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疫情世界大流行重创经济，导致债务激增，各国已将利率降低至历史的最低，而且业内人士预计未来较长时间不会提高利率。这个情况带来非常深远的后果。

零利率时代

法国世界报记者Eric Albert7月6日刊文说，政府，企业，家庭：贷款吧，现在正逢良机，利率从未如此之低，而且未来较长时间内不会涨回去。其实在世界进入Covid-19疫情大流行之际，借贷利率已经是2008年金融危机以来的最低。

为了在危机期间让各国筹集资金，央行走得更远，朝着货币几乎免费的新货币时代多前进了一点。法国安盛投资管理公司（AXA INVESTMENT MANAGERS）的Mikaël Pacot先生解释说，“利率会在很长时间内非常低。” 丹麦盛宝银行(Saxo Bank)的Christopher Dembik先生也证实说，“我们不会在短期内摆脱离扩张性货币政策”。

法国世界报说，对于全球经济而言，央行此举将带来重大后果。各央行维持零利率的举措影响到其他的一切因素，比如让购房家庭更便宜地借到钱；让持有资产的最富有家庭变得更富有，同时加剧社会阶层之间和两代人之间的不平等。反过来，现在把钱存在银行里，已赚不到利息了。但是，央行的低利率却可让各国政府前所未有地借到债。

美联储带头

随着疫情大流行，所有主要央行都通过启动空前规模的购债计划，对经济提供援助。例如，欧洲央行（ECB）拿出超过1.5万亿欧元，让欧元区的国家更容易筹集资金。虽然各央行都官方宣称，干预行动是暂时的，并且保证会很快提高利率，回归“常态”。不过，惠誉国际评级（Fitch Ratings）首席经济师布莱恩-库尔顿（Brian Coulton）反驳说：“他们在2008-2009年也说过同样的话。”可是十年来的经验教训是，中央银行在恢复常态方面没有走太远。另据牛津经济研究分析公司估计，至少在“未来五年”内，利率会处在低水平。

法国世界报说，利率的下降趋势可以追溯到1980年代后期。当年美联储 (Fed) 就是带头降息的央行之一。1987年黑色星期一的股灾重创了全球股市。当时美联储主席格林斯潘（Alan Greenspan ）刚上任两个月。他承诺在金融泡沫破裂时，不会出手干预，并表示相信市场本身的调节力量。然而，他所做的与他说的这些话恰恰相反，股灾出现后，他立即宣布“随时准备提供流动性”。

从那以后，每次发生危机，所有的央行都效仿美联储主席法格林斯潘的这个做法，来支持经济，并且干预力度越来越大。比如在2008年大规模金融危机中，欧洲央行和美联储都首次把利率降为零。这样还不够，还启动了购债行动，也就是“量化宽松”政策。不过在2017年，确实美联储试图正常化，调升了利率。可是此举随即引发了金融市场严重动荡，结果在第一次警讯出现后，美联储就恢复了零利率。

存款负利率

位于法兰克福的欧洲央行却从未接近过任何正常状态。而且它的存款利率甚至在2014年变成了负数，首先是-0.1％，然后逐渐下降到目前的-0.5％。

在全球范围内，经济参与者们当然都利用这些反复的降息政策，享受超低利率贷款。但同时他们也承担更多的负债。

位于亚特兰大的资产管理公司Invesco研究评估指出，30多年来，世界前25个经济体的债务负担越来越重。这些经济体的国家债务，企业债务，家庭债务加在一起，与GDP的比例，从1980年的150%，增加到今天的250%。那么，这样债台高垒，灾难是要来了吗？该公司的分析师Paul Jackson表示，“只要经济增长，而且融资成本很低，就不成问题”。换句话说，只要保持超低利率，一切就都好。不过惠誉主权国家债券总监托尼-斯金格警告说：“我们处在一个恶性循环当中。各国使用这些低利率借贷越多，央行收紧货币政策的能力就越弱。”

负债多一倍，利息少一倍

世界报这篇文章说，自疫情大流行以来，各国都发现了这棵神奇的摇钱树，并且花钱如流水。比如，法国政府支出创下了历史新高：补贴部分失业用300亿欧元，延迟企业税费需要320亿美元，还有，对汽车业，航空业，旅游业等各业的援救补贴计划，如果没有央行干预，是根本是不可能实现的。

如今，法国的十年期债券利率，徘徊在零附近，德国为-0.4％，英国为0.2％。世界报说，这就导出一个奇特的悖论。以法国为例：从2008年到2020年低，国家债务与GDP的比例，从70%增加到115%。但同期，法国为这些债务支付的年息却从GDP的2.8%降到了1.4%。也就是说，债务增加了一倍，债务在政府预算的权重，反而减少了一半。Paul Jackson总结说，这是多亏了几个世纪以来的最低利率。

Transferring the Financial Services Authority’s (OJK) supervision over banking back to Bank Indonesia (BI) could cause investors to lose confidence in the country, experts have warned.

Institute for Development of Economics and Finance (Indef) economist Eko Listiyanto said on Friday that the move could create more uncertainties in the country’s financial sector amid an already risk-filled COVID-19 situation.

Such a move, he added, could signal that institutions that were supposed to be independent of the government were easily influenced by political interests.

“This is a political move. President Jokowi [Joko Widodo] should really think about the repercussions and impact on investor confidence in Indonesia,” he told The Jakarta Post, urging the government to focus instead on its efforts to curb the spread of COVID-19.

Once foreign investors started to lose their confidence in the country, Eko said, Indonesia would face tougher challenges. Foreign investment could leave the country and weaken the rupiah exchange rate, and it could be harder for the government to obtain funding for pandemic-related measures.

According to a Reuters report, Jokowi is considering issuing an emergency decree to return banking regulation to the central bank because of his dissatisfaction with the OJK’s performance during the pandemic.

The OJK was established in 2011 to oversee financial institutions. It was modeled on the financial services regulatory structure the prevailed in the United Kingdom at the time. The OJK assumed the role of regulator and supervisor of banks in 2013, taking the responsibility from the central bank.

One Reuters source said the government was looking at the French structure, where an independent administrative authority under the central bank oversees banking.

However, presidential expert staff member Dini Shanti Purwono denied the claim. “There has not been any official discussion of the matter so far,” she told the Post.

Neither BI nor the OJK had responded to the Post’s request for comment by the time of writing.

The report came after a Cabinet meeting on June 18 where Jokowi said he would reshuffle the Cabinet or even disband government agencies if he felt they had not done enough to tackle the crises brought about by the pandemic.

The Supreme Audit Agency (BPK) concluded earlier this year that aspects of the OJK’s supervision were not in line with prevailing regulations.

Although Eko acknowledged that the OJK’s supervision was far from satisfactory, he said the government should reflect on its response to the pandemic before accusing the OJK of ineffective supervision.

“The government should remember that this was caused by its delayed response to the pandemic, which then caused disruptions to the real sector and hit the financial sector,” he said.

Indonesia’s loan growth slowed to 5.7 percent year-on-year (yoy) in April, from 7.9 percent recorded in March, Bank Indonesia (BI) data shows. The outbreak has depressed loan demand and disrupted business activity, and some borrowers are facing difficulties repaying their loans.

As of June 22, the country’s banks had restructured loans worth a total of Rp 695.3 trillion for 6.35 million borrowers, in accordance with a recent OJK regulation that instructed financial institutions to provide relief for borrowers affected by the COVID-19 pandemic.

Banking expert Paul Sutaryono said the central bank would have to carry heavier responsibilities if the plan went ahead.

“If OJK’s supervision is deemed unsatisfactory, it doesn’t mean the OJK should be disbanded and its supervisory function brought back to BI,” he said. “It would be wiser if the top management was changed.”

“Its supervision needs to be improved – not only its quality, such as human resources and the supervision volume, but also the number of the supervisors,” he added.

Heri Gunawan, a Gerindra politician and member of House of Representatives Commission XI overseeing financial affairs, said a proposal currently on the House’s priority legislation list to revise regulations governing BI might also include discussions about returning the supervisory and regulatory function to the central bank.

“However, I think we should conduct a comprehensive study before deciding on it because it will make BI’s task a lot harder,” he said.

Households across the world have been saving up since the coronavirus pandemic hit the global economy, but their cash stash poses a dilemma for policymakers as they try to gauge the amount of stimulus needed to fuel a return to growth.

It is not clear whether the money represents pent-up consumer demand that is itching to be spent as lockdowns are lifted, known as involuntary saving, or a safety net put aside by households to insure against uncertain times ahead, referred to as precautionary saving. 

If consumers rush back to the shops, extra government stimulus threatens to generate too much spending and inflation; but if they continue to hoard their incomes, too little stimulus threatens a vicious circle of weak expenditure, slower recovery and higher unemployment.

The two trends are not mutually exclusive — the likeliest outcome is a bit of both — but the dilemma about which will be more powerful is pitting some of the big beasts in central banking on either side of an intellectual divide. 

Christine Lagarde, president of the European Central Bank, recently cited a surge in household bank deposits as reason for caution on the speed of the economic recovery, which she forecast would be “sequential and restrained”. But Andy Haldane, chief economist of the Bank of England, said last week that involuntary saving caused by the lockdown was of a scale sufficient to “potentially dwarf any voluntary rise in savings for precautionary purposes”.

The high level of saving is due in part to governments’ actions to protect the workforce from the sharp downturn. Even though large numbers of households in advanced economies in the US, Europe and Asia have suffered falls in earnings during the pandemic, their incomes have been partly protected, through either welfare systems, such as in the US, or short-time working, mostly in Europe. 

As shops closed and travel and tourism ground to a halt, households were left with fewer opportunities to spend.

As a result, the eurozone household saving rate — defined as gross saving divided by gross disposable income — rose to 16.9 per cent in the first three months of the year, up from 12.7 per cent in the previous quarter and the highest since records began in 1999, according to Eurostat data. 

In the UK, it rose to 8.6 per cent in the same period, from 5.4 per cent in the same quarter a year earlier. In the US, the personal savings rate surged from 7.9 per cent at the start of the year to more than 32 per cent in April, before dropping back somewhat to 23.2 per cent in May, according to the Bureau of Economic Analysis.

Alongside the sharp rise in saving rates, bank deposits have grown at a record pace.

The sharp increase in household bank deposits in the eurozone suggests that increased s aving continued for much of the second quarter. In the three months to May, eurozone households increased their bank deposits by €71bn a month on average — more than double the same period last year.

Tim Congdon, an economist who tracks money supply figures, said the growth in deposits in the US and around the world had been “unprecedented in modern peacetime history”. He warned that at some point, such moves would lead to “a significant uptick in inflation”.

The most recent data have provided some corroborating evidence for those who believe the consumer will come roaring back as economies reopen — there are already signs of a rebound in retail expenditure in many developed nations. 

French consumer spending on goods surged 36.6 per cent in May, while German retail spending shot up a record 13.6 per cent, rising even above pre-pandemic levels. 

Katharina Utermöhl, economist at Allianz, said retail sales were likely to keep rising in June and July as the benefits of lifting the lockdowns were felt and as Germany’s temporary cut in value added tax encouraged more consumers to splash out.

In South Korea, Miguel Chanco, senior Asia economist at Pantheon Macroeconomics, said: “The gains in sales since April have been robust enough to bring the overall level back up above its long-run trend.”

But not every country can expect to enjoy a rebound in consumer spending. Although large-scale unemployment has so far been avoided — helped by furlough schemes such as those covering more than 40m people in the eurozone — significant job losses are expected in economies such as the US, Spain and Italy. Households in those countries are more likely to hang on to their savings, according to some economists.

“Because the economic prospects are darker in some countries, like Spain and Italy, so there will be higher levels of precautionary savings in these countries,” Ms Utermöhl said. Allianz has forecasted that insolvencies will rise 12 per cent in Germany by the end of next year, while they will increase 41 per cent in Spain and 27 per cent in Italy. 

