prove to be real, the approach is definitely promising. How can the advantages of Blockchain technology be combined with the stability of Fiat currencies such as the Euro, US Dollar or Yen? The answer is something representatives of both the traditional financial industry and the “Crypto Community” consider central to the future of cryptocurrencies. After all, the immense volatility of these currencies (to be observed among even its most prominent representatives such as Bitcoin, Ether or Ripple) is a central weakness, in particular as regards confidence and broad public and corporate acceptance. Central bank money in a digital guise for…

Election in Turkey: Little clarity, lots of question marks

Next Sunday sees presidential and parliamentary elections in Turkey that have been brought forward. At the same time as the ballot, the still controversial constitutional reform adopted in spring 2017 by referendum comes into force. It strengthens the powers of the president vis-à-vis the Turkish parliament. New elections were not actually scheduled until the end of 2019, but President Erdogan brought them forward to 24 June this year, no doubt not least with the intention of securing his own re-election. According to current opinion polls it is doubtful whether his plan will succeed. Neither Erdogan nor the election alliance of AKP and the nationalist MHP can at present be sure of gaining an absolute majority of the votes. With a view to the composition of the future parliament, what will above all count is whether the pro-Kurdish HDP manages to poll more than the 10% required for a single party…

Data protection and social media: bringing together things that previously did not match

The past few weeks have been turbulent for Facebook. The social media platform has been forced to admit that the personal data of up to 87 million of its users had been the object of an unauthorised sale by a former psychology professor in the context of an opinion survey to the data analyst company Cambridge Analytica. The latter is suspected of having used the data acquired in this way for activities including the election campaign of U.S. President, Donald Trump, among other things. In 2017, Google, which is a subsidiary of Alphabet Inc, was the subject of criticism when the video portal, YouTube, placed ads of well-known companies next to extremist and racist videos. In recent years, the two online behemoths have enjoyed huge success with the collection and analysis of personal data – considered the “gold of the 21st century“ – for the purposes of online advertising aimed…

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