central bank – Island Crisis http://islandcrisis.net/ Wed, 16 Mar 2022 19:09:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://islandcrisis.net/wp-content/uploads/2021/04/default1-150x150.png central bank – Island Crisis http://islandcrisis.net/ 32 32 10-Year Fixed Mortgage Rates | fox business https://islandcrisis.net/10-year-fixed-mortgage-rates-fox-business/ Wed, 16 Mar 2022 19:09:00 +0000 https://islandcrisis.net/10-year-fixed-mortgage-rates-fox-business/ Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own. Although 10-year mortgage rates are generally lower […]]]>

Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own.

Although 10-year mortgage rates are generally lower than longer-term mortgages, you should weigh the pros and cons before choosing one. (Shutterstock)

Nearly 90% of buyers choose a 30-year mortgage when buying a home, according to Freddie Mac. Although 10-year mortgages are less popular, they may also be worth exploring. Compared to 30-year mortgage rates, 10-year mortgage rates are generally lower.

But 10-year mortgages also have drawbacks, such as higher monthly payments than longer-term loans. Here’s what you need to know about 10-year mortgage rates, the pros and cons of 10-year mortgages, and how to find a mortgage that best suits your needs and budget.

If you’re considering a 10-year mortgage, Credible lets you compare pre-qualified mortgage rates in minutes.

Current Trends in 10-Year Mortgage Rates

Here’s how mortgage rates have moved over the past 12 months.

Historical mortgage rates

Here’s what the average annual mortgage interest rate looked like over the past three decades.

How Credible Mortgage Rates Are Calculated

Changing economic conditions, central bank policy decisions, investor sentiment and other factors influence the movement of mortgage rates. Credible’s average mortgage rates and mortgage refinance rates are calculated based on information provided by partner lenders who pay compensation to Credible.

The rates assume a borrower has a 740 credit score and is borrowing a conventional loan for a single-family home that will be their primary residence. Rates also assume no (or very low) discount points and a 15% deposit.

Credible mortgage rates will only give you an idea of ​​current average rates. The rate you receive may vary depending on a number of factors.

Credible, it’s easy to compare mortgage rateswithout affecting your credit score.

Advantages of a 10 year mortgage

A 10-year mortgage has several advantages, including:

  • Lower interest rates — A 10-year mortgage usually has a lower rate than a longer-term loan. If you get one, you could save a lot of money on interest.
  • Lower Total Refund Amount — The amount of money you pay over the term of the loan will likely be less than what you would pay with a longer term loan. For example, if you took out a $200,000 15-year mortgage at 3% interest, you would pay $248,609 over the life of the loan. In contrast, taking out a 10-year mortgage with the same term, rate, and amount would cost a total of $231,745, a difference of $16,864.
  • Build equity faster — Since your loan term is shorter, more of your payments will go towards the principal. This allows you to build up equity in your home faster.

Disadvantages of a 10 year mortgage

But 10-year mortgages also have some drawbacks that you’ll want to consider:

  • Higher monthly payments — Since your payments are only spread over 10 years, your monthly mortgage payments will be higher than a longer-term mortgage.
  • Less flexibility in your budget — Due to higher payments, you may have less cash to devote to other important financial goals, such as retirement.
  • Potentially smaller loan — With a higher monthly payment, you may have a harder time meeting a lender’s minimum debt-to-equity ratio and borrowing the amount of money you want to spend on a home.

Find the mortgage that’s right for you

Follow these steps to find the right one mortgage lender and the mortgage that best suits your unique financial needs and goals:

  1. Check your credit. Before you start shopping for your mortgage, check your credit report to see how your score is and to check for any errors. This will give you an idea of ​​the mortgage products you may be eligible for.
  2. Review your budget. Before taking out a mortgage, review your monthly expenses and income to see how much you can afford. If you need help, consider using a mortgage calculator to estimate your mortgage costs.
  3. Research and compare lenders. To find the best mortgage lender, you have to shop around. You can visit several lender websites to review and compare key features, such as rates, terms, assembly costsand closing costs.
  4. Get pre-approved. Once you’ve chosen the best lender for your situation, submit a pre-approval request to get an estimate of rates and terms. This usually requires a soft credit check, which won’t affect your credit. Once you have officially applied for a loan, the lender will perform a thorough credit check, which may cause your credit score to drop temporarily.

How to get a good 10-year fixed rate

When you apply for a 10-year mortgage, lenders will consider these factors, among others, to determine the interest rate to offer you:

What credit rating do you need to get a good 10-year mortgage rate?

While the credit score you need to get a good 10-year mortgage rate varies by lender, here’s a breakdown of your FICO score, which most lenders use when reviewing your credit:

  • 350 to 580 — Poor
  • 580 to 669 — Fair
  • 670 to 739 — Good
  • 740 to 799 — very well
  • 800 to 850 — Exceptional

Most conventional mortgage lenders want to see a credit score of at least 620 to approve you for a home loan. Certain types of mortgages, such as VA loans and USDA loans, do not have a minimum credit score requirement. Although it is possible to get a home loan with bad credityou may not receive the best interest rates.

Is a 10-year fixed mortgage a good deal?

Whether a 10-year fixed mortgage is a good deal depends on your budget. If you can afford higher monthly payments, this option could save you thousands of dollars in interest and help you pay off your home faster. But if choosing this option would stretch your budget too much, it’s probably best to choose a longer-term mortgage.

If you’re ready to buy a home, use Credible to compare mortgage rates from multiple lenders, all in one place.

Should you get a fixed rate mortgage or an adjustable rate mortgage?

A fixed rate mortgage has an interest rate that remains fixed for the life of the loan. In contrast, an adjustable rate mortgage has a rate that is fixed for a certain period of time (and often lower at the beginning) and then fluctuates depending on the current market. This type of mortgage is also called an adjustable rate mortgage or ARM.

If you prefer predictable monthly payments and plan to live in your home for a long time, a fixed rate mortgage is probably the best option. But if you don’t plan to stay in the house for long and want a lower rate initially, it might be a good idea to get an adjustable rate mortgage.

Are central bank digital currencies the key to unlocking financial inclusion in Africa? https://islandcrisis.net/are-central-bank-digital-currencies-the-key-to-unlocking-financial-inclusion-in-africa/ Thu, 03 Mar 2022 07:57:02 +0000 https://islandcrisis.net/are-central-bank-digital-currencies-the-key-to-unlocking-financial-inclusion-in-africa/ Technology is changing money as we know it. Financial technology or fintech as a form of financial innovation has reshaped the financial services industry, especially in sub-Saharan Africa. More recently, the advent of central bank digital currencies (hereafter CBDCs) presents a transformational opportunity for the global financial industry. New analysis shows that over 90% of […]]]>

Technology is changing money as we know it. Financial technology or fintech as a form of financial innovation has reshaped the financial services industry, especially in sub-Saharan Africa. More recently, the advent of central bank digital currencies (hereafter CBDCs) presents a transformational opportunity for the global financial industry. New analysis shows that over 90% of the global economy is exploring a CBDC. According to the Atlantic Council’s CBDC Tracker, nine countries have now fully launched a digital currency. Nigeria is the latest country to launch a CBDC, the e-Naira, the first outside the Caribbean. The e-Naira is expected to boost cross-border trade and financial inclusion, make transactions more efficient and improve monetary policy, according to the Central Bank of Nigeria.