Adam Slater, lead economist at Oxford Economics, said that across advanced economies it was too early to celebrate a V-shaped spending bounce just because there were some initial strong signs of life among consumers.

“Unemployment and precautionary saving by firms and households will hold down spending,” he said, which would add to corporate bankruptcy threats. Ultimately, deflation was still much more of a risk than inflation, he added. 

The effectiveness of each country’s health system in dealing with the spread of the virus is another factor that will influence their economic trajectory. The move by some US states to return to lockdown suggests that the virus’s threat to spending patterns is likely to persist for some time.

Countries that have managed the health crisis well will enjoy a greater rebound in consumer confidence and quicker reopening, say economists — and that is what gives them the best chance of enjoying a V-shaped rebound.

Sixteen European banks have teamed up to deliver by 2022 a new unified payment system that will offer consumers on the continent both cards and digital wallets that could offer a serious alternative to giants in the sector such as Visa and Mastercard.

Dubbed the European Payments Initiative (EPI), the “solution aims to become a new standard means of payment for European consumers and merchants in all types of transactions including in-store, online, cash withdrawal and ‘peer-to-peer’ in addition to existing international payment scheme solutions,” the  consortium said in a statement. 

The proposal would offer consumers the possibility to make instant transactions, a service start-ups have pioneered and which some European banks have begun to integrate into their offers.

“The big innovation will be to allow making a payment to someone throughout Europe, seven days out of seven, instantaneously and, for example, with the telephone number of the beneficiary,” said Thierry Laborde, a senior executive at French bank BNP Paribas, one of the members of the consortium.

With payment systems in Europe still fractured and digital services still not available everywhere, the banks behind the initiative believe that European and national authorities will find it useful.

“The COVID-19 crisis has underlined the need for a unified European digital payment solution,” the EPI consortium said.

“In this sense, EPI also aims to align the European payments ecosystem of banks, merchants and acquirers/payment services providers, thereby contributing to strengthening of the Single Market and the European digital agenda.” 

The European Central Bank welcomed the initiative, noting that 10 European countries still have national card schemes that do not welcome cards from other EU member states.

It said it supports private initiatives that are pan-European in reach, are cost efficient, secure and customer friendly.

The consortium is still open and members urged others involved in the payments sector to join.

The project, which is expected to cost several billion euros, aims to eventually capture at least 60 percent of electronic payments in Europe.

货币是什么？

货币本质上是一种交换媒介，也可以用来储存财富。

不言而喻，“交换媒介”指的是可以用来买东西的工具。而所谓财富储备，指的是在获取和消费之间储存购买力的工具。最合理的方式显然就是把钱存起来，以备不时之需，但人们往往不愿意持有货币，而总想把货币兑换成他们想买的东西。这就是信贷和债务发挥作用的地方。

当出借人放贷时，他们认为收回的钱会比本身持有的钱购买更多的商品和服务。如果做得好，借贷者就能有效地使用这些钱并获得利润，进而偿还贷款并保留一些额外的钱。当贷款尚未偿还时，它是贷款人的资产，也是借款人的负债。当钱被偿还时，资产和负债就消失了，这种交换对借方和贷方都有好处。他们从本质上分享了这种生产性贷款的利润。整个社会也得益于这种机制所带来的生产力提高。

因此，重要的是要意识到：

1.大多数货币和信贷（尤其是现存的法定货币）没有内在价值

2.会计系统，它只是日记可以很容易地改变

3.系统的目的是帮助有效地分配资源以便生产力增长

4.该系统会周期性崩溃。所有的货币不是被摧毁就是贬值，财富随之发生大规模转移，对经济和市场产生巨大影响。

更具体地说，货币和信贷系统并没有完美地运转，而是在循环中改变货币的供应、需求和价值，在上升时产生富裕，在下降时产生重组。

桥水基金创始人达里奥发布了2万字长文，以剖析在长期债务周期中，货币、信贷和债务的相互运作方式，以及它们驱动全球经济和政治变化的方式。达里奥指出，如果不了解货币、信贷和债务之间是如何运作的，就无法理解经济是如何运作的，进而就更无法理解整个经济政治体系是如何运作的。

为了理解帝国及其经济起起落落的原因，以及现在世界秩序发生了什么，你需要理解货币、信贷和债务是如何运作的。这一点至关重要，因为从历史上看，无论是过去还是现在，人们最乐于为之奋斗的就是财富，而对财富的增减产生最大影响的就是货币和信贷。因此，如果不了解货币和信贷是如何运作的，就无法理解经济是如何运作的，进而就更无法理解整个经济政治体系是如何运作的。

举个例子，如果不理解二十年代债务泡沫和贫富差距是如何产生的、债务泡沫的破裂又是如何导致了三十年代的大萧条，以及大萧条和过度的贫富差距如何引发了世界各地的冲突，那么也就无法理解是什么力量导致了富兰克林·罗斯福当选总统，以及在他当选后不久所推出的新计划（中央政府和美联储将共同提供大量的资金和信贷）。就是这些改变了当时的世界秩序，而这又与现在正在发生的事情颇为相似，了解其背后的机制和原理，将有助于更好地理解新冠病毒大流行的背景下，接下来会发生什么。

永恒而普遍的基本原理：货币和信贷

所有实体（国家、公司、非营利组织和个人）都需处理基本财务，他们的收入和支出构成了净收入，而这些流动是可以用资产负债表中的数字来衡量的。如果一个人赚的比花的多，他就会有利润，从而使他的储蓄增加。而如果一个人的支出大于收入，那么他的储蓄就会减少，或者他不得不通过借钱或来弥补差额。

如果一个实体拥有巨额净资产，它的支出将可以高于收入，直到资金耗尽，这时它必须削减开支。如果不削减开支，它将会有大量负债/债务，如果它没有足够的收入来偿还，它就会违约。由于一个人的债务是另一个人的资产，债务违约会减少其他实体的资产，进而要求它们削减开支，从而导致债务下降和经济收缩。

这种货币和信用体系适用于所有人、公司、非营利组织和政府，但有一个重要的例外。所有国家都可以印钞给人们消费或放贷。然而，并不是所有政府发行的货币都具有相同的价值。

在世界范围内被广泛接受的被称为储备货币。而在当今世界上，占主导地位的储备货币是美元，由美联储发行，占所有国际交易的55%。另一种则是欧元，由欧洲央行发行，占所有国际交易的25%。目前，日元、人民币和英镑都是相对较小的储备货币，尽管人民币的重要性正迅速上升。

拥有储备货币的国家更容易通过大量借贷摆脱困境。原因在于，世界上其他国家倾向于持有这些债务和货币，因为它们可以用来在世界各地消费。因此，拥有储备货币的国家可以发行大量以储备货币计价的信贷/债务，尤其是在目前这种储备货币短缺的情况下。

而相比之下，没有储备货币的国家则没有这种选择。它们在以下情况中，特别需要这些储备货币（如美元）：他们有很多以他们不能印刷的储备货币计价的债务（如美元）；他们在这些储备货币上没有多少储蓄；他们获得所需货币的能力下降。当没有储备货币的国家急需储备货币来偿还他们的债务，以储备货币计价和交易的卖家希望它们用储备货币来支付时，它们就只能破产。这就是现在许多国家的情况。

这也是许多州、地方政府、公司、非营利组织和个人会面临的情况。当它们遭受了收入损失，有没有多少存款来弥补损失时，它们将不得不削减开支或通过其他方式获得资金和信贷。

这就是现在的世界上正在发生的事情：风险储蓄即将耗尽，以及债务违约的风险。有能力这样做的政府正在印钞，以帮助减轻债务负担，并帮助为以本国货币计价的开支提供资金。但这将削弱本国货币，提高本币的通胀水平，以抵消需求减少和被迫出售资产所造成的通货紧缩，而那些资金紧张的国家就不得不筹集现金。

Hong Kong has a more vibrant capital market ― its stock exchange market capitalisation this month was more than seven times larger than Singapore’s at HK$367.7 billion (US$47 billion), compared to S$9 billion (US$6.4 billion) ― with more Chinese companies choosing to raise funds there. It is also where wealthy mainlanders stash funds.

More than 420 hedge funds are based in Hong Kong, and these funds manage assets worth almost US$91 billion, more than is managed in Singapore, Japan and Australia combined, according to a Financial Times report this month.

About 650,000 foreign residents, including domestic helpers, live in Hong Kong, out of a total population of more than 7 million. Singapore has a population of 5.7 million, of whom almost 1.7 million are foreigners. About 400,000 are foreigners on employment passes that mean they earn at least S$2,400 or S$3,900 a month.

While there have been no signs of an exodus from Hong Kong, bankers and business professionals in Singapore say there have been inquiries from wealthy investors seeking to move more money there and firms mulling over an expansion or relocation of their operations.

One senior banker said banks had been allocating staff to receive any funds flowing out of Hong Kong and into the city state, but they were not expecting businesses to abandon Hong Kong just yet.

The banker, who did not want to be named as he was not authorised to speak on behalf of his organisation, said businesses would be mindful that moves to or talk of relocating could be perceived by Beijing as the brand being “unsupportive” of its policies on Hong Kong.

TMF Group, a professional services firm that provides accounting, tax and human resources support to businesses, said it had received inquiries from companies exploring the possibility of leaving Hong Kong for Singapore. But many of the inquiries “have not translated into action”, said Paolo Tavolato, its head of Asia-Pacific.

“Almost no firm with a head office or regional head office in Hong Kong has chosen to relocate it.”

Over at real estate consultancy Knight Frank, head of capital markets Ian Loh said that since January he had got roughly 30 per cent more inquiries from investors based in Hong Kong.

He has had more clients, ranging from family offices to investment funds, asking about buying strata offices, shophouses and buildings in Singapore, but while some deals have concluded and the investors have moved some business operations to Singapore, Loh said most investors were still in the early stages of exploring their options and were not ready to make decisions yet.

Business consultancy firm Vistra said it had seen “a strong pickup” of new business enquiries from Hong Kong-based companies in the last month, especially from fund management companies.

“The intention is to expand their operations in Singapore to complement their Hong Kong operations,” said Otto Von Domingo, head of commercial Southeast Asia at Vistra Singapore.

Tavolato said his conclusion was that Hong Kong’s strength as a financial and business capital remained, it was “stronger than many give it credit for”, and it had an “incumbent’s advantage” of firms being reluctant to move head offices.

Fatas, the economics professor at INSEAD, said Hong Kong’s proximity to mainland China was a winning factor, echoing a point made by Hong Kong business leaders, who said the city was the gateway to the mainland for both foreign and local firms.

The Bank of Korea (BOK) and the financial authorities here should reveal specific timelines for their plan to retrieve massive anti-coronavirus liquidity supplied to the market, as a lack of such details may end up causing medium- to long-term market confusion here, a former foreign investment ombudsman said in an interview.

Jeffrey In-chul Kim, now a professor emeritus at Sungkyunkwan University, voiced the need for the central bank to make public its plans as early as possible, as the local currency is not a global reserve currency such as the U.S. dollar.

“Speculation will run more and more rampant in the market unless the central bank makes timely announcements over how and when to retrieve the supplied liquidity for the economy’s mid- to longer-term recovery,” Kim told The Korea Times, Friday.

“Some developed countries ― such as the U.S. ― have in recent months pushed for supplying an unlimited amount of liquidity to the market against the virus-induced economic downturn, but they can do so because international currencies run low inflation risks. But this is not the case for the Korean won,” the economist said.

Following a recent decision by the U.S. Federal Reserve, the BOK also took a similar step to provide unlimited liquidity to financial institutions here, in a move to rev up the sagging economy.

The unprecedented decision reflected on growing concerns over the economic downturn here in the wake of the COVID-19 pandemic and prolonged low interest rate.

The central bank and the financial authorities have expanded market liquidity to 53 trillion won particularly by purchasing bonds.

