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Powered by blockchain, financial institutions such as JP Morgan and Goldman Sachs were experimenting with the technology at the time. Since then, the former has launched its own blockchain initiative system called Onyx, while Goldman Sachs co-led the first public digital issuance on Ethereum public blockchain for the European Investment Bank.

Perhaps most strikingly though, major powers like Russia and China have introduced their own digital currencies since Lagarde’s statement, signalling a potentially seismic and irreversible shift towards blockchain-based payments, particularly for those taken across borders. But how exactly does this technology work and why are financial institutions and countries alike seemingly so eager to move towards it?

Blockchain explained

First things first, let’s recap what blockchain actually is. Blockchain is a kind of database that gathers data in groups called blocks. All of these blocks have a fixed storage capacity, and, when filled, are chained onto an existing block to create a chain— i.e., the term blockchain.

A key feature of this is that, once a block has been filled, it is given an exact timestamp of when it was added to the blockchain. Every event that happens on it is recorded on a public ledger, which is essentially a record-keeping database that ensures the participants’ identities are kept secure and pseudo-anonymous. They can only be identified by private keys, which are strings of letters and numbers needed to make a blockchain transaction.

An example: Bitcoin

To demonstrate blockchain in action, it makes sense to look at the most famous example of a technology that uses one: Bitcoin. The cryptocurrency exists on a blockchain across thousands of computers worldwide, all operated by different groups of people. These computers are called ‘nodes’, each of which has a record of every transaction that has taken place on it.

This has many benefits, with perhaps the main one being that, if one node has an error in its data caused by a fraud attempt, the blockchain can reference the other nodes to correct the database. Consequently, every transaction is accountable, secure and irreversible, with no de-centralised organisation being able to control things either.

To make a Bitcoin transfer, you need two Bitcoin addresses (known as public keys) to send the crypto to and from. The person transferring it is required to sign a message using their private key, which contains the input, output and amount being sent. This transaction is then broadcast to the rest of the Bitcoin network, with the nodes checking whether the person’s private key is able to access the input by matching the public key number. After doing so, mining nodes will add the transaction to the blockchain.

How does blockchain facilitate global payments?

People can use blockchain to send money across the world as they would for transferring cryptocurrency to one another. For example, companies like Stellar and Tempo offer 1:1 backed fiat tokens (also called stablecoins) that individuals and companies can convert their government-issued currencies into and send via a blockchain. The receiver can then accept the digital currency and convert it back into their own currency.

Blockchain is rivalling conventional transfers

This type of system allows people to enjoy the benefits of blockchain-like more secure and transparent transactions. It, therefore, has significant advantages over conventional cross-border payments, which are often costly, slow, opaque and dogged with security issues. Because of a lack of standardisation between countries, transfers tend to require a number of intermediaries to carry out tasks like verifying a sender or receiver’s identity and creditworthiness. This is not only time-consuming but adds extra costs. What’s more, these transactions often take place on outdated legacy systems, potentially rendering those involved vulnerable to security breaches. So why exactly is blockchain increasingly considered a better alternative?

Why are financial institutions moving towards blockchain?

It’s more cost-effective

Instead of paying transfer fees to multiple intermediaries, those using blockchain only pay a nominal fee to a financial institution or nothing at all. Deloitte estimates that business-to-business and person-to-person payments with blockchain are 40% to 80% cheaper than the standard transfer process.

It’s quicker

In the same study, Deloitte revealed that blockchain transactions are also astronomically quicker than conventional cross-border transfers due to being near-instantaneous. On average, they take around four to six seconds, compared to two to three days, with none of the hoops around intermediaries to jump through.

It’s more secure

When records are maintained by one central authority, such as a bank, they are vulnerable to hacking and other threats. But all transactions within a blockchain are tied to previous transactions, as well as being protected by cryptography. Consequently, a hacker would have to also hack every other transaction on the ledger, making it nigh-on impossible to infiltrate.

It’s more transparent

Considering a blockchain is a public record of digital transactions, it is a lot more transparent than traditional banking. Each party has an identical copy of the ledger, which is continually updated by the connected computers. This also removes the risk of discrepancies between different records, unlike with financial institutions which each have different databases that may not feature matching data.

What does the future hold for blockchain in the global payments system?