So what exactly is a CBDC? Simply put, a CBDC is the digital form of a country’s fiat currency that is also a claim on the central bank. Instead of printing money, the central bank issues coins or electronic accounts backed by the full trust and credit of the government.

The idea of ​​digital money is not new, many of us use debit and credit cards or payment apps for transactions. Africa’s reputation for innovation as a global leader in mobile money is a key driver of the continent’s booming fintech investment scene. The continent is already the largest adopter of mobile money transfer systems, comprising nearly half of the world’s registered mobile money customers, around 70% of global mobile money transactions and two-thirds of the volume of transactions in value.

But what would make a CBDC different? One of the big financial developments of recent years has been the growing popularity of cryptocurrencies – with one in particular, Bitcoin, standing out. Unlike traditional currency, cryptocurrencies are not issued by a central bank, but rather through a decentralized network of computers, usually using blockchain technology. Even behemoths like Facebook, now known as Meta, are trying to get in on the act with the announcement in 2019 that it would be developing its own digital currency, known then as Libra and now rebranded Diem. Central banks are experimenting with their own form of digital currencies, to counter the tsunami of cryptocurrencies we are currently witnessing. Generally speaking, central banks do not like decentralized private currency (like Bitcoin) because they cannot control the supply of it, and this also threatens the sovereignty of the national currency. Therefore, many central banks around the world, from China to Sweden to South Africa, are working on their own state-issued CBDC. According to the International Monetary Fund, about 100 countries are in various stages of exploring CBDCs.

Although still in its infancy, there are compelling reasons for central banks to issue CBDCs, including the need to support the digital economy and e-commerce that have been accelerated by the covid-19 pandemic. CBDCs can also provide a solution to overcome the risks associated with unregulated payment solutions, which are exploding both on the African continent and globally. Unlike public blockchains like Bitcoin and Ethereum, where the information recorded is available to everyone, CBDCs are private or permission blockchains, accessible only by the central bank and parties it chooses. There are two types of CBDCs. Wholesale CBDCs are used to facilitate payments between central banks and commercial banks or entities that hold their accounts with central banks. The other is retail CBDCs which can be used by businesses and individuals. It’s like currency in your mobile wallet issued directly by a central bank. This could be a game changer and have huge implications around the word. Retail CBDCs could advocate for financial inclusion, as a central bank could directly transfer funds to unbanked people as long as they have a cell phone. This is particularly promising in sub-Saharan Africa where the World Bank estimates that up to 65% of adults are unbanked. Imagine funds being transferred for covid-19 pandemic relief, natural disaster assistance, etc. The central bank could also use CBDCs as a tool to influence monetary policy and stimulate spending to revive the economy during downturns. The opportunities are many, but there are also risks.

If individuals could all hold their money at the central bank, why hold money at the local branch of a commercial bank? This could lead to a run on commercial banks and could have consequences for the entire banking sector. Central banks are highly unlikely to want to take this risk, as a strong banking sector is crucial to the financial health of an economy and central banks are simply not designed to deal with millions of retail customers. Thus, the approach of central banks is most likely at two levels. Issue the CBDC to banks who then issue it to retail customers. This would give the authorities the opportunity to experiment with this new financial tool without upsetting the entire banking model.

Additionally, there are a number of legal and regulatory gaps regarding the implementation of CBDCs in Africa that need to be considered. A major hurdle is that identified accounts will likely need to be required in order to ensure compliance with anti-money laundering and the financing of terrorism (AML/CFT). Currently, the World Bank estimates that approximately 1 billion people worldwide and 45% of women in low-income countries do not have official identity cards. Regionally, sub-Saharan Africa has the largest coverage gap, where almost one in three people in the countries surveyed lack basic identification. Additionally, privacy and data protection laws may impact the deployment of CBDCs regionally. Over the past decade, African countries have steadily passed laws and enacted regulations on cybersecurity and data protection. To date, 33 countries have data protection laws and/or regulations. The fight against AML/CFT and the guarantee of confidentiality and data protection are not at the heart of the objectives of the central bank, which are generally price stability and financial stability. Ultimately, central banks will have to strike the right balance between protecting privacy and reducing illegal activity.

As countries begin to experiment with CBDCs, the design and implementation of these initiatives will likely vary around the world, in advanced and emerging markets. Kenya’s central bank recently sought the public’s opinion on the applicability of a potential digital Kenyan shilling, soon after it emerged that Zambia was also testing its viability. With the launch of Nigeria’s e-Naira in October 2021 and the fact that Ghana is said to be in advanced stages of launching its e-cedi, this can serve as a model for central banks across Africa and globally. who are preparing to launch their own CBDC – having a first-mover advantage may not be a huge advantage in this case.

Consideration of digital currencies by central banks has the potential to support financial inclusion and stability as well as increase operational efficiency and ensure financial integrity, particularly in cross-border payments. However, several important challenges and considerations loom on the horizon. The growth of cryptocurrencies coupled with the covid-19 pandemic has accelerated discussions on CBDCs globally with huge upside potential for the financial sector, especially in sub-Saharan Africa. What happens next is hard to predict, but a lot will depend on how it’s handled.

Iftin Fatah is Director of Financial Institutions at the US International Development Finance Corporation. The opinions expressed here are his own.

]]> Nigeria touts its digital currency as a success – citizens give it mixed reviews so far https://islandcrisis.net/nigeria-touts-its-digital-currency-as-a-success-citizens-give-it-mixed-reviews-so-far/ Fri, 18 Feb 2022 19:01:06 +0000 https://islandcrisis.net/nigeria-touts-its-digital-currency-as-a-success-citizens-give-it-mixed-reviews-so-far/ As cryptocurrencies continue to grow in popularity, another type of digital currency is also gaining traction, namely central bank digital currencies. Unlike decentralized and volatile crypto, these currencies are issued by governments and simply serve as a digital version of the country’s official currency. More … than 90 countries are currently studying the idea of […]]]>

As cryptocurrencies continue to grow in popularity, another type of digital currency is also gaining traction, namely central bank digital currencies. Unlike decentralized and volatile crypto, these currencies are issued by governments and simply serve as a digital version of the country’s official currency. More … than 90 countries are currently studying the idea of ​​creating one (instead of just 35 in May 2020). In Africa, Nigeria took the lead and launched the continent’s first CBDC, eNaira – ironically a few months later. forbidden crypto trading.

The nation has big plans for the brand new digital token which has been developed by the Barbados-based company bitt, a fintech company that has also developed one for the Eastern Caribbean Currency Union. During the official launch of the currency on October 25, President Muhammadu Buhari said that eNaira and its underlying technology had the potential to increase Nigeria’s GDP by $29 billion in 10 years.