“It is a misunderstanding that the economy will necessarily bounce back if authorities expand liquidity,” he said. “The point is to supply the liquidity to the areas in desperate need of capital.”

“For the nation’s fiscal soundness, the financial authorities will soon put an end to the liquidity expansion policy,” he said. “But they need to announce the retrieval plans in advance, so the market is not disrupted due to possibly ensuing speculation over its liquidity retrieval.”

Informal lending by Chinese banks, so-called shadow banking, is back in vogue after two and half years of regulatory clampdown as Beijing pledges faster credit growth to rescue its coronavirus-hit economy, according to a new report.
Overall shadow banking assets in China rose for the first time since 2017, a report published by American business and financial services company Moody’s on Wednesday showed.
The report detailed how shadow banking assets in the world’s second largest economy grew 100 billion yuan (US$14 billion) to 59.1 trillion yuan (US$8.4 trillion) in the first quarter of 2020, compared with a 1.2 trillion yuan decline to 60.2 trillion yuan during the same period in 2019.
This rise suggests that Beijing, which had been tightening its control over off-balance sheet lending by banks since 2016 to curb financial risks, has switched its focus to supporting economic recovery by slowly allowing shadow credit to expand again, according to the rating agency.
“Increased policy focus to support economic recovery will fuel further expansion of shadow credit. However, a rapid rebound is unlikely as financial systemic stability still remains one of the authorities’ main policy objectives,” Moody’s said.

Shadow banking had previously increased rapidly in China, mainly driven by the need for borrowing among small and medium-sized companies in the private sector which are unable to obtain loans from banks, which often prefer to lend to state firms and larger listed private companies.
Wealth management products, which are essentially off-balance-sheet substitutes for deposits without the regulatory interest rate ceilings offered by banks to savers, were a big driver to the growth of shadow credit in the first quarter, Moody’s said.
Issuance of wealth management products with investment terms of three months or less rebounded to 43 per cent of the total volume in the first three months of 2020, the highest increase since the second quarter of 2018.
Wealth management products constitute the largest shadow banking segment in China and are often invested in a range of loans and securities that have high exposure to speculative areas such as real estate and stocks or funding weaker borrowers.
The central government has sought to balance the need to curb the growth of shadow banking as default risks rise in wealth management products and trust products, while leaving some room for the private sector to access credit, but Moody’s expects asset quality to continue to deteriorate this year in the trust sector.
Trust companies do not face the same government-imposed lending quotas as state banks, giving them more flexibility to hand out loans or pick investment choices.

The prospects for HSBC and other banks to recover losses from a failed Singapore oil trader are dimmer than originally thought, after an accounting review found the energy firm overstated assets by US$3 billion and fabricated documents on a “massive scale”.
Hin Leong Trading has assets of about US$257 million, or 7 per cent of its estimated US$3.5 billion in liabilities, the company’s interim managers said in a report to Singapore’s High Court on Tuesday. That is less than half the assets estimated by founder Lim Oon Kuin and his son Evan Lim, according to earlier affidavits to the court.
HSBC is among 23 banks owed almost US$4 billion by Hin Leong, one of the largest traders in Singapore before its collapse in April following a plunge in oil prices that exposed what the report found were “manipulated” accounts and frequent double counting of cargo to keep credit lines flowing.
“The scale and regularity of the fabrication suggests that the practice was routine and pervasive,” the report found. “These forged documents enabled the company to mislead banks in extending financing to the company and also acted as supporting documentation for fictitious gains and profits.”
HSBC, the London-based bank with the most exposure to Hin Leong at about US$600 million, declined to comment on the report. Hin Leong did not respond to email inquiries seeking comment. The court filing was earlier reported by Reuters and Singapore’s The Straits Times.

Hin Leong “systematically manipulated its accounts to inflate the value of its accounts receivables” to present an exaggerated picture of its financial health, according to the report by PwC’s Chan Kheng Tek and Goh Thien Phong. Chan and Goh, who were appointed in April as interim judicial managers to oversee the company, added that Hin Leong has “no reasonable prospect” of rehabilitation as a stand-alone entity.
The trading house and its sister companies owned by the Lim family should be put together as an integrated trading platform to be restructured, while the Lims should inject their personal assets, the managers said in the report. The Lims, who received dividends totalling US$90 million in the 2018 and 2017 financial years, have not responded to this suggestion via their legal advisers, according to the report.
The Hin Leong collapse has sparked several legal disputes among banks and other creditors seeking to recover losses from the debacle. Sinopec last month lost a legal bid to halt a loan payment, while Winson Oil Trading took Oversea-Chinese Banking Corporation to court, demanding payment for a sale of fuel tied to Hin Leong.

The COVID-19 crisis should destroy once and for all the notion that interest rates can be set by math alone.

Tiff Macklem, the new Bank of Canada governor, used his first speech Monday to defend the central bank’s commitment to inflation targeting, a regime he helped design as a young researcher in the late 1980s.

“The message I want to leave you with is that while we are using different tools in these extraordinary times, our policy remains grounded in the same framework,” Macklem said. “The inflation target is our beacon that is guiding our actions as we help bring the economy from crisis, through reopening, to recuperation and recovery.”

That’s a more controversial declaration than it might sound.

There is a rich debate in academia over whether inflation targeting still works as well as practitioners have come to believe. The lockdowns have emboldened critics, who can now argue that the price gauges that central bankers use to guide policy have been rendered unreliable because spending patterns have changed dramatically.

“When it comes to the longer-term recovery, (central banks) inevitably will have to revisit their policy targets,” Jim O’Neill, the former Goldman Sachs Group Inc. chief economist who is now chair of Chatham House, a London-based think-tank, wrote last month. “After all, traditional inflation targeting based on the Consumer Price Index is unlikely to serve any purpose for the foreseeable future.”

The contrarians raised enough doubt that many central banks, including the Bank of Canada, are taking a hard look at the way they set interest rates.

In fact, Macklem will have to make a call next year on whether to stick with the current inflation-targeting regime or recommend that the government adopt something else. The Finance Department updates the central bank’s mandate every five years. In 2017, Stephen Poloz, the previous governor, initiated a “horse race” between the best ideas about how to conduct monetary policy, pledging to subject all of them to rigorous study. The mandate is next up for review in 2021.

O’Neill and others favour scrapping inflation in favour of a target for nominal gross domestic product, which is one of the contestants in the Bank of Canada’s “horse race.”

For now, Macklem is signalling that he has no doubt about the positive outcomes from keeping inflation low and stable. However, he concedes the point that a few months of lockdown might have made his main gauge — the Consumer Price Index — unreliable.

“Total CPI is weighted to reflect the buying patterns of the average Canadian household,” Macklem said. “In normal times, for example, Canadians spend a lot more on gasoline than on alcohol, so gasoline has a larger weight in the index. But these aren’t normal times.”

Here, policy-makers can silence a different group of critics. They don’t have as much influence as they used to, but some economists think interest rates should be determined by mathematical equations involving variables such as the CPI and economic growth. Such a rigid approach could lead to bad outcomes at times like these when the variables have veered from trend.

Last month, the CPI decreased 0.4 per cent from May 2019, the second consecutive decline. Does that mean Canadians are experiencing deflation? Probably not, because much of the downward pressure is coming from gasoline prices and most Canadians haven’t been driving very much. At the same time, weaker inflation is in line with a recession, so the signal remains relevant, but it’s not telling policy-makers how much extra stimulus could be required.

Macklem said the central bank and Statistics Canada are working on the problem.

An early discovery by the Bank of Canada is that the gap between perceived inflation and measured inflation is wider than usual. That’s probably because our understanding of prices tends to be based on the things we buy frequently, not the big-ticket items that eat up most of our disposable incomes.

For the past few months, we’ve been buying a disproportionate amount of groceries, which also happen to represent one of the few sources of upward pressure on the CPI. So even though inflation is at zero, surveys suggest that people think inflation is much higher, Macklem said. That matters because inflation expectations can become self-fulfilling prophecies, and therefore something policy-makers need to take into account when setting interest rates.

“Some of the shifts that we’ve seen in spending patterns are going to unwind as we get back to regular shopping activities,” Macklem said on a call with journalists after the speech. “We’ll really try to look through these temporary effects that are going to unwind and factor in the more enduring effects.”

In the meantime, Macklem and his deputies will rely more on instinct and less on their dashboard. Next month, the central bank will release a “central scenario” of where it thinks the economy is headed, rather than its typical quarterly forecast.

“We expect the quick rebound of the reopening phase of the recovery will give way to a more gradual recuperation phase, with weak demand,” Macklem said. “If, as we expect, supply is restored more quickly than demand, this could lead to a large gap between the two, putting a lot of downward pressure on inflation.

“Our main concern is to avoid a persistent drop in inflation by helping Canadians get back to work.”

Investors, looking past the COVID-19 pandemic, are betting that the Bank of Canada could be among the first major central banks to hike interest rates, signalling new governor Tiff Macklem’s success so far convincing the market not to expect negative rates.

Money market data shows investors have moved away from pricing in additional easing by the Bank of Canada and instead see a steady profile for rates this year and next, with about a 50 per cent chance of a rate hike in 2022..

The Federal Reserve, which has been pressured by U.S. President Donald Trump to cut rates below zero, is not expected by money markets to hike until at least 2023.

“The Bank of Canada has done a better job than some other central banks of quashing speculation around further rate cuts,” said Andrew Kelvin, chief Canada strategist at TD Securities.

“If you think that the economy did hit bottom in April, a rate hike in two years … is a plausible outcome I think,” Kelvin said.

After the Bank of Canada slashed interest rates in March to a record low of 0.25 per cent, speculation mounted that it would join central banks in Japan and Europe in setting rates below zero.

Just last month, the Canadian dollar slumped as some investors mistook a comment by Macklem, on the day he was named the governor, as putting negative rates on the table.

Sub-zero rates lower borrowing costs and could help exporters if the Canadian dollar were to decline, but they also hurt lending margins for banks and penalize savers.

Some economists argue the experience of Europe and Japan shows that negative rates are not effective at boosting economic growth. Alternatives for the Bank of Canada if it needs to add stimulus include adding to the size of its bond-buying program.

Both Macklem and his predecessor Stephen Poloz have said they see 0.25 per cent as the floor for rates. That could have headed off some potential headaches.

If negative rates “were to get priced in and the BoC didn’t meet the market expectation, then the BoC would be disappointing markets,” said Greg Anderson, global head of FX strategy at BMO Capital Markets. It “would likely trigger an equity decline and CAD rally at a really bad moment.”

Money markets could also be signalling confidence that adequate fiscal and monetary policy stimulus has been put in place to help Canada’s economy recover, said TD’s Kelvin, adding that the BoC will not want to encourage excessive borrowing from already heavily-indebted Canadians.

“I wouldn’t be surprised if the Bank of Canada was a little bit more eager (than other central banks) to move out of emergency rates when they are able to,” Kelvin said.

评级机构穆迪周三发表的报告称，今年首季中国内地广义影子信贷录得两年半以来首次增长，而以调整后社会融资总量占名义GDP比重衡量的总体经济杠杆也大幅上升。

报告称，今年首季广义影子银行资产增加了1,000亿元人民币，主要因资产管理业务增加带动。尽管增长温和，但却是两年半以来首次增长，而去年影子银行资产减少了2.3万亿元。再加上新冠病毒疫情导致经济收缩的影响，广义影子银行资产占名义GDP的比重从2019年底的59.5%升至今年首季的60.3%。

“由于监管部门放松货币和信贷政策以支持中国经济复苏，我们预计未来数月杠杆率仍将继续上升，不过总体升幅有限，因为政府仍注重金融稳定性。”穆迪董事总经理/亚太区首席信用总监Michael Taylor表示。

穆迪副总裁/高级信用评级主任李秀军表示，基建贷款的增长扭转了此前信托贷款下滑的局面。第一季度向地方政府融资平台投放的信托贷款也有所反弹，反映出平台公司牵头的基建项目获得了政策支持。

今年首五个月净信托流入减少了440亿元，相比前五个月(去年8-12月)累计下跌3,720亿元为少，要因针对基建板块的信托贷款于首季扩张，并超过该板块去年全年的信托贷款总额。

此外，因货币政策环境的放松，小银行通过向非银行金融机构提供融资来改善贷款收益率，银行与非银行金融机构之间的相互关联性也呈现出过去12个月以来首次上升趋势。

穆迪指，受疫情相关的不确定性影响，流动性更好的资产越发受到投资者的欢迎，例如货币市场基金和短期理财产品等。2020年第一季度，货币市场基金的资产管理规模在持续一年的缩减之后恢复增长。

Before the first wave of staff returned to Credit Suisse’s Paradeplatz head office this month, the financial institution supplied free antibody checks so workers would have a “greater degree of certainty” about whether or not they had already had Covid-19.