While blockchain is certainly gaining traction in the global payments sphere, it’s unlikely to replace the traditional payment system in the near future. International transactions must meet complex regulatory, compliance, finance and operational requirements, making it hard for independent companies to offer blockchain-based cross-border payment systems. Rather, we’re more likely to see an increasing number of banks use the technology themselves to provide blockchain transactions through their existing payment systems.


Stan Cole is the Head of Financial Institutions at Inpay.

Online Banking is a global trend that banks and institutions are currently following to improve the current connections across digital services. In addition to it, Open Banking is the representation of a next-generation business model in an open data economy.

With Open APIs, banks can be easily linked to financial technology companies using affiliated services from a single dashboard using specific applications on a smartphone.

The leading jurisdictions in Open Banking include the United Kingdom (UK), Australia and the European Union (EU).

About it, LearnBonds explained:  “The United Kingdom leading the way in Open Banking explains why so many UK-based challenger banks and tech startups like Revolut, Monzo, Starling and Curve are thriving in the banking sector.”

Countries such as the United States or New Zealand are considered ‘Beginners.’ These are countries and jurisdictions with small or no progress on regulation or standards.

Meanwhile, Switzerland, India or China are considered ‘Risers’ because the whole market is unregulated but they are registering Open APIs and evolving standards.

To understand which countries are currently at the forefront of Open Banking, the report takes into account four different factors that include the spread of Open APIs, regulatory requirements, standardization initiatives and the presence of a central TPP regulatory body.

Activity was particularly subdued in the difficult to interpret third quarter of the year, when USD 622.2bn worth of deals were struck globally, down 21.2% on 3Q18 (USD 789.7bn) and with 1,164 fewer deals than last year.

The US market, which had so far seemed immune to the global downward trend at play since the middle of last year, is starting to be impacted. At USD 262.9bn in 3Q19, US M&A is down 32.1% on 3Q18 (USD 387.1bn). Worth USD 1.25tn YTD, US M&A is still marginally up on the same period last year (USD 1.23tn), just about retaining a 50% share of global M&A activity, down from 52.5% in 1H19. Marred by the trade and tech war between Washington and Beijing and persistent political instability in Hong Kong, YTD M&A activity in Asia is down 26.5% over last year to USD 417.2bn.

Despite a small recovery over the summer, European M&A remains 29.4% lower compared to the same period last year, as a weakening European economy and geopolitical tensions continue to dampen activity. However, London Stock Exchange’s USD 27bn acquisition of US-based financial data provider Refinitiv, the largest deal globally in 3Q19, exemplifies the strength of European outbound M&A, which at USD 187.1bn is up more than 20% on last year and at its highest YTD level since 2016.

Beranger Guille, Global Editorial Analytics Director at Mergermarket commented: “Whether they are motivated by the desire to get more growth, or a way to secure future survival, deals are getting larger. On the back of the longest equity bull market in history, and amid persistently low interest rates, corporates have ample cash reserves and appealing debt financing options at their disposal to pursue M&A. This context and the growing feeling that it will not last forever are pushing valuations up.”

That possibility has pushed many government bond yields to new lows in recent weeks, while global equity prices have been volatile. Below Rhys Herbert, Senior Economist, Lloyds Bank Commercial Banking looks at the evidence.

And while some economic data might be confusing, I think there is a clear message.

First, that global economic growth has slowed and may slow further, and second, that there is a pronounced difference between weak or even falling activity in the manufacturing sector and still relatively buoyant service sector.

So, what might be causing this?

Manufacturing v services

It seems probable that the manufacturing sector is being hurt by the ongoing trade dispute between the US and China.  Indeed, the US manufacturing sector is now in decline for the first time in a decade.

And the Bank of England (BOE) flagged last week that, because the trade war between the US and China had intensified over the summer, the outlook for global growth has weakened.

The Bank’s Monetary Policy Committee added that the trade war was having a material negative impact on global business investment too.

The main impact is on confidence - or more accurately lack of confidence – which is holding manufacturers back from investing. As a result, we’ve seen a slowdown in world trade and in demand for manufactured goods.

In contrast, demand for services is being supported by relatively buoyant consumer spending. Yes, consumers are probably reluctant to splash out on big ticket items like cars right now, but overall, they are still willing to spend.

Consumers