But as for the citizens? Despite great interest in crypto (Nigeria has one of the highest crypto adoption rates in the world, even with the trade ban), their reactions to the official digital currency have been decidedly mixed. Some were very eager to start using it, while others encountered technological problems and some, suspicious of the government’s agenda, vow never to use the token. We spoke to Nigerians to get their perspective on how the CBDC experience is going so far.

Early excitement (and recriminations)

Early adoption rates and downloads of the eNaira app for individuals and businesses demonstrated widespread interest. Within hours of eNaira’s launch, the Speed ​​Wallet app for individuals had already registered over 4,000 downloads and the merchant application recorded 1,000 downloads. Ten days later, the speed wallet app had accumulated 367,000 downloads and the merchant app had been downloaded 58,000 times.

Central Bank spokesman Osita Nwanisobi said there had been nearly half a million downloads only three weeks after the launch of the virtual currency, with approximately $150,000 of virtual currency having been exchanged at that time. He also claimed that up to 78,000 traders from 160 countries signed up to the Traders Wallet in these first three weeks. By the end of January, 95 days after eNaira’s debut, the app had been downloaded some 694,000 times.

While this early enthusiasm shows that eNaira is a welcome development for many Nigerians, the app’s 3.7-star rating and numerous negative reviews highlight issues with the registration and verification processes that have created significant barriers for many citizens wishing to use eNaira.

A reviewer on the Google Play Store, who called the app “very disappointing”, complained, “I was an early pioneer of this app. From the day I finished registering on the app, I couldn’t log in. Even when I pretended to have forgotten my password, no email was received from the developers to make changes to a new password.

Others expressed similar sentiments. “I signed up earlier and it didn’t work, so I tried again later and got an error message that BVN [Bank Verification Number] has already been recorded,” one reviewer said. “So I tried to reset my password but OTP didn’t reach my email. It’s frustrating and annoying.”

A satisfied user

Ọláṣùpọ̀ Ajia, a 34-year-old researcher in the Department of Physics and Astronomy at the University of Southampton, is one of the first eNaira users who was happy with the experience.

Ajia told us the transfers were quick and smooth. Since the eNaira is directly linked to his bank account, all he had to do to dive into the realm of digital currency was to make a transfer from his banking app and follow a set of instructions including entering its token key.

The experience, however, was not entirely seamless. Ajia said he encountered problems setting up his digital wallet. eNaira app sends verification link to users to verify emails, and its email client was not supported. This quickly became a problem. However, unlike many who have reviewed the app, he says the responsiveness of customer service helped him resolve the issue.

Besides being a personal user, Ajia is optimistic about the CBDC’s potential to help improve Nigeria’s economic future.

“I absolutely think it has the potential to improve Nigeria’s economy,” he said. “But the strict requirement of having a BVN to be able to open an eNaira wallet already makes it quite exclusive and inaccessible to these Nigerians.”

The problem highlighted by Ajia is one that could prevent eNaira from reaching its full potential. Bayo Olugbemi, President of the Chartered Institute of Bankers in Nigeria, said that eNaira represents a step to deepen financial inclusion and integrate millions of unbanked Nigerians into the banking system. However, eNaira’s BVN verification requirement contradicts this, as unbanked Nigerians do not have one to log into the system.

More out of curiosity than anything else: a skeptical user

One Nigerian who is still unconvinced is Mary Mezue, a 26-year-old product manager at a fintech company in Lagos. Mezue said if Nigeria is fighting financial inclusion, then eNaira is not a big step forward in addressing it.

A fintech insider, Mezue is also unimpressed with the technology, saying it was not innovative and looked more like a copycat.

Worse, when she first downloaded the app in November, users were unable to transfer funds outside of their wallets, she said, making it more of a box. digitized savings than anything else. Recent updates have allowed users to send and receive money, but she remains skeptical.

“Most of the downloads right now are out of curiosity and I don’t think people would want to use an app that doesn’t give anything different than what they’re used to,Mezue said.

A recalcitrant who refuses to consider eNaira

Asoegwu Kingsley, who works at a PR firm in Lagos, told us that he has no plans to start using the state-backed digital currency.

“I don’t trust the current government, so why would I use their digital currency? For a country that banned cryptocurrency transactions by launching its own digital currency? he said. “Something is wrong.”

Kingsley pointed out that one of the main draws of cryptocurrencies for many Nigerians is actually the lack of central oversight. He fears that the launch of eNaira is a ploy by the government to monitor the finances of Nigerians.

And because it is simply pegged to the regular Naira, Kingsley noted that eNaira lacks the upside potential of cryptocurrencies.

“Finally, the value of E-naira might not be speculative like with crypto. eNaira would rarely grow like with other cryptocurrency assets – that is subject to speculation,” he said. “People will hardly invest in a digital asset that might not bring them quick returns because eNaira does not promise it.”

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Digital Rupee: A New Chapter in Digital Payments https://islandcrisis.net/digital-rupee-a-new-chapter-in-digital-payments/ Tue, 08 Feb 2022 21:30:00 +0000 https://islandcrisis.net/digital-rupee-a-new-chapter-in-digital-payments/ Considering India’s maturity in digital payments and the stature RBI has gained in the Central Banks Committee, the implementation of the CBDC is visible. By AP Hota The budget announcement on the rollout of digital rupee by the Reserve Bank of India (RBI) concluded the debate on whether or not to implement a central bank […]]]>

Considering India’s maturity in digital payments and the stature RBI has gained in the Central Banks Committee, the implementation of the CBDC is visible.

By AP Hota

The budget announcement on the rollout of digital rupee by the Reserve Bank of India (RBI) concluded the debate on whether or not to implement a central bank digital currency (CBDC) and when. The main objective of launching the CBDC has been clearly stated. Stating that the CBDC can be implemented with blockchain or “any other technology,” also set the stage for an endless wait for blockchain technology to mature. Non-conventional DLT stable technology options are plentiful. Considering the maturity the country has gained in digital payments and the stature that RBI has gained in the Central Banks Committee, CBDC implementation in India is now in a visible range. India need not wait for global standards to develop.

The only major economy where a CBDC is experimented with nationwide is China, which was forced to opt for a CBDC given the lack of competition between two major players in digital payments. A few island nations in the Caribbean region and a few countries in Africa introducing a CBDC were mainly driven by the gaps in the availability of digital payment instruments and a much higher degree of exclusion than in India. The aim of introducing the digital rupee in India is to help reduce the usage of banknotes and thereby reduce the ever-increasing cost of printing banknotes/currency and the logistical challenges associated with them. circulate.

In accordance with the currency management system in place, RBI prints banknotes (in multiple denominations) in its captive banknote printing presses in Mysore and Salboni, stores banknotes in approximately 20 currency vaults in its regional offices and feeds about 4,000 currency vaults being managed by commercial banks throughout the country. Once the banknotes are soiled after repeated use, they are brought back to the RBI offices through the same distribution network and destroyed. As the country’s GDP rises from $3 trillion to $5 trillion and the per capita consumption level rises, the demand for banknotes will increase accordingly to meet transactional needs. Unless timely measures are taken, the operational load would severely affect the functioning of the RBI as well as the banking systems. Questions had been raised earlier arguing that digital payments in India with the wide array of payment instruments and channels such as IMPS, UPI, NEFT, wallets, debit/credit/prepaid cards and NETC has made the Redundant CBDC. The rising Digital Payments Index (from the base index of 100 in March 2018 to 304 in September 2021) was cited for this purpose. But there remains a significant gap in the number of active digital payment users (just 200 million against a potential 700 million) and just 15 million points of acceptance against a potential 50 million. Cases of cyber fraud in digital payments and the number of cases reaching RBI banking ombudsmen are high. Under such circumstances, a sea change in the format of the “medium of exchange” through the CBDC, and RBI itself jumping into the fray in managing the digital payments infrastructure, becomes imperative. The go-live schedule being aggressive and the tasks ahead of a lot, the following aspects seem relevant:

Finalize design options: The first task is to finalize the design options, if they are not yet closed. As happens in any technology implementation, this would be an evolutionary process. The search for a perfect solution would be endless. The easiest option to get started in issuing, circulating and serving retail CBDCs is to ride the rails of existing digital payments infrastructure. Since blockchain-based technology has yet to stabilize in any financial application, it may be prudent to start with conventional technology and consider blockchain at a later date; accounts would be better for ease of communication as they can be used almost like wallet accounts. The on-device UPI wallet provided by the National Payments Corporation of India (NPCI) can also be molded for the CBDC. Around 10 major banks can be selected to act as digital rupee distributors, each with around one million willing customers. Questions about anonymity can be addressed as the pilot progresses by an appropriate additional privacy layer. Banks may be incentivized to reimburse the cost of initial technical and system infrastructure changes and recurring transaction fees.

Expand acceptance: The second critical task would be to expand the acceptance infrastructure through steps such as a massive awareness campaign. The Payments Infrastructure Development Fund with an initial corpus of Rs 250 crore provided by RBI has shown remarkable progress especially in Tier 3 and 4 centers. Seen against the digital acceptance target in each kirana store, the funding contribution is certainly meager, and for the next 3-4 years, it is expected to be significantly increased. Wherever cash is accepted, it must be enabled for digital acceptance to build a cashless society.

Digital payment literacy: The third dimension is digital payment literacy. The absence of an MDR benefit for merchants or cashback for customers would not automatically drive digital adoption. To convert the ignorant, the bums, and the reluctant critics, different approaches would be needed. A wide network of commercial correspondents of banks and citizen service centers can be tried as a digital assistant. They must be trained and then encouraged to register again.

A research institution: The fourth task can be to create a research institution exclusively for the CBDC to play a leading role on a global scale, both in formulating policies and also in experimenting with several technologies. There is no doubt that in 10 to 15 years, central banks around the world will opt for digital versions of fiat currency. The global institution can start operating during India’s G20 Presidency in 2023.

Let us now look forward to the start of another chapter in India’s digital payments landscape.

The author is the former Director of DPSS, RBI, and the former Managing Director and CEO of NPCI.

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Tobagonian at the forefront of fintech | Local company https://islandcrisis.net/tobagonian-at-the-forefront-of-fintech-local-company/ Sun, 19 Dec 2021 02:06:00 +0000 https://islandcrisis.net/tobagonian-at-the-forefront-of-fintech-local-company/ [ad_1] For the past six months, Tobagonian Sekani Solomon, 31, has been working on the secret rebranding of Square, the publicly traded US financial services and digital payments company, co-founded by Jack Dorsey, its former chief executive, who also co -based Twitter ,. On December 10, the rebranding went live. Square, which includes Square, Cash […]]]>


For the past six months, Tobagonian Sekani Solomon, 31, has been working on the secret rebranding of Square, the publicly traded US financial services and digital payments company, co-founded by Jack Dorsey, its former chief executive, who also co -based Twitter ,.

On December 10, the rebranding went live.

Square, which includes Square, Cash App, TIDAL, TBD54566975, and Spiral (formerly Square Crypto), is now known as Block Inc.

“Block is a new name, but our goal of economic empowerment remains the same,” Dorsey said at the time.

Solomon, the head of movement design for Cash App, said the rebranding was silent except for a few members of the executive.

Dorsey’s resignation from Twitter a few weeks before Block’s launch, he said, surprised them.

“This news (Dorsey’s resignation) came on Monday, and we had long decided on a December launch a few months ago. Jack is, you know, a really smart guy, really forward-thinking. His leadership and the vision he brings are super thoughtful and inspiring. And for him running two great companies is like, wow, really crazy, but we are also happy to have him to ourselves because the company is also growing quite quickly. For Cash App, it continues to grow and try to figure out how to get some of these services internationally, ”Solomon said in an interview with the Sunday Express last week from Tobago.

This is his first return trip to the country – he is the last of five children of former Tobago House of Assembly (THA) official Gladstone Solomon – after the border closed in March 2020.

Since the pandemic was declared, the technological axis of the world has shifted to digital – from work to teaching in banking.

For Cash App, there was a slight uptick as it was able to provide tools for people who don’t have them, “especially for people of color and minorities.”

Cash App, he explained, creates a digital account where you can send and receive money without having to touch real money.

Solomon explained that Cash App was used to process U.S. government stimulus payments because a large percentage of Americans were unbanked.

“Even in the United States, it’s still difficult for people to set up bank accounts or receive money. If you didn’t have a bank account, it would be difficult to get the stimulus. So when you build a platform that makes it easy for people to take payments and then send them to people, it becomes attractive, ”he said.

But Cash App isn’t just an app, it’s a digital payment ecosystem.

“We’re a platform that allows someone to get a payout and then buy shares of most companies on the stock exchange and buy Bitcoin. You can sign up for Cash App, get a bank account number and a routing number, so you can also deposit your paycheck directly into Cash App, ”he added.

Cash App has 14 million users in the US and UK.

From cinema to technology

Solomon says the first time he physically touched money in years was when he returned home on vacation earlier this month. Since December 2019, T&T has switched from cotton banknotes to polymer.

Solomon explained that motion design was a specific career choice because he had thought about becoming a software engineer when he started applying to college.

He got his first job in New York even before graduating from Savannah College of Art and Design in Atlanta.

Solomon began his career in television (two projects won two Emmy Awards), commercials and commercial films. He worked on the Oscar winning film Black Panther and in 2018 he made the leap to technology.

After working for a few months with software and hardware giant Apple, he held a full-time position at Cash App.

For him, the appeal of Cash App lay in the limits it pushed from a brand and visual point of view.

“The way they approached it was from a very advanced, millennial, Gen Z perspective,” he said with the aim of attracting the unbanked and creating an accessible brand.

“It gave me the possibility of having more creative freedom in the projects. It also gave me the opportunity to help create a new entity, ”he explained.

He cited companies such as Red Bull, Virgin and Coca Cola who have been able to diversify their businesses into many different industries using their brand.

“We were taking inspiration from these types of companies, but we were pushing that forward and applying it to fintech, which hadn’t really been done before,” he said.

Now that the rebranding is complete, he dives headfirst into Cash App.

“When you study motion design, you mainly study storytelling. The idea is to get the people behind what you do from a narrative and creative point of view. And that’s the main idea, I guess, of graphic design or motion design from that perspective or that brand. It’s communication, isn’t it? It’s solving visual problems. By definition of the job, that’s what I do in my day job. I look at that specific product or feature and look for the most engaging way to send it to consumers that is always informative, but still state of the art and creative, ”he said.

He said he married that creative aspect with the nuts and bolts of being in a technology-based business that gives a lot of learning.

“Here at Cash App I can do an animation or I could come up with a concept and run it. And then they release it and I see all the metrics, I see the impressions it gets. So you have that extra pressure, I guess, to be a little more calculated on the things you do because you see the results and it affects the business. So I think it was more of a learning perspective, but also integrating the research What do people gravitate towards, what works and what doesn’t? It’s like an iterative process of learning.

“From a technical point of view, creating the visuals that we produce requires a lot of technical knowledge. And then there’s like the creative aspect to make it look or just in a narrative way, make it meaningful and make it feel smart and intelligent. And then this is the strategic part, where do you unroll it, where do you place it? Would I like it? I’m not saying I’m doing it all in a bubble. Obviously, I work with a team of people who are as competent as they are talented. But you know you’ve had to learn how to work cross-wise with a bunch of different players who might not understand exactly how to create amazing 3D animated graphics and how long it takes to do it, especially because I’m directing a team now, ”he said.

“In addition, we are playing in a relatively new field. Apps like Cash App didn’t really exist, ”he says, naming apps like Venmo, Chime, Coinbase and Robin Hood as competitors.

“It’s almost like we’re kind of competing against all these competitors who really like one thing. We have to be able to do all of these things as well, but then create an ecosystem so that everyone can connect in a thoughtful way. And that’s still the challenge, ”he said.

Be futuristic

Block’s name and vision is futuristic, and follows Facebook’s October name change to Meta.

Solomon’s work centers on creating stories for this future.

He describes today’s global digital landscape as “the wild and wild west”.

He observed that the global cryptocurrency grows due to the allure of decentralization, digital wallets grow and this year there has been an explosion of non-fungible tokens (NFTs) which has given artists like him opportunities to earn money on digital art.

“I’ve seen people in space, like people I knew, being just a regular motion designer, and then he’s sold maybe over $ 100 million worth of art this year alone, which is enough. crazy. At one point he held the record for best-selling. Like space right now is so crazy. And it’s moving fast, “he said.

So how is Cash App pushing the future?

“You have pretty much most of the capacity of an average bank. You have a bank account, a bank account number, a routing number. You can get direct deposits so you can send money to your friends and we also just enabled the option to send someone or give someone stocks or bitcoin. So let’s say we had dinner we want to split the bill now you can say do I want my money in cash or do I want to change bitcoin or do I want to change stock this which, you know, is a feature that you haven’t really seen before in that sense. So again, that kind of changes the idea of ​​the exchange of value and currency, ”he said.

He observed that with different jurisdictions, banking laws are different, making expansion difficult.

“That’s why Bitcoin is a huge initiative, because there isn’t a lot of regulation there. So it’s easier to create a Bitcoin wallet that we can launch internationally,” he said. declared.

Regarding the central bank’s main concern that cryptocurrencies are being used to launder money, he countered that people are laundering billions of fiat money.

“I think if you just focus on the negatives and miss out on a few opportunities as well,” he said.

He used his recent purchase of two pieces of art with Bitcoin at Fitzroy Hoyte’s Think Art Studio as an example.

“How do I buy this without having to go to an ATM or make a traditional bank transfer which would take forever?” We could just use Bitcoin because it is a decentralized platform. Mark (Pereira from Zed Labs who facilitated the transaction) used his wallet and I was able to use my Cash app as they both use a bitcoin address. Using this, I could just send a Bitcoin to his address. I think it shows the power of the platform, ”he said. Zed Labs was featured in Express Business last week.

He compares traditional banks to Blockbuster and Cash App and crypto to Netflix. Cash App is developing its ecosystem to serve its customers.

“In terms of creating a great, well-designed, user-friendly app, I guess, that lets someone download the app and just have a fancy suite of easy-to-use tools, which I think will be very valuable to a different group of consumers and I think we’re just focusing on expanding that into the United States and, of course, around the world.

“As far as the Caribbean is concerned, I think there is a huge opportunity. Like me, the idea of ​​even going to a bank is always a little crazy. Since I haven’t been to a physical bank in I can’t tell you when, just because I’m able to do everything over the phone. Even for making simple transactions, withdrawal fees and cash take so long in Trinidad and Tobago. And you know, the one thing that you can’t really get over is time, and time is precious. So when you create a platform that helps people move money, send money, see money, spend money. I think it is useful.


Making electronic money safer in the digital age https://islandcrisis.net/making-electronic-money-safer-in-the-digital-age/ Thu, 16 Dec 2021 01:11:34 +0000 https://islandcrisis.net/making-electronic-money-safer-in-the-digital-age/ [ad_1] (MENAFN- Caribbean News Global) By José Garrido and Jan Nolte Imagine you go to pay for your morning coffee and your stored value card returns an error message, or the payment app wallet on your phone does not open because the company providing the payment service went bankrupt. Worse, what if you live in […]]]>


(MENAFN- Caribbean News Global)

By José Garrido and Jan Nolte

Imagine you go to pay for your morning coffee and your stored value card returns an error message, or the payment app wallet on your phone does not open because the company providing the payment service went bankrupt. Worse, what if you live in a rural area and the e-money service provided through your mobile phone was the only access you had to the financial system? Or is your government now relying on the electronic money system to transfer benefits or collect taxes on a large scale?

Forms of digital currency – including central bank digital currencies, privately issued stablecoins, and electronic money – continue to evolve and find new ways to further integrate into people’s daily lives. . Essentially, electronic money is a digital representation of fiat money guaranteed by its issuer. Customers exchange regular money for electronic money, which they can use to make payments through an app on their mobile phones to individuals and businesses with ease and immediate effect. Compared to other recently developed forms of digital currency, such as stablecoins, electronic money has been around for quite some time and its customer base continues to grow rapidly. Unlike most privately issued stablecoins, electronic money operates within a regulated framework.

For regulators and supervisors tasked with protecting consumers and ensuring a level playing field for all financial intermediaries, it can be difficult to keep pace with new developments. Regulators and supervisors need to think about how best to protect clients against the (potentially systemic) failure of e-money issuers, including preventing the loss of their funds.

A new IMF staff paper examines these and other scenarios that can put consumers and potentially all electronic money systems at risk. We examine the evolution of regulatory practices country by country and offer a set of policy recommendations on the regulation of electronic money issuers and the protection of their clients’ funds.

Electronic money offers payment solutions for unbanked people

We can think of electronic money as an electronic store of monetary value on a prepaid card or electronic device, often a mobile phone, which can be widely used to make payments. The stored value also represents an enforceable claim against the e-money issuer, whereby its customers can demand reimbursement at any time of the funds they have used to purchase e-money.

Electronic money is already an integral part of the daily lives of billions of people, especially in many developing countries, where many do not have access to the banking system. As shown in the graph below, a high percentage of the population in a number of East African countries are now using electronic money, making it important from a macro-financial perspective. It is estimated, for example, that two-thirds of the combined adult population of Kenya (where M-PESA has achieved a high degree of market penetration), Rwanda, Tanzania and Uganda regularly use e-money. Many of these people do not have a bank account or other access to the formal financial system, so they store a significant portion of their available funds in electronic money wallets and access them using cell phones or mobile phones. computers.

Protect financial systems and consumers

With the growing importance of electronic money issuers, a comprehensive and robust framework for the regulation and protection of client funds is essential. Issuers should be subject to proportionate prudential regulatory requirements. For example, they should establish governance and operational risk management systems to identify and mitigate risks. They should also be prohibited from lending at retail. And, in order to protect consumers who may be less savvy than bank customers, rules should be in place to govern how issuers disclose fees, protect consumer data, and handle complaints.

One of the most important regulatory measures identified in our paper is that in order to protect customer money, all e-money issuers must implement mechanisms to hold and segregate these funds. Issuers must maintain a secure pool of liquidity equivalent to the amounts of customer balances and separate from the issuer’s own funds. This is a fundamental safeguard against the misuse of funds and should, in principle, allow the recovery of these funds in the event of the bankruptcy of an issuer.

However, segregation of client funds does not solve all the problems in the event of a potentially systemic issuer default. In the absence of specific bankruptcy rules, segregation by itself does not guarantee that clients would gain quick access to their funds, and this discontinuity can create serious problems if the issuer plays a potentially systemic role in the payment system and in everyday life. daily transactions of the country.

Potentially systemic, potentially problematic

Regulators and supervisors may need to significantly strengthen supervisory and user protection arrangements, depending on the business model and the size of the electronic money system. In countries with a potentially systemic e-money issuer or industry, the protection in place should be aimed at preserving customer funds and ensuring the continuity of critical payment services.

While some countries have sought to extend deposit insurance to electronic money, further efforts may be needed to operationalize this protection and ensure that it would work effectively in practice. In particular, clients should not lose access to their funds and therefore services should be able to be restored or replaced quickly, preferably within hours. But the practicality of e-money deposit insurance has yet to be tested, at least in practical terms. The costs and benefits of effectively extending deposit insurance coverage to electronic money need to be carefully considered.

As with many issues in the FinTech world, best practices continue to take shape, making policy decisions difficult. However, the pandemic has only increased the importance of prudent e-money frameworks as the number of online transactions and the growth of e-money have accelerated. For regulators and supervisors, now is the time to act.


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In word and deed, China loosens economic policy https://islandcrisis.net/in-word-and-deed-china-loosens-economic-policy/ Sat, 11 Dec 2021 06:58:31 +0000 https://islandcrisis.net/in-word-and-deed-china-loosens-economic-policy/ [ad_1] BFR BERNANKE, the former chairman of the US Federal Reserve, entitled his memoir “The Courage to Act”. But a lot of what central bankers do these days is talk. They talk about what they are doing, doing and could do. In the central bank, words can speak louder than stocks. Listen to this story […]]]>


BFR BERNANKE, the former chairman of the US Federal Reserve, entitled his memoir “The Courage to Act”. But a lot of what central bankers do these days is talk. They talk about what they are doing, doing and could do. In the central bank, words can speak louder than stocks.

Listen to this story

Enjoy more audio and podcasts on ios Where Android.

China is no different. Its macroeconomic policy is a combination of acts and signals, execution and exegesis. On December 6, for example, the People’s Bank of China announced that it was reducing the reserve requirement ratio (the amount of money banks must keep in reserve, as a percentage of deposits) by half a percentage point. , compared to a weighted average of 8.9% to 8.4%. This, he said, would “free up” about 1.2 billion yuan ($ 190 billion) in funding.

The reduction was, you might think, a simple act of easing – an understandable response to the downturn in the economy, a changing virus, and the financial risks posed by real estate developers, two of whom (Evergrande and Kaisa) have made. default on their offshore bonds, according to Fitch, a rating agency, soon after the cut.

But the decision was accompanied by a cautionary statement. “The stance of a sound monetary policy remains unchanged,” the central bank said. He also pointed out that banks will need some of the additional funds (around 80% of them) to repay the central bank’s medium-term loans which fall due on December 15. In other words, much of the extra money would soon go to the institution that released it. The impact of the reduction “is likely to be neutral,” said one analyst, as quoted by Daily economy, an official journal. An editorial in the same newspaper cautioned against the “relatively simplistic” view that a reduction in reserve requirements amounted to “loose” macroeconomic policy.

So, are Chinese policymakers slacking off or not? The short answer is yes, they do indeed soften. But not without scruples and qualifications. They want to stabilize growth. But they do not want to relaunch speculation, especially real estate. Their expansionist actions therefore come with a lot of clarifying and cautionary chatter.

The clearest evidence of the easing may not lie in the actions of the central bank, but in the words of the Politburo, the 25-member body that oversees the Communist Party. After a meeting on December 6 to set the macroeconomic tone for 2022, he emphasized the expansion of domestic demand and the preservation of the “six stabilities” (in employment, finance, trade, foreign and domestic investment and expectations). The Politburo also had a few words of comfort for the beleaguered real estate market. He said the sector should be supported to better meet the “reasonable” demand from home buyers. (“Reasonable” has not been defined. But it is safe to say that this does not include buying a property and keeping it unoccupied in the hope of selling it for a higher price.)

The debate now is not whether China’s policymakers are easing up, but by how much. Because the stimulus can take many forms, especially in China, measuring its overall scale is not easy. An attempt to do so, by Goldman Sachs, a bank, combines indicators of monetary policy (the benchmark lending rate and market rates), credit policy (including reserve requirements), fiscal policy and housing policy in one index. Faced with the global financial crisis, this index fluctuated by nearly 2.9 points on its scale (see graph). It swung by just over two in response to China’s slowdown in 2015 and just under two after the start of the pandemic.

The easing in the first ten months of this year has been modest in comparison. The latest reduction in reserve requirements will add to this, but not by much on its own. Policymakers therefore have a lot of leeway before they can be accused of having reproduced the 2008-09 “deluge” of stimulus measures, which gained a reputation for debauchery, despite its brutal effectiveness in bringing China back on its feet. pre-crisis economic trajectory.

If Chinese policymakers had an equivalent clue, their warning rhetoric could be calibrated more precisely. “We can lighten up by one point but not two,” they might say. In the absence of such a measure, Chinese observers have the more difficult task of inferring macroeconomic intentions from vague party slogans. How many reductions in reserve requirement ratios, one wonders, will be necessary to preserve the six stabilities? ■

For a more in-depth analysis of the biggest stories in economics, business and markets, sign up for Money Talks, our weekly newsletter.

This article appeared in the Finance and Economics section of the print edition under the headline “Is China Going Softer?”


Bitcoin and macroeconomics, IMF warns of collapse https://islandcrisis.net/bitcoin-and-macroeconomics-imf-warns-of-collapse/ Wed, 08 Dec 2021 22:15:11 +0000 https://islandcrisis.net/bitcoin-and-macroeconomics-imf-warns-of-collapse/ [ad_1] Watch this episode on YouTube Listen to this episode: In this episode of Bitcoin Magazine‘Fed Watch’ podcast, Christian Keroles and I sat down for our very first live broadcast as part of the new Bitcoin Magazine live show. Going forward, we’ll be recording live around 2:00 p.m. EST every Tuesday. Join us and as […]]]>


Watch this episode on YouTube

Listen to this episode:

In this episode of Bitcoin Magazine‘Fed Watch’ podcast, Christian Keroles and I sat down for our very first live broadcast as part of the new Bitcoin Magazine live show. Going forward, we’ll be recording live around 2:00 p.m. EST every Tuesday. Join us and as we become more familiar we may be able to answer questions live from the chat.

This week, we took a quick tour of macroeconomics. First, we listened to and responded to three excerpts from Federal Reserve Chairman Jerome Powell’s testimony to Congress where he removed the term “transitional”. Next, we did a quick read of an IMF blog post on the debt crisis in low income countries. Third, we discussed the reduction in its reserve requirement ratio (RRR) by 50 basis points (bps) and the default of Evergrande by China’s central bank, the PBoC. Finally, we took a look at bitcoin and covered several of our current theses on macro and geopolitics, why we are bullish on the US and bearish on Europe. It was a huge live show, I think you all are going to really enjoy this one.

Fed’s Powell retires “transient”

We had three Powell clips that we listened to. Each gave us the opportunity to discuss different aspects of the Fed, its monetary policy, and perhaps to unveil its inner thoughts. So many Fed experts and analysts don’t even look at the actual testimony. They are pissed off by the headlines or a reporter’s take on what Powell said. The general public, who are concerned about their money, tend to think of these people as bad. We think central bankers are misguided and biased, but we actually looked at the testimonials to form our own opinion and took you with us.

Our discussion included parts of transient or not, a global low interest rate environment, issues of forecasting inflation based on non-linear side effects of supply and whether or not the reduction will be accelerated.

IMF sees economic collapse in low-income countries

In a blog post Since December 2, IMF President Kristalina Georgieva has written: “We could see an economic collapse in some countries unless the G20 creditors agree to speed up debt restructuring and suspend service. debt while restructurings are being negotiated.

It is very disturbing. These countries have had 12 to 18 months of suspension on their international loans, and yet they still cannot pay them? If they can’t pay them after a year of postponement, what makes anyone think the restructuring will help?

These countries are in great difficulty, and this corresponds to our thesis that emerging markets have benefited over the past 50 years from an easy credit environment. Now that the easy credit environment is over, they will have to face extreme burdens in continuing their previous level of economic activity.

China cuts RRR for banks and Evergrande default

Our last stop was China. We covered the Fed, we brought Europe into our discussions, and then we covered the People’s Bank of China. This week he announced a 50 basis points cut to its reserve requirement ratio (RRR), freeing up 1.2 trillion yen in the hope that banks will lend.

This follows a similar cut earlier this year in July, which would have freed up 1 trillion yen. It mustn’t have had the desired effect, or the economy is much worse than expected, because why should she start over, and / or why would she expect better results this time around?

If banks don’t lend, it’s not because they don’t have reserves. There have been empirical studies regarding RRR – banks lend first, then go out and find the necessary reserves. Giving banks room in the RRR doesn’t make them want to go out and lend.

It also happens just as Evergrande faces a fault offshore debt, if it has not yet defaulted at the time of writing. Reports indicate that Evergrande will default on $ 19 billion in international bonds, and their real estate industry’s second-largest international debtor, Kaisa, has also defaulted on $ 12 billion in offshore debt. The contagion continues.

Finally, we compared and contrasted sentiment in recent statements from the PBoC and the Fed. The global financial reality is very similar for these two countries, indeed they are very closely intertwined, but where Powell describes the story that the economy is doing very well and that there is a danger of growth and inflation. excessive, the PBoC says the central bank must inject liquidity into the economy in advance to prepare for potential challenges.

The contrast is apparent. The Fed provides positive forward guidance and the PBoC is negative.

If you enjoyed this content, please subscribe and revisit on iTunes to help others find the show.

Evergrande default value: https://www.reuters.com/world/china/developer-china-evergrandes-shares-set-rise-66-restructuring-looms-2021-12-07/


The 1st National Bank hosts the 5th Annual Stanley French Conference https://islandcrisis.net/the-1st-national-bank-hosts-the-5th-annual-stanley-french-conference/ Sat, 04 Dec 2021 12:12:49 +0000 https://islandcrisis.net/the-1st-national-bank-hosts-the-5th-annual-stanley-french-conference/ [ad_1] The 1st National Bank of Saint Lucia is hosting its 5th Stanley French Education Forum on Saturday (December 4); Today’s conference theme: History and Governance is presented by Dr Velda Henry, Deputy Governor of the Eastern Caribbean Central Bank (ECCB), and Dr Winston Phulgence, Lecturer in History at Sir Arthur Lewis Community College and […]]]>


The 1st National Bank of Saint Lucia is hosting its 5th Stanley French Education Forum on Saturday (December 4); Today’s conference theme: History and Governance is presented by Dr Velda Henry, Deputy Governor of the Eastern Caribbean Central Bank (ECCB), and Dr Winston Phulgence, Lecturer in History at Sir Arthur Lewis Community College and director of the Archaeological and Historical Society of Saint Lucia (A&H). The two presenters are expected to examine the history of banking and the history of governance of financial institutions in the Caribbean.

The island’s first indigenous bank has been organizing the annual conferences since 2017, every year, addressing topics of national, regional and international banking interest for discussion among shareholders, directors, clients and other stakeholders.
The first talk, “De-Risking”, was presented by Johnathan Johannes, then managing director, and Clarette Auguste-Taylor, executive director of the bank in charge of risks, compliance, collections and securities.

2019 was an interesting conference topic: “The Banking and the Marijuana Industry Its Implications, Challenges and Opportunities for Banks”, at a time when North America had legalized the marijuana industry. The presenters were Johannes and Auguste-Taylor, and Henri-Jacques Mangal, then secretary general and legal adviser.

The final topic of the conference was “Digital currency and its impact on the Eastern Caribbean Monetary Union (ECCU)” presented by Stephen Phillips, vice president of special projects of Bit Inc, based in Barbados, who explained the implications for Caribbean banks in the digital age. currencies, including Bitcoin and other cryptocurrencies.

The annual Stanley French conferences of the 1st National aim to take advantage of the expertise of regional and local experts to inform stakeholders about the issues of the day and demystify new banking models and concepts in the era of tele-banking and banking. visionary planning.
The 2021 conference on “Our history and our governance” takes place at the Center Administratif des Finances de la Pointe Séraphine from 9h to 12h.

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Food, gasoline prices pinch families as global inflation rises https://islandcrisis.net/food-gasoline-prices-pinch-families-as-global-inflation-rises/ Mon, 29 Nov 2021 14:07:00 +0000 https://islandcrisis.net/food-gasoline-prices-pinch-families-as-global-inflation-rises/ BUDAPEST, Hungary (AP) – From appliance stores in the United States to food markets in Hungary and gas stations in Poland, rising consumer prices fueled by high energy costs and disruptions in the supply chain is straining households and businesses around the world. Rising inflation drives up the prices of food, gasoline and other commodities, […]]]>

BUDAPEST, Hungary (AP) – From appliance stores in the United States to food markets in Hungary and gas stations in Poland, rising consumer prices fueled by high energy costs and disruptions in the supply chain is straining households and businesses around the world.

Rising inflation drives up the prices of food, gasoline and other commodities, and causes many people to choose between digging deeper into their pockets or tightening their belts. In developing economies, this is particularly serious.

“We have noticed that we are consuming less,” said Gabor Pardi, a shopper at an outdoor food market in the Hungarian capital, Budapest, after recently buying a bag of fresh vegetables. “We try to buy the cheapest and most economical products, even if they don’t look so good. “

Almost two years after the start of the COVID-19 pandemic, the economic impact of the crisis is still being felt even after countries have rushed out of debilitating lockdowns and consumer demand rebounded. Now, a new wave of infections and a new variant of the coronavirus, omicron, are leading countries to tighten their borders and impose other restrictions, threatening the global economic recovery.

Omicron has raised concerns that factories, ports and freight yards will be forced to shut down temporarily, putting more pressure on world trade and pushing prices even higher.

“A new round of infections could further worsen supply chains, putting even more upward pressure on inflation,” said Rubeela Farooqi, chief US economist at High Frequency Economics.

The economic repercussions are hitting Central and Eastern Europe particularly hard, where countries have some of the highest inflation rates in the EU27 and people find it difficult to buy food or fill their fuel tanks. fuel.

Budapest food market butcher Ildiko Vardos Serfozo said she had seen a drop in business as customers moved to multinational grocery chains that can offer discounts by buying in bulk at wholesale.

“Buyers are price sensitive and therefore often leave us out, even though our products are of high quality. Money talks, ”she said. “We notice that inflation is not good for us. … I’m just glad my kids don’t want to continue this family business, I don’t see much of a future.

In neighboring Poland, Barbara Grotowska, a 71-year-old retiree, told a discount supermarket in the capital Warsaw that she had been hit the hardest by her garbage collection costs which nearly tripled to 88 zlotys ($ 21 ). She also lamented that the cooking oil she uses has increased by a third of its price, to 10 zlotys ($ 2.40).

“It’s a real difference,” she said.

The recent upturn in inflation has surprised business leaders and economists around the world.

In the spring of 2020, the coronavirus crushed the global economy: governments ordered shutdowns, businesses closed or reduced hours, and families stayed at home. Companies have prepared for the worst, canceling orders and postponing investments.

In an attempt to avert an economic catastrophe, rich countries, especially the United States, introduced trillions of dollars in government aid, an economic mobilization on a scale unprecedented since World War II. Central banks have also cut interest rates in an attempt to revive economic activity.

But these efforts to revive economies had unintended consequences: as consumers felt more emboldened to spend the money they had received through government aid or low-interest borrowing, and vaccine deployments have encouraged people to return to restaurants, bars and shops, soaring demand has tested providers’ ability to keep pace.

Ports and freight stations were suddenly clogged with shipments, and prices began to rise as global supply chains seized up – especially as new outbreaks of COVID-19 have sometimes shut down factories and ports in Asia.

The price increase has been dramatic. The International Monetary Fund predicts that global consumer prices will rise 4.3% this year, the biggest jump since 2011.

It is most pronounced in the developing economies of Central and Eastern Europe, with the highest annual rates recorded in Lithuania (8.2%), Estonia (6.8%) and Hungary (6.6%). ). In Poland, one of the fastest growing European economies, inflation stood at 6.4% in October, the highest rate in two decades.

Several buyers at a vegetable stand in Warsaw said they were worried about rising prices for staples like bread and cooking oil and expect the situation to worsen during the news. year when energy prices are expected to rise.

Piotr Molak, a 44-year-old vegetable seller, said he has not yet had to raise the prices of the potatoes, apples or carrots he sells but the cherry tomatoes he imports from Spain and Italy, which he buys in euros, have gone far more expensive as the Polish currency, the zloty, has weakened.

“We will mainly feel this in the New Year when the electricity increases,” Molak said. “We’re really going to feel it when we have to spend more on our house than on fun.”

Weakening currencies in Central and Eastern Europe against the US dollar and the euro push up the price of imports and fuel and worsen the squeeze on supply reserves and other factors.

The Hungarian currency, the forint, has lost around 16% of its value against the dollar over the past six months and slipped to an all-time low against the euro last week. This is part of a strategy by the Hungarian central bank to keep the country competitive and attract foreign companies looking for cheap labor, said Zsolt Balassi, portfolio manager at Hold Asset. Management in Budapest.

But the prices of imported products have skyrocketed and global oil prices pegged in US dollars have pushed fuel costs to record highs.

“As the Hungarian forint, and indeed all regional currencies, weaken more or less constantly, this will constantly increase the prices of oil in our currencies,” Balassi said.

In response to record fuel prices, which this month peaked at 506 forints ($ 1.59) for gasoline and 512 forints ($ 1.61) for diesel per liter, the Hungarian government has announced a cap of 480 forints ($ 1.50) at gas stations.

While providing some relief, the upcoming elections in Hungary, in which the right-wing ruling party faces the most serious challenge since being elected in 2010, have likely been a factor, Balassi said.

“It’s obviously a political decision that has huge economic downsides, but it probably makes households happy,” he said.

The political nature of some economic decisions is not limited to Hungary.

Poland’s central bank, also facing a weakening currency, has been accused by critics of letting inflation rise too high for too long to encourage economic growth and bolster support for the ruling party.

The bank surprised markets with the timing and scale of two base interest rate hikes in October and November in an attempt to ease prices, while Hungary’s central bank increased rates in more installments. small six times this year.

Yet if central banks act too aggressively too soon to control inflation, it could bypass economic recovery, said Carmen Reinhart, chief economist at the World Bank.

She is concerned about rising food prices which mainly affect the poor in developing countries, where a disproportionate share of family budgets is spent keeping food on the table.

“Food prices are a barometer of social unrest,” Reinhart said, noting that the Arab Spring uprisings that began in 2010 were caused in part by rising food prices.

Anna Andrzejczak, 41, who works for an environmental foundation in Poland, was still a child when communism ended there in 1989 and has only vague memories of hyperinflation and the other economic “turmoil” that accompanied it. the transition to a market economy.

But she feels prices are going up “every time I refuel”, with fuel prices rising 35% last year.

“We’ve had a period of stability in recent years, so this inflation is now a big shock,” Andrzejczak said. “We don’t have the price increases we had then, but I think it will cause a lot of stress. “


Wiseman reported from Washington and Gera from Warsaw, Poland.

Copyright 2021 The Associated Press. All rights reserved.