While Credit Suisse is contemplating increasing the programme globally, Goldman Sachs and UBS have each determined in opposition to it for now, aware that outcomes will be ambiguous and that individuals who check constructive may very well be extra careless about an infection management.

Other huge banks similar to JPMorgan Chase, Morgan Stanley, Bank of America and Citigroup have but to make up their minds.

Credit Suisse is probably in a extra handy place to supply checks — deputy chairman Severin Schwan is chief government of Roche, which makes considered one of solely three checks deemed dependable. But this broadly diverging strategy to antibody testing is only one instance of the other ways banks are tackling the mammoth process of bringing staff back into places of work from London to New York, Frankfurt and Paris.

In a sequence of interviews with the Financial Times, executives described completely different methods on every thing from how to transfer staff to and from the office, to supplying private protecting gear, managing how workers transfer round in the office and rotating groups.

Philosophically, I feel it is necessary to [return to office]. We are going to assist the financial system normalise, so we as an establishment want to get back to normality as nicely

How lifts can be utilized safely has emerged as a very vexing downside inside the constructing, whereas few managers anticipate workers to really feel assured sufficient to restart every day commutes earlier than a vaccine is discovered.

“This is going to cause a seismic shift in how all office-based organisations approach the workplace,” stated Charlie Netherton, head of consumer advisory companies for the UK and Ireland at Marsh. “No one was prepared for such a rapid shock and transition to the future.”

Banks even have very completely different views on the long-term implications for working life after lockdown ends. A senior government at a significant European lender spoke enthusiastically about saving $100m or extra a 12 months on journey and leisure bills, which have plunged virtually 90 per cent throughout the disaster to between $3m and $5m a month from $25m.

He stated worldwide journey for inside conferences may all however disappear, now that individuals have tailored to video calls.

Wall Street bankers are much less optimistic about bills cuts, as a result of financial savings may very well be offset by new bills similar to paying worker residence working prices, supplying PPE and better property prices if staff have to work a metre or extra aside.

In London, many banks kicked off the first part of their plans on June 15, when the authorities allowed “non-essential” companies to reopen. HSBC, which is sort of back to regular in Hong Kong and Shanghai, has informed UK staff it’ll begin repopulating its 45-floor Canary Wharf tower from July 1.A social-distancing ground marker in an ABN Amro carry © Bloomberg

For the first three months, it expects solely 10-20 per cent capability so as to preserve social distancing. Those engaged on the buying and selling ground shall be amongst the first to return.

“Philosophically, I think it is important to [return to office],” one HSBC government stated. “We are going to help the economy normalise, so we as an institution need to get back to normality as well.”

British lender Lloyds will retain a skeleton staff of lower than 10 per cent in its two London places of work till September, stated an individual briefed on its plans. It anticipates it is going to be simpler to bring individuals back to its nine-storey Gresham Street office than its different London Wall constructing, which has twice as many flooring.

Across Europe, UBS is bringing back merchants, threat managers and bankers engaged on stay offers first, however different staff will proceed at residence so long as doable.

RAM Ratings Services Bhd expects Malaysia’s bond market to continue its bearish run over concerns on escalating Covid-19 outbreak in the US and wider fiscal deficit and debt levels over the government’s Penjana stimulus package.

The rating agency said the concerns had pushed up the 10-year Malaysia Government Securities (MGS) yield by 25.5 basis points to a peak of 3.12 per cent on June 9, before swiftly retreating below 3.0 per cent.

This is despite foreign interest returned to the Malaysian bond market in May after three consecutive months of net outflows totalling RM22.4 billion, supported by a more upbeat global sentiment.

Since then, RAM said, the benchmark yield had stayed above the level seen throughout May, with average yield of 2.89 per cent, on account of persistent foreign investor risk aversion.

“This trend suggests that foreign buying of MGS is likely to remain dull for the rest of June,” it said in a statement.

It said over the longer term, all-time low global interest rates amid liquidity-boosting measures by central banks would continue to suppress domestic bond yields.

“At its last Federal Open Market Committee meeting on June 10, the US Federal Reserve indicated that the benchmark short-term interest rate will remain near zero through 2022,” it said.

RAM said similarly, expectations of further Overnight Policy Rate cuts by Bank Negara Malaysia in the second half 2020 would also keep a lid on domestic bond yields.

The firm said the Penjana stimulus package, launched in June, was expected to widen Malaysia’s fiscal deficit to 5.8-6.0 per cent of gross domestic product, from its previous projection of 4.8 per cent.

Given the government’s intention to fund this deficit domestically, RAM revised its MGS/GII issuance upward to RM155 billion-RM165 billion for 2020, from the previous RM135 billion-RM145 billion.

信用评级机构穆迪周一表示，今年新冠疫情将把全球最富裕国家的负债比率平均提高近20个百分点，破坏程度几乎是金融危机期间的将近两倍。

穆迪的这份报告考察了从美国和日本到意大利和英国等14个国家，评估了新冠疫情导致的经济放缓会给财政造成的伤害程度。

“我们估计这些国家中，政府债务/GDP比率平均会上升约19个百分点，几乎多达2009年金融危机期间的两倍。”

“与全球金融危机期间相比，这次债务负担的上升将更加直接和普遍，反映了新冠病毒疫情冲击的严重程度和广度。”

预计意大利、日本和英国的债务升幅将最大，相当于各自GDP的25个百分点左右，而美国、法国、西班牙、加拿大和新西兰的增幅将达到约20个百分点。

英国上周公布数据显示，5月公共部门净借款创下天量纪录，公共部门债务与经济产出之比超越100%。

穆迪表示，如果不能把债务水平降下来，将使得信用状况较弱的国家更难以承受未来的经济或金融冲击，主权信用评等也可能下调。

“评级影响将取决于政府在潜在的未来冲击之前扭转债务轨迹的能力，”穆迪报告表示。

“意大利和日本将特别取决于增长趋势，因为缩小债务和维持比冲击以前更强劲的财务状况的空间是有限的。”

Controversy is growing over the entry of big tech companies, such as Naver and Kakao, into the financial sector, as they are not subject to the same regulations as financial firms.

Banks and other financial services firms are crying foul over a “double standard” that they claim is providing regulatory loopholes for the tech giants to more easily expand their presence in the industry by capitalizing on their platforms and technologies.

Naver and Kakao have begun to establish financial businesses. Naver earlier this month launched a cash management account service together with securities firm Mirae Asset Daewoo. The tech company established Naver Financial as a subsidiary last year, after seeing its online payment service grow.

Kakao has set up an internet bank and also has Kakao Pay, a financial platform based on mobile money transfers. Kakao Pay has acquired an insurtech firm, and is taking steps to establish a separate digital non-life insurer. Kakao Pay also launched a brokerage as a subsidiary, after taking over Baro Investment & Securities.

Financial firms are worried as the tech companies have immense potential in the financial sector considering brand awareness, capital and massive amounts of data from their e-commerce platforms. Naver Shopping has grown into Korea’s largest e-commerce platform with 30 million users as of the third quarter of last year. Kakao Commerce has seen annual transactions grow to several trillions of won.

The rapid growth of the companies’ online payment and money transfer services is attributed to Naver and Kakao’s respective dominance as the No. 1 web portal and mobile messenger service providers.

The firms also pose a threat as they hold an advantage in developing innovative technology-based services.

Financial firms are unhappy about the situation as tech companies are subject to lighter regulations even if they offer financial services.

They contend the government has been too lax in regulating big tech companies, because they have prioritized fostering innovative technology and services.

Banks and financial companies are subject to various regulations in the areas of capital requirement, financial soundness and majority shareholders’ qualification.

In contrast, if tech giants engage in the electronic banking business, they are controlled by specific laws governing e-transactions which provide leeway for them to get around these stricter regulations.

Naver is seen to have held back from launching an internet bank, despite widespread expectations, as internet banks face more regulations than companies offering financial services as non-bank entities.

The government should not make any rash decisions in levying a “cryptocurrency tax,” as the new taxation scheme may end up blocking industrial growth in the emerging digital currency market, economists said Sunday.

The nation’s financial authorities ― headed by the Ministry of Economy and Finance ― have discussed for years whether to impose taxes on virtual currencies in line with the global rise of bitcoin.

The cryptocurrency market has been considered a tax-exempt safe haven here despite its rapid growth, as regulators and experts remained poles apart over whether to accept virtual currencies as universal assets subject to regulations.

Wrapping up the years-long discussion, the finance ministry decided recently to impose taxes on cryptocurrency transactions. Minister Hong Nam-ki said Thursday it will announce a reformed tax system in July with details over the encrypted currency taxation.

“It is premature for the government to impose cryptocurrency taxes at a time when the market has not developed enough in a stable manner,” Yonsei University economist Sung Tae-yoon said. From an economic viewpoint, he said, cryptocurrencies cannot be considered a universal asset like traditional paper currencies.

He also raised worries that any tough regulations or taxation schemes may block growth in the overall digital currency market.

“The financial authorities should think twice before imposing taxes on the market, as the digital currency industry is still in its infancy,” he said. “Any rash taxation or introduction of regulations can be a stumbling block for sustainable growth of the industry.”

The finance ministry is in internal discussion over how to levy taxes on cryptocurrency transactions. For now, the authority is likely to impose a capital gains tax over revenues generated by encrypted currency transactions.

Chances are the financial authority will follow in the footsteps of its counterparts from the world’s leading financial powerhouses ― such as the United States and Japan ― all of which impose taxes on transactions involving bitcoin and other encrypted currencies.

The Central Bank of Myanmar (CBM) has permitted local banks to restructure and reschedule existing loan repayments to help their clients, CBM Deputy Governor U Soe Min, told.

While the economic impact of the COVID-19 pandemic has yet to be quantified, it is expected that businesses will bear the brunt of a decline in demand for products and services. The CBM anticipates that the impact on small and medium-sized enterprises (SMEs) will be the most severe.

As such, allowing businesses with healthy repayment track records to defer repaying their outstanding loans should provide them with some reprieve and help many maintain business operations, U Soe Min said.

KBZ Bank is among the local banks that has launched schemes to help borrowers. Last week, it announced the COVID-19 Credit Assistance Program for SMEs to provide urgent financial relief to its SME customers. Under the program, SMEs can apply for extensions of current overdraft and term loans, deferrals on principal loans and interest and recapitalise principal loans and interest for a period of up to six months.

“By using their current cash flow for business operations instead of servicing loans, SMEs will have a better chance to stay afloat and recover during this critical period,” U Zaw Lin Aung, Senior Managing Director of KBZ Bank, said in a statement.

Other banks, including Yoma Bank, CB Bank and uab Bank have also launched similar schemes allowing customers to defer their loans and interest repayments.

National banks have pledged to maintain strong digital security systems and have encouraged consumers to take precautions against the risk of digital security breaches.

Tantri Desyanti, a 25-year-old customer of Jenius, a digital banking platform operated by publicly listed lender BTPN, recently experienced a cybersecurity breach. In a viral tweet posted on June 9, Tantri said she had lost Rp 3.2 million (US$228.58) from her Jenius account, through a series of unauthorized transactions through Paypal.

She was later refunded by the bank, but her case has highlighted the risk of cybersecurity breaches in online banking platforms.

According to a 2018 PricewaterhouseCoopers survey polling 43 Indonesian banks, the industry considers cybersecurity its biggest risk over the next two to three years.

BTPN has said it has implemented a multilayered security system to secure digital transactions and is using the latest technology.

“Aside from that, we routinely educate our users about data security, as well as offline and online transaction security,” BTPN digital banking head Irwan S Tisnabudi told The Jakarta Post on Tuesday.

Irwan added that Jenius continuously reminded its customers to refrain from sharing classified information, such as PIN numbers, passwords, one-time passwords (OTP), and to change their PINs and passwords regularly.

Regarding Tantri’s case, Irwan said the bank maintained that there had not been any account breach or issue within Jenius’ internal system. The bank suspected that the customer had been manipulated by a scammer into providing confidential information.

Bank Central Asia (BCA), the country’s biggest privately owned bank, said it had maintained the security of consumer transaction information and had applied security systems in accordance with regulations.

“BCA is continuously carrying out development on its transaction securitization system,” BCA executive vice president of the secretariat and corporate communications Hera F. Haryn told the Post on Monday.

BCA enjoyed a steep 91 percent year-on-year (yoy) rise in the number of mobile banking transactions in the first quarter of this year. The value of the transactions reached Rp 3.38 quadrillion. The number of BCA internet banking transactions increased by 24 percent to 740 million during the same period.

The bank is encouraging consumers to download its official mobile banking application to maintain transaction security. It is also reminding customers to remain cautious about the safety of the internet network they are using.

Jay Powell, the chair of the Federal Reserve, has warned Congress against withdrawing fiscal assist for the US financial system, saying it might imperil the restoration from the shock of the coronavirus disaster

“I would just note that there are something like 25m people who have been dislodged from their job either in full or in part due to the pandemic,” Mr Powell advised the House monetary companies committee on Wednesday. “It would be a concern if Congress were to pull back from the support that it’s providing too quickly.”

Mr Powell’s feedback got here after he advised the US Senate on Tuesday that “significant uncertainty” remained across the form and timing of the rebound from the sudden recession afflicting the world’s largest financial system.

His phrases got here as the talk stays heated on Capitol Hill about whether or not to resume $600 per week in emergency unemployment insurance coverage enacted throughout the disaster. The assist expires in July.

Democrats say it must be prolonged till January, however Republicans contend that the cash discourages individuals from returning to work as states raise restrictions on exercise.

It can be sensible to have a look at methods to proceed to assist each people who find themselves out of labor and likewise smaller companies that won’t have huge assets

Fed officers usually draw back from prescriptions to lawmakers on taxes and spending, and Mr Powell mentioned he didn’t need to make particular suggestions for measures Congress ought to take. But he did recommend that the unemployed would want extra assist.

“It would be wise to look at ways to continue to support both people who are out of work and also smaller businesses that may not have vast resources for a continued period of time, not forever, but for a period of time so that we can get through this critical phase,” Mr Powell mentioned.

“The economy is just now beginning to recover, it’s a critical phase and I think that support would be well-placed at this time.”

Negotiations over a brand new fiscal bundle — on prime of the $3tn handed throughout the pandemic — have nonetheless not ramped up on Capitol Hill. In addition to the controversy over unemployment advantages, partisan variations have developed over assist for cash-strapped state and native governments, which Republicans are additionally resisting.

This week, Ben Bernanke and Janet Yellen, Mr Powell’s predecessors on the Fed, signed a joint letter with 130 economists saying “insufficiently bold” motion by Congress risked resulting in “prolonged suffering and stunted economic growth”.

“If Congress fails to act, state and local governments face potentially disastrous budget shortfalls, and the Congressional Budget Office estimates the unemployment rate will probably be more than 11 per cent at the end of the year,” the letter mentioned.

1/5
Poor credit offtake
In the wake of the coronavirus pandemic, the global economy, including India’s, has slowed down considerably. In order to get the wheels spinning again, the government and the RBI introduced a number of financial schemes, but recent data suggests that corporations have become highly risk-averse in the face of uncertainty.

2/5
Multi-decade low
As ET reported, bank credit growth will hit a multi-decade low of 0-1% which will be nearly 800 bps lower than the 8-9% growth expected before the pandemic, Crisil ratings said on June 8. The forecast presumes a base case scenario of gross domestic product contracting 5% this fiscal.

3/5
Corporate portfolio de-growth
The corporate loan portfolio, which constitutes almost half of total credit, is expected to be the worst-hit, and de-grow this fiscal due to disruption in capacity utilisation, as per the ratings agency. Further estimates suggest that retail lending, which is about a fourth of overall credit, is also expected to slide amid job losses and salary cuts that will lead to reduced expenditure on discretionary items. Purchase of new homes and vehicles are expected to be delayed, impacting demand for financing.

4/5
Consumer spending hit
On the deposits front, there was a surge of Rs 4.83 lakh crore during the first lockdown and Rs 3.62 lakh crore in the second lockdown, which is indicative of “significant risk aversion in consumer spending”, a SBI note pointed out.

5/5
Silver lining
Though the silver lining as per Crisil is, MSME loans which are expected to grow the most at 6-7% this fiscal, riding on the government’s stimulus package – particularly the Rs 3 lakh crore Guaranteed Emergency Credit Line – and are likely to be driven by public sector lenders.

美国联邦储备委员会(FED/美联储)周五在向国会提交的报告中称，由于冠状病毒大流行对经济活动造成冲击，美联储预计家庭财务和企业资产负债表将遭受”持续的脆弱性”。

在向美国国会提交的半年度货币政策报告中，美联储还列举了一系列他们认为会阻碍经济复苏的风险。今年春天为了遏制新冠疫情的蔓延而大规模的关停，导致产出大幅下降。

报告称，“自3月以来，经济和金融冲击给家庭和企业资产负债表带来的压力，可能会造成持续的脆弱性。”

美联储还描述了一系列其他担忧，比如控制疫情的前景高度不确定，感染再度出现的巨大风险；由于消费者需求的崩溃，可能出现的企业，尤其是小企业，的破产潮；对工人需求复苏前景的不确定性以及工资可能面临的下行压力；州和地方政府财政出现重大压力；以及由于贸易中断而断裂的全球供应链重新配置成本高昂等。

此外，本周早些时候确认，新冠疫情导致的衰退已于2月正式开始，对占美国经济产出约三分之二的关键服务业的影响最大，这可能阻碍复苏。

报告称，“与以往的衰退不同，服务业活动的下降幅度比制造业更大——对行动的限制严重削减了旅行、旅游、餐饮和娱乐方面的支出——保持社交距离的要求和态度可能会进一步拖累这些行业的复苏。”

美联储表示，疫情对劳动力市场的冲击是”突然、严重和广泛的”，但同时指出，失业对低收入工人的影响尤为严重，他们可能对长时间没有薪资收入准备不足。

报告还指出，州和地方政府在面临税收锐减后正承受着“巨大压力”。尽管5月整体经济的就业岗位增加，初步迹象显示与冠状病毒相关的失业状况最糟糕时期可能已经结束，但州和地方政府继续裁员。

Leading mortgage lender HDFC on Friday slashed its lending rate by 20 basis points amid a gradual decline in the cost of borrowing across the system.

The move is in line with rate cuts by lenders like State Bank of India.

 “HDFC reduces its Retail Prime Lending Rate (RPLR) on housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 20 basis points (bps), with effect from June 12, 2020,” the company said in a statement.

The change will benefit all existing HDFC retail home loan and non-home loan customers, it said.

New rates will now range between 7.65-7.95 per cent for existing salaried home loan customers.

Rates across the banking system have headed south in the last few months, as the Reserve Bank of India (RBI) and the government work in tandem to propel the slowing economy.

The RBI last month cut the policy rate by 40 basis points to a historical low of 4 per cent to spur growth amid the COVID-19 crisis.

The global economy will suffer the biggest peace-time downturn in a century before it emerges next year from a coronavirus-inflicted recession, the OECD said on Wednesday.

Updating its outlook, the Organisation for Economic Cooperation and Development (OECD) forecast the global economy would contract 6.0 per cent this year before bouncing back with 5.2 per cent growth in 2021 – providing the outbreak is kept under control.

However, the Paris-based policy forum said an equally possible scenario of a second wave of contagion this year could see the global economy contract 7.6 per cent before growing only 2.8 per cent next year.

“By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments,” OECD chief economist Laurence Boone wrote in an introduction to the refreshed outlook.

With crisis responses set to shape economic and social prospects for the coming decade, she urged governments not to shy away from debt-financed spending to support low-paid workers and investment.

“Ultra-accommodative monetary policies and higher public debt are necessary and will be accepted as long as economic activity and inflation are depressed, and unemployment is high,” Boone said.

As the threat of a second wave of contagion keeps uncertainty high, Boone said now was no time to fan the flames of trade tensions and governments should cooperate on a treatment and vaccine for the virus.

The U.S economy, the world’s biggest, is seen contracting 7.3 per cent this year before growing 4.1 per cent next year. In the event of a second outbreak, the U.S. recession would reach 8.5 per cent this year and the economy would grow only 1.9 per cent in 2021, the OECD said.

The OECD expects the Canadian economy to decline 8% in 2020 and recover to 3.9% growth in 2021. A second wave of infection this year would cause the economy to shrink 9.4% and grow only 1.5% in 2021.

Meanwhile, the euro area is heading for a downturn of 9.1 per cent this year followed by 6.5 per cent growth next year. But the recession could reach 11.5 per cent this year in the event of a second outbreak, followed by growth of 3.5 per cent in 2021.

Britain is expected to see the worst downturn among the countries covered by the OECD, with its economy forecast to contract 11.5 per cent this year before recovering 9.0 per cent next year. A second outbreak could trigger a slump of 14.0 per cent this year followed by a rebound of 5.0 per cent next year, the OECD said.

Deutsche Bank has warned its provisions for bad loans will surge to the highest level in more than a decade this quarter as the coronavirus crisis leaves the global economy mired in recession.

Germany’s biggest lender had earmarked a provision of just €506 million for bad loans in the first three months of the year, but cautioned on Wednesday that the figure would increase this quarter.

“Our expectation would be that credit loss provisions will be in a range around €800 million for this quarter,” James von Moltke, chief financial officer, told analysts on Wednesday at Goldman Sachs’ European Financials Conference.

Analysts were expecting just €630 million in provisions for the second quarter, and €800 million will be up fivefold from a year ago.

Mr von Moltke added that “we would expect that the second quarter will be the peak of the loan loss provisioning for this year”, and that the picture would improve in the second half of the year.

Shares in Deutsche Bank rose 2.6 per cent in early afternoon trading in Frankfurt, close to the highest level since late February.

The optimism on loan losses reflected in Deutsche’s first-quarter provision caused some surprise among analysts given the economic damage wrought by efforts to contain Covid-19. Relative to the size of their loan book, only 10 of the 40 largest European lenders provisioned less than Deutsche, according to data by DBRS Morningstar.

Deutsche has argued that it is less exposed to credit card debt than many of its rivals and that an early lockdown in Germany, where state aid for stricken companies is more generous than in many other countries, will limit the damage to its loan book.

On Wednesday, Deutsche also announced a restructuring of parts of its private bank, its single biggest division by revenue. The business that serves private and commercial clients outside of Germany will become part of Deutsche’s wealth management division in a move intended to eliminate parallel structures in the back office. – Copyright The Financial Times Limited 2020

K bank will launch a new checking account service early next month, normalizing the internet-based bank’s business operation, the lender said Tuesday.

This is the first time in a year that the internet-only bank has come up with a new product for customers.

The bank said it will stop registering customers for its existing “Dual K Checking Account” in early July and introduce the new, upgraded checking account service

Market watchers see the move as an indication that the bank is seeking to normalize its operations as a capital increase issue has recently been cleared up. BC Card, a subsidiary of KT which owns a 10 percent stake in K bank, decided to buy the KT shares and raise its stake in the lender to 34 percent by purchasing new shares issued by the bank.

K bank is the nation’s very first internet-only bank that began operation in April 2017. But it has suffered from a lack of capital since last year.

It initially hoped to receive a capital injection from the mobile carrier KT, which looked to become the bank’s largest shareholder.

But the plan hit a snag after the nation’s financial authority halted a review of KT’s plan early last year on the grounds of an ongoing antitrust inspection into the mobile carrier. As a result, the bank had to stop giving loans in April last year, due to the failed increase.

Payments made via financial services platform Toss using stolen data earlier this month have placed the fintech unicorn in the hot seat. Toss has stated this was not a cybersecurity breach, but concerns are rising over the platform’s ability to detect suspicious transactions, resulting in customers leaving the company.

Toss did not provide details but conceded Tuesday it has seen customers leave the platform over concerns related to the incident, after reports surfaced on the case that took place last week. Even if it wasn’t a hacking incident, customers appear to feel uneasy, as it is unknown how the data was obtained.

A total of 9.38 million won in payments were made June 3 on three websites, including a game company, using stolen data of eight Toss customers. A police investigation is ongoing to find out who made the payments.

Four of the eight customers reached out to Toss after finding out about the payments. Toss said it was able to find four more customers whose data was stolen to make payments on the same websites.

Toss said it paid back each of the customers the amounts of money paid with the stolen data June 4, the day after the incident.

The payments were made on websites for which the payment process was simplified ― requiring only a name, phone number, date of birth and password.

A Toss spokeswoman said Tuesday this “web payment” system was changed for the three websites where the payments in question were made.

“We changed the payment system for the three websites to an application payment system, which checks if the actual owner of the account is making the payment,” she said.

The “web payment” system is applied to about 30 businesses affiliated with merchants partnering with Toss. The spokeswoman said Toss will review whether to change the payment system for all other businesses.

Some say the simplified payment system enabled stolen data to be utilized, as payments can be made with only a few personal details and five-character password.

Shinhan, KB, Hana and Woori financial groups are facing difficulties in attracting young engineers equipped with digital skills, due to their rigid corporate culture and tough financial regulations.

Despite the nation’s four largest banking groups’ efforts to find such people to engineer their digital transformation as the trend for contactless transactions grows due to the COVID-19 pandemic, IT experts are choosing to work for tech firms, rather than becoming bank employees.

According to industry sources, hundreds of experienced engineers and designers rushed to visit Naver Financial’s website between May 11 and 15 to apply for about 30 positions available at the IT giant’s financial subsidiary.

In contrast, all 15 KB employees sent to KakaoBank in 2016 refused to return to their previous workplace late last year, despite attractive incentives from their previous employer.

These cases may seem weird to those who remember when banks were popular workplaces here because of their stability and high salaries.

Korean students, however, are choosing not to work for conventional financial firms anymore.

A survey of 1,045 university students done by Incruit in June showed Kakao was their most-favored company, followed by Samsung Electronics, Naver and CJ ENM.

The local job market information provider said the respondents mentioned Kakao’s growth potential and work-life balance as the biggest reasons they want to work for the IT firm.

In the survey, none of financial firms were among the top 10.

Up until of 2017 when the Export-Import Bank of Korea ranked 10th, financial firms had regularly been in the top 10.

KB Kookmin Bank was on the list from 2006 to 2015, and Shinhan Bank was placed ninth in the same survey done in 2011.

However, their corporate cultures and regulations have led talented jobseekers to turn away from them.

“I had to do what bank employees ordered, and had to apologize when they had complaints, so I became withdrawn and suffered from an excessive workload,” an engineer who moved to a foreign company from a financial group’s IT subsidiary said on condition of anonymity.

Some engineers complained of the strict network separation policy imposed on banks, because it has barred them from telecommuting or working on a flexitime basis, despite the work-from-home trend amid the COVID-19 pandemic.

美联储周三结束为期两天的议息会议后宣布，维持现行利率0%-0.25%不变，符合市场预期。决定利率政策的联邦公开市场委员会也公布预测，今年美国经济将萎缩6.5%，年底失业率将达到9.3%。美国财长姆努钦表示，美国经济开始反弹，第三第四季将显著改善。

美联储周三决定，维持基准利率近于零。美联储并表示，在经济从新冠病毒疫情复苏之前，将维持现有利率政策。官员预料将维持低利率到2022年。

美联储在一连两天举行议息会议后，决定联邦基金利率目标范围维持在零至0.25%，合乎市场预期。

美联储决定利率政策的联邦公开市场委员会并公布经济预测，表示今年美国国内生产总额（GDP）将萎缩6.5%，但年底失业率会从目前的13.3%降至9.3%。

联邦公开市场委员会透过声明表示：这场新冠病毒疫情导致全美及世界各国经济面临巨大困境，对经济展望构成巨大风险。 美联储并承诺，将使用所有工具支持美国经济，重申新冠病毒疫情危机短期内严重影响经济活动、就业及通胀。公共卫生危机对中期经济前景，构成相当大的风险。

美联储发表的图表显示，预计将维持利率在目前水平直至2022年底。

不过，美国财长姆努钦周三表示，美国经济已开始反弹，预料将在第三及第四季显著改善。美国参议院举行会议，讨论美国政府在新冠疫情下协助企业的舒缓措施成果。努钦书面声明表示，就业职位和其他经济数据都显示，美国分阶段重启经济情况良好。

美国联邦储备委员会(美联储/FED)的最新政策会议周三落幕，美联储逐渐减少关注应对疫情冲击的大规模行动，重心转向尚在拟定中的计划，以协助强化及拉长刚起步的经济复苏。

美国5月就业报告交出新增250万个岗位的意外之喜，企业开始重新聘雇员工的速度之快，也让经济分析师感到惊讶。

虽然这鼓舞了一些乐观情绪，但美联储官员异口同声表示，经济统计数据的重要性暂时比不上疫情危机的进展。官方已认定美国经济2月起便陷入衰退，决策官员一致认为，在确定第二波疫情不会迫使民众再度无法出行之前，风险将持续偏高。

尽管2月以来美国减少约2,000万个就业岗位、经济可能正以大萧条时期的速度萎缩、染疫死亡人数将近11.1万人，在这一片愁云惨雾之中，美股却仍然回升到接近危机前的高档，拜美联储大举行动而企稳的债市，也为老牌百货公司梅西等众多面临困境的企业提供融资。

就业岗位严重流失，未来仍要面对历史性的风险，因此美联储可能依然强调未来几年将维持宽松货币政策承诺，并最终给出更具体的政策保证。

“尽管高频数据出现令人振奋的反转，也有初步迹象显示企业回聘活动升温，但对经济前景的看法应该仍偏向审慎，”牛津经济研究院(Oxford Economics)首席美国金融分析师Kathy Bostjancic表示。“尽管有强劲反弹”，失业率料仍居高不下，通胀低于美联储2%目标的情况至少会持续到明年，“…此外还有第二波疫情的风险。”

美联储将自去年12月以来首次发布最新经济预估，阐述对经济前景的看法。上一份预估发布时，长达10年的经济扩张还没有被突如其来的新冠疫情打破。

美联储的这份经济预估和政策声明将于周三1800GMT出炉，之后美联储主席鲍威尔将召开记者会。

承诺提供支持

会议声明和鲍威尔可能会重复危机初期以来的标准承诺，即保持利率接近于零并提供一切所需支持，直到经济“步入正轨”向着实现美联储的充分就业和通胀目标方向前进。

美联储已向金融市场提供数万亿美元的广泛支持，就像2007年至2009年金融危机和衰退时期所做的那样。但这一次它走得更远，与美国财政部在购买公司债和市政债、以及向“实体”经济中的中小型企业提供贷款等计划上面进行了合作。

这些计划对于地方政府和企业来说是一种故障保险，可以帮助他们抵御疫情导致的突如其来的税收和收入损失。

但理想情况下，它们应该是短期的权宜之计。从长远来看，关于如何引导经济恢复到2019年的状态，美联储将面临一系列选择。那个时候，失业率处于纪录低位、低收入工人的工资不断增长、经济保持稳定增长。

这可能需要数年时间。预计美联储会在某个时点更明确地承诺利率究竟需保持在近零水准多久、或者购债的适宜水准，才能够为经济持续提供额外支撑。

美联储也可能会考虑作出某种新承诺，比如保持长期利率在一个特定水平，也就是所谓的收益率曲线控制策略。

这可能不会发生在本次会议。但鲍威尔或将清楚表明联储着眼于长期，以及经济还需要具备什么条件才可重返往日水准。

Evercore ISI副总裁Krishna Guha说，最新预测可能显示，决策官员预计保持近零利率直至2023年，政策声明稿和鲍威尔的讲话料给予支持。Krishna Guha曾在纽约联储任职。

“美联储将暗示它仍聚焦于…联储目标与当前经济状况之间的巨大落差，”Guha写道，并预测联储声明稿、预测和鲍威尔记者会的整体基调都将偏温和。

Banks earnings are likely to remain uncertain and volatile this year with a combination of factors, analysts said.

This includes Day One modification losses and rising credit cost, they said, ading that the recovery path was unlikely in thenear term.

Kenanga Research has reduced banks’ equity risk premium by 25 basis points (bps) for next year, saying updated guidance from banks had helped to provide some context to the outlook ahead, while recent earnings cuts had also aided in lowering some earnings risks.

However, it said the re-opening of the economy and significant cuts to policy rate had helped clear some overhang for the banking sector.

Its analyst Ahmad Ramzani Ramli maintains “neutral” to local banks as they would be facing a tougher operating environment ahead with a solid balance sheet.

“We upgrade AMMB Holdings Bhd (AMMB) to ‘outperform’ from ”market outperform as it has been a laggard and valuations look cheap for financial year 2021 with price-earnings-ratio 7.3 times lower than smaller peers Affin Bank Bhd and Alliance Bank Malaysia Bhd.

“As such, AMMB could be an attractive catch-up play. For a more defensive tilt, we prefer Hong Leong Bank Bhd over Public Bank Bhd and add the stock to our “Outperform” list,” he said in a ‘report today.

Kenanga Research said banking stocks had enjoyed a catch-up rally last week, where the sector rose 10.5 per cent for the week compared to 5.6 per cent gain for the FBM KLCI.

Consequently, the sector is now up 23.9 per cent from its low in March (FBM KLCI: up 27.6 per cent) but on year-to-date basis, it is still down 11.6 per cent FBM KLCI: -2.0 per cent.

“We believe the recent rally was fuelled by a combination of liquidity, rotational play into cyclicals and possibly, more optimistic prospects ahead. We noted that other regional markets have also seen their banking stock prices pick-up,” it added.

Kenanga Research said some key observations for the trends between share price performance, price earnings (PE) and profitability included share prices bottomed out around three to six months ahead of earnings and strong PE multiple expansions subsequently as share prices reacted positively to improved earnings prospects.

Hong Leong Investment Bank Bhd (HLIB) analyst Chan Jit Hoong said net interest margin pressure might persist into following quarters given May’s 50 bps Overnight Policy Rate (OPR) cut and possibly another 25bps reduction in the second-half of the year.

“With the confluence of events from Covid-19 crisis and imminent recession, loans growth is expected to taper further. Besides, asset quality is poised to remain weak but it should not spiral out of control (at least till end September 2020).

“This is because Malaysian borrowers were granted six-month loans deferment while any restructuring and rescheduling (R&R) of loans affected by Covid-19 will not be tagged as impaired,” he said in a report.

The firm cut its earnings forecasts for CIMB Bank Bhd, Malayan Banking Bhd, Public Bank and RHB Bank Bhd due to two-year aggregate earnings negative of compound annual growth rate of 5.7 per cent.

“We believe recent sector rally was due to ample liquidity given the six-month loan moratorium, series of OPR cut, and low fixed deposit rates. In turn, this led to decade high retail participation and more generous valuations were accorded to stocks than usual, despite challenging outlook,” it said.

As Australia flirts with the idea of a cashless society after coronavirus, Sweden has a warning: be careful what you wish for.

It was already well on the way to digital-only payments before the pandemic was declared, and the virus has only served to hasten the demise of cash.

“If you walk in the city in Stockholm nowadays, most of the stores will have signs saying they don’t accept cash anymore,” says Niklas Arvidsson, an associate professor at Sweden’s Royal Institute of Technology.

If you are one of the many Australians who now prefer to use a card over cash, this might not sound like such a bad thing.

But as Mr Arvidsson explains, there are now concerns Sweden went too hard too early and the rapid switch can have unintended consequences.

Sweden’s quick switch

Sweden has undergone a remarkable and comparatively rapid shift away from cash as its government and central bank left it to the market to decide what worked best.

Banks had no interest in keeping physical currency alive as they make no profit on cash purchases, and ATMs are costly to operate.

In fact, Mr Arvidsson said it was now difficult to even find an ATM outside a major city in Sweden.

‘Australia could be cashless in two years’

Australia is already well on the way to a cashless society.

The Reserve Bank’s 2019 Consumer Payments Survey, released in March, found that in the space of a decade cash went from the dominant form of payment to now barely cracking a quarter of transactions.

But it’s not all consumer-driven.

Last year, the Federal Government proposed laws to ban cash payments of $10,000 and more, threatening jail sentences of up to two years for people who didn’t obey.

Meanwhile, cryptocurrencies, once the dream of Silicon Valley tech-heads and Facebook, are now being seriously considered by governments around the world.

And in recent years the likes of India and the European Central Bank have phased out higher-value notes.

It’s led global firm Research and Markets to estimate that Australia could become the Asia-Pacific’s “first cashless society” by 2022. The Commonwealth Bank thinks we’ll probably get there by 2026.

Financial firms are keeping a keen eye on IT giants Naver and Kakao that are continuing to expand in the financial services industry. The tech companies hold immense potential, as they are able to provide innovative services based on their tech capabilities and have access to massive pools of data from their e-commerce platforms.

“We will create new engines of growth with accumulated technology in the contactless market,” Naver CEO Han Seong-sook stated in a conference call after the company’s earnings for the first quarter were released in April.

Financial firms in the past did not regard “techfin companies” as a threat, as they were convinced they know the most about finance. Techfin refers to established technology firms providing financial services in collaboration with financial companies. This compares with the term “fintech,” which refers to financial firms incorporating technology to enhance the services they offer.

In the era of digitization, companies in the finance sector are realizing that tech is becoming crucial in maintaining competitiveness.

This is where big tech firms have a huge advantage, enabling internet lenders such as Kakao Bank to lead in user-oriented application designs that have attracted masses of younger users.

Tech giants such as Naver and Kakao have another competitive edge ― data accumulated from online shopping transactions as both operate e-commerce platforms.

Naver Shopping has grown into Korea’s largest e-commerce platform, with 30 million users as of the third quarter of 2019.

Kakao’s mobile gift shop, accessed by Kakao Talk users, has also seen annual transactions grow to several trillions of won.

Both Naver and Kakao have seen their stock price soar in past weeks, based on numerous factors including the potential of their businesses in finance.

Naver’s price per share climbed from 135,000, March 19, to 246,000 won May 26. Kakao’s stock price surged from 127,500 won to 279,500 won by the same day.

This has changed the order of companies by market capitalization. Kakao entered the list of top 10, pushing out traditional power houses such as POSCO and Hyundai Mobis.

As of May 29, Naver ranked fourth, accounting for 2.8 percent of market capitalization. Kakao ranked eighth, taking up 1.8 percent.

Sung Jong-wha, an analyst at eBest Securities, referred to Kakao’s subsidiaries with “contactless businesses” having immense potential.

Entering the financial industry is considered the next step for IT firms, as the easy payment market has become overheated.

This is also the path taken by Ant Financial, which was formerly Alipay, an affiliate of China’s tech colossus Alibaba Group. Ant Financial now operates a credit payment company as well as an online bank and a wealth management platform. It is the highest-valued fintech firm globally, and the most valuable unicorn company, estimated at $150 billion.

The finance sector has long been associated with sharp suits and a strict hierarchy, but more firms and institutions are joining the move to break down this stereotype.

Beginning this month, Woori Bank has eased the dress code for all employees, enabling a wider choice of attire other than suits.

The bank has noted at the same time that employees dealing with customers should be dressed in smart attire.

The measure is part of the new CEO’s drive to innovate the culture and existing practices at the bank.

“We have decided to ease the dress code to align the bank with rapid changes occurring in this era that includes digitization and the growth of contactless transactions, as well as to revitalize the bank,” Woori Bank CEO Kwon Kwang-seok stated in an email sent out to employees last month.

“We hope that this measure not only leads to more diverse attire but results in the transformation of the company into an innovative bank that does not fear change.”

The measure is regarded to have contributed to greater gender equality within the bank, as young female employees are no longer required to wear uniforms.

The Financial Supervisory Service (FSS), which was long regarded as one of the most authoritative and rigid institutions in the finance sector, also introduced a similar system last month.

Every Friday, employees are able to opt for more casual attire. The change has been welcomed by those within the supervisory agency, from younger staff members to officials in managerial positions.

“One advantage of casual attire is that it is much more comfortable to work in,” an official at the FSS said. He said this also creates a more relaxed atmosphere within the office.

“Officials in managerial positions are also taking part ― we see them wearing chinos instead of suit pants,” he said.

An official of the planning and coordination department said the measure was introduced to provide more autonomy to employees.

“Employees are able to choose what to wear as long as it’s based on the principle of time, place and occasion (TPO). If they are visiting financial firms for inspection purposes they will need to be dressed smartly, if not, they can dress comfortably.”

“We introduced ‘casual Friday’ as part of efforts to break down the authoritative atmosphere, provide more autonomy to employees and encourage creative thinking,” he said.

Korean brokerages and banks are accelerating their efforts to shut down branches to reduce costs and adapt to the growing trend of contactless transactions triggered by the COVID-19 pandemic.

Since the outbreak of the coronavirus, people have been relying more on digital transactions, avoiding direct human contact, for their banking activities and financial investments.

According to data from the Korea Financial Investment Association, the number of branches run by the top 10 securities companies, including Mirae Asset Daewoo, KB, Shinhan, Korea and NH Investment, stood at 556 in March this year, down 59 (9.5 percent) from a year earlier.

Viewed on a quarterly basis, there has been a continual decreasing trend over the last three years. Since the spring in 2017, about 20 percent of all local branches of the 10 major securities firms in Korea shut their doors.

Mirae Asset Daewoo has shown the most drastic fall in the number of branches over the years. The firm had 174 branches countrywide ― the largest number of branches ― in 2017, yet it has reduced the number of branches to 80.

KB Securities has also decreased to 75 as of March this year, from 112 branches in 2017.

A KB Securities official told The Korea Times that the firm’s move to close down some of its local branches is in line with its plans to focus on integrated financial centers ― a hybrid of a bank and brokerage house where customers can receive comprehensive counseling in terms of financial investment and strategies.

This strategy of converting the role of branches into specialized centers is shared by other securities firms like Mirae Asset Daewoo, NH Investment & Securities and Shinhan Financial Investment.

As the two largest firms in terms of the number of local branches closed some of their branches, Shinhan Financial Investment has become the securities company that now has the biggest number of branches at 88 in March this year. Mirae Asset Daewoo, Korea Investment and NH Investment & Securities, are closely chasing the firm at 80, 79 and 78, respectively.

It is expected that domestic securities firms’ efforts to cut down the number of local branches will continue in the second quarter.

The trend is also evident in the nation’s banking sector.

In the first quarter alone, the nation’s six major banks closed down a total of 73 branches, a sharp increase from a shutdown of only 15 branches during the same period last year. Not only have mobile banking services been steadily growing in popularity, but recently the global pandemic has discouraged visits to bank branches.

Against such a backdrop, banks are fast moving towards full-on digitalization, using the latest technologies of AI or biometric authentication, removing the need for face-to-face contact when carrying out personal banking.

The COVID-19 pandemic has forced the Indonesian government to seek more funding in the global market, including through the issuance of the country’s first ever 50-year tenured government bonds recently, to fund the fight against the economic impacts of the outbreak.

Subsequently, state-owned construction firm PT Hutama Karya’s first-ever dollar-denominated bonds issuance received a warm welcome from global investors despite the fact that most of its road show for this was done virtually due to social restrictions.

The Jakarta Post’s Riska Rahman interviewed Deutsche Bank Indonesia country chief officer Siantoro Goeyardi via email on May 29 to learn more about global investors’ views on Indonesian assets amid the pandemic and how the outbreak has changed the way the bank and its clients, as well as issuers and investors, interact with each other. Here are excerpts from the interview.

Question: Which business line or type of product or service has been the biggest contributor to Deutsche Bank Indonesia’s business operations?

Answer: Since the onset of the pandemic, our investment and corporate banking business has remained stable and we continue to serve our institutional investors and corporate clients, the vast majority of which are multinationals. However, during the height of the pandemic outbreak, when markets were most volatile in March, our businesses saw both higher trading and lending volumes. 

Overall, the bank had a solid first quarter performance in Indonesia, [with] profits up approximately 15 percent on the same period last year, despite the coronavirus. This is in line with our global group results for the first quarter of 2020, in which the bank saw 13 percent growth in fixed income and currencies globally with strong growth in FX and rates in the first quarter of this year.

Are you seeing a shift in the types of products and services required by clients during the pandemic?

There has not been a significant shift in products and services for clients, although working capital and cash management have been critical for clients.

While our business mix has not really shifted, we have certainly seen a shift in how we do business. Many more clients are communicating with us electronically through our electronic FX platforms.

The uptake in digital platform usage will accelerate investment into platforms, because the functionality and efficiency has been clear to see during the COVID-19 period and it has proven that everything can be done electronically with much less paper, although face-to-face meetings will always be important for maintaining relationships.

The government seems to be the biggest bond issuer in Indonesia, especially during the pandemic, with its plans to triple the amount of debt to around Rp 1 quadrillion (US$68.12 billion). How has that affected global investors’ appetite, especially since the global market conditions seem to be unfavorable at the moment?

Investors recognize COVID-19 for what it is – an enormous and unprecedented worldwide challenge. Yet global investors continue to view Indonesia favorably. Indonesia has established a good track record with foreign investors, demonstrated financial discipline, and proactively and transparently engages regularly with investors, even more during the pandemic.

In April 2020, Indonesia raised $4.3 billion in three tranches as part of its general budgetary financing activities, including for COVID-19 relief efforts, and earlier in May, quasi-sovereign PT Hutama Karya raised $600 million and the 10-year coupon of 3.75 percent was lower than the sovereign debt coupon of 3.85 percent achieved by the country in April.

How did foreign investors respond to the Indonesian government’s recent global bond issuance to help fight COVID-19?

Global emerging market investors continue to be favorable to Indonesia. Pricing for Indonesia’s recent bonds was attractive across all tranches, which also included the first 50-year issuance for the country and in the Asian emerging market sovereign space. The bond offering was well distributed to global investors across Asia, Europe and the United States.

What do you think of emerging markets, especially Indonesia’s, in terms of asset resilience during the pandemic?

Short term, there will certainly be a slowdown. We don’t expect Indonesia’s growth to be as robust as the last couple of years but we see a fast recovery next year due to the country’s young and large population, and rich natural resources.

As one of the largest traders in primary and secondary markets for rupiah bonds, Deutsche Bank Indonesia sees first hand investor demand for investing in Indonesia. Flows are fairly consistent and Indonesia remains one of the most preferred emerging markets by investors.

What is your view on the Indonesian government’s plan to rescue some state-owned enterprises (SOEs) from default due to the pandemic? Should the government help them to get through the crisis by providing liquidity and preventing a default?

In the short term, some sectors and SOEs will experience challenges and the government is considering what kind of support it can provide to these SOEs. This is not unique to Indonesia, but [it applies] to SOEs around the world.  Restructuring, consolidation and support are understandable given the current situation.

However, what is more important is first supporting healthcare demands and cushioning the overall economic impact of the pandemic. Significantly, the government is instilling financial discipline and accountability into SOEs and we see this as a positive for the medium- and long-term as this will strengthen SOEs governance and professionalism.

How do you think the pandemic will change the way issuers raise funds? Will you be expecting significant changes in road show mechanisms and how do you prepare yourself for change?

Investor meetings and interactions will certainly change, given that travel will be limited for quite some time. This pandemic period has shown that technology is a powerful alternative for corporate to connect with foreign investors for capital markets issuances. Meetings are all conducted virtually with the aid of video conferencing and phones, which can be highly effective as the recent quasi-sovereign issuance we had worked on proved. They engaged with 90 investors in Asia, Europe and the United States over two full days of calls. Notably, this was for a debut issuer in the USD bond market.

We believe that face-to-face meetings will come back when things return to normal, but virtual meetings will become an alternative more and more going forward, especially for investors in non-financial hub locations such as Singapore, Hong Kong, London and New York.

With a full three months of responding to a global pandemic under their belt, United States Federal Reserve officials have united around one point: lasting progress on the economic front will be dictated by success in containing the spread of the coronavirus.

But agreement beyond that may be elusive as Fed policymakers meet this week to balance fresh signs the United States may be over the worst of the economic fallout from the pandemic against evidence the virus is not yet under control.

A surprise gain of more than 2.5 million US jobs last month will factor into their debate, as will any hint the surge in employment and other activity more broadly is accompanied by more transmission of the novel coronavirus.

Where they end up could shape decisions about whether to expand or create new emergency programs in anticipation of a more extended economic crisis, or about how to best support companies and households if in fact the pandemic is easing.

The US central bank has ongoing debates on each front, both about the long-run commitments it might make to anchor interest rates at a low level for the recovery, and the continued hunt, as Fed Chair Jerome Powell put it last week, for companies with substantial numbers of employees that have not been covered in any of the crisis programs launched so far.

The stunning May payrolls data released by the Labor Department on Friday could temper some of the urgency that has accompanied Fed meetings since March.

After having cut interest rates to near zero and launched a bevy of credit programs in a frenzy of emergency meetings in March, no major policy decisions are expected on Wednesday when the Federal Open Market Committee ends its latest two-day meeting. It is scheduled to release its policy statement at 2 p.m. EDT (1800 GMT) on Wednesday and Powell is due to hold a news conference shortly after.

Policymakers, however, will issue economic projections for the first time since December, before a decade-long economic expansion was snuffed out by a massive wave of unemployment that followed widespread lockdowns to stop the spread of COVID-19, the respiratory illness caused by the coronavirus.

Projections due in March were shelved because there was so much fog around the collapsing economy that policymakers felt it pointless to guess where unemployment, inflation and economic growth were headed.

Three months of data since have verified the scope of the crisis – unemployment may have fallen in May but remains at a Great Depression-like 13.3 percent. And while it does appear the worst in terms of joblessness may have been reached, Oxford Economics economist Bob Schwartz cautioned on Friday that “the remarkable turnaround last month reflected the easy-lifting part of the healing process.”

Furthermore, what remains unknown is perhaps what matters most – the extent to which durable progress has been made in containing a health crisis in which more than 110,000 Americans have died.

Deaths and the rise in new cases, which had been declining on a moving average basis, have recently risen. The easing of restrictions on business and social gatherings, meanwhile, has led to concerns about a possible wave of new infections. Such fears were heightened late last month as Americans flocked to beaches and lakes to celebrate the Memorial Day long weekend.

Two weeks of protests across the nation over the death of George Floyd, an African-American man who died in police custody in Minneapolis, have added even more uncertainty in major cities, including some that seemingly had the virus under control.

For the Fed, how to make sense of it all has become an impressionistic test, with policymakers looking at the same set of information and seeing different trajectories.

Asked about the scenes of Memorial Day revelers at one Missouri lake resort, St. Louis Fed President James Bullard said he thought the risk of a second large wave of infections was low because of an expected quick response by health authorities.

“This is not occurring in a vacuum,” he told journalists on the Wednesday after the holiday weekend.

That same day, Atlanta Fed President Raphael Bostic said he was paying particular heed “to congregations happening in ways that … will potentially lead to a second wave that induces another shutdown. If that happens I think there are significant concerns” about the economic recovery.

Clarity slow in coming

The economic projections released on Wednesday will offer a key insight into how Fed officials see the pandemic’s trajectory and whether they think the economy has hit bottom.

The Fed has not tried to establish its own central system for monitoring or recreating health data, but pulled extensively from the publicly available information, consultations with outside experts, and a massive amount of background reading.

“We are not experts on epidemiology, the spread of pandemics or anything like that,” Powell said in an online event in late May. “We talk to experts, and the main answer they give you is things are highly uncertain.”

Even experts are struggling over measuring the fight against the pandemic with testing levels still insufficient to fully describe how the health crisis is evolving.

In a recent paper, Jeffrey Harris, a physician and economics professor at the Massachusetts Institute of Technology, noted the main methods for tracking progress against the virus had all failed in one jurisdiction or another.

“We will have more than a few problems trying to determine whether various state governments’ efforts to rekindle economic and social activity have been working or failing,” Harris wrote. “Imagine trying to bring a plane to a soft landing when you don’t really know its altitude or velocity.”

The pace for lifting restrictions isn’t up to the Fed, and policymakers say the strength of a recovery will depend on whether people feel safe again in stores and offices.

A second wave of infections could wreck that process.

The Fed may not know for sure if it’s coming, but Powell said late last month that it would respond if it does.

“There is clearly a risk of a second outbreak, and that would be challenging,” Powell said. “We, of course, would continue to react … We are not close to any limits.”

Europeans have started going back to work, shopping and dining, suggesting that the worst economic damage from the blockages of the coronavirus pandemic has passed, but overall activity remains well below standards normal, which indicates the long-term recovery the region is facing.

High-frequency data indicators such as mobility and consumer spending suggest that the sharp economic contraction that has hit major European economies since March began to ease in May and early June.

The figures are more up-to-date than official economic indicators, which were only released in April, although they are also experimental and to the extent that they reflect later trends documented in official data is variable.

“There is evidence that European economies are going through the worst of this very sharp drop in production,” said Neil Shearing, group chief economist at Capital Economics. “Things are starting to melt. . . but I think the recovery is going to be extremely weak. ”

For many economists, the data confirms the idea that the pandemic has widened the gap in economic performance between the countries of northern and southern Europe.

Shopping and leisure

Eurozone buyers bought fewer goods in April than in any other month since records started in 1995, official figures show. However, since the closings began to loosen in May, trips to stores, bars and restaurants have started to increase again, particularly in France and Italy, according to data from Google Mobility.Spain and the United Kingdom lag behind, while Germany and other northern European countries experienced more moderate contraction and smaller differences from pre-crisis levels, reflecting in many of the less stringent restrictions.

Car sales in the EU fell 76% a year in April, according to industry data. But browsing the Internet, a forward indicator of spending, indicates a certain normalization of consumer demand. Car sales website visits increased in early June as showrooms started reopening, according to web tracking company SimilarWeb. Europeans have also shown renewed interest in buying furniture and homes.

High-frequency data indicates “that the recovery took off in mid-May, with Germany in the lead,” said Claus Vistesen, chief eurozone economist at the Pantheon Macroeconomics.

But economists warn that the recovery will be gradual across the region, particularly in countries and sectors where closings have been tighter or hampered by some lingering restrictions, as well as weak consumer and business confidence.

Bert Colijn, senior economist at ING, warned that “a lot of restrictions will stay with us for a while, which means [activity] it will take longer to return to its pre-crisis level. “

Job

Figures to be released this week should show that in April industrial production in the euro area experienced the sharpest contraction since records started in 1992. But data from Google Mobility suggests that the decline in travel by Europeans to factories and offices eased in May. The same pattern is reproduced in the data on roads and public transport.

Nikola Dacic, an economist at Goldman Sachs, said the mobility indicators should be “very informative about the rate at which activity increases in the initial phases of recovery”, as the crisis is mainly due to movement restrictions.

New job openings remain moderate, however, even in less affected economies like Germany.

The high unemployment rate and declining household incomes should also contribute to the continued economic slowdown. Rosie Colthorpe, an economist at Oxford Economics, said that across Europe “high uncertainty and poor job prospects mean consumers can choose to save rather than spend.”

European governments and central banks have supported the economy with major stimulus packages, but some economists fear that support will run out before activity is strong enough to support more hires. “We believe that a fragile recovery will require regular interventions for some time,” said Nadia Gharbi, European economist at Pictet Wealth Management.

Expectations that the global economy has dodged the worst-case coronavirus pandemic scenarios have led to a dramatic sell-off in U.S. government bonds from their record highs, pushing the yield curve to its steepest level since March.

Investors will get a chance next week to see whether the U.S. Federal Reserve agrees with their optimism. The U.S. central bank’s two-day meeting, ending on Wednesday, will be the first since April when Fed Chair Jerome Powell said the U.S. economy could feel the weight of the economic shutdown for more than a year.

The meeting will follow a surprise gain in the Labor Department’s closely watched jobs report on Friday that pushed benchmark 10-year Treasury yields to the highest since early March.

“The sell-off in the bond market in the last few weeks seems to be justified,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale (OTC:SCGLY).

While the Fed could introduce additional bond-buying programs known as quantitative easing or yield-curve control measures to target short-term rates, fund managers say they expect yields will need to rise significantly to justify any intervention in the bulk of the curve. Instead, they are watching for hints that the central bank believes the worst part of the coronavirus crisis has passed.

“They are really in this transition phase,” said Eric Stein, co-director of global income and portfolio manager at Eaton Vance (NYSE:EV). “Markets are functioning, if not all the way back to pre-shock levels, with very strong debt issuance and market improvement, even though the real economy is incredibly weak.”

As a result, Stein is looking for signs that the Fed believes the economic rebound can support the rise in yields.

“The Fed will be OK with a slow creep higher, particularly with a backdrop of a recovery, but if it moves too much and destabilizes the recovery, there’s a reason for concern,” he said.

Ed Al-Hussainy, senior interest rate analyst at Columbia Threadneedle, expects the Fed to focus on its newly announced Main Street Lending Program to support small- and medium-sized businesses facing financial strain from the pandemic, rather than introducing significant new stimulus measures.

“The Fed is likely to communicate that there is more scope for fiscal measures but that is a very uncomfortable spot to be in,” he said. “We won’t have a clear sense of direction of the economy until well into the fourth quarter because all the sequential data now is massively positive.”

The manufacturing ISM index rose to 43.1 in May from 41.5 in April, while weekly jobless claims fell to 1.877 million from 2.126 million the week before.

“Recent economic reports in the U.S. have been uniformly weak, though not any worse than expected,” said Kevin Cummins (NYSE:CMI),senior U.S. economist at NatWest Markets.

Eddy Vataru, lead portfolio manager at Osterweis Capital Management, said the larger risk for the Fed is that rates remain too low, making it unlikely that there will be a significant push for yield curve-control measures.

“We can now discredit the worst outcomes of the virus. The sentiment around the risks around the virus have really changed,” he said, pointing to declining infection and fatality rates in coronavirus hot spots such as the New York City region.

As a result, he is moving into corporate debt and mortgage-backed securities and shying away from Treasuries, which he said have “no investment value” at their current yields.

“At the end of the day, we have a ton of stimulus, both fiscal and monetary, and the markets have reacted to it,” he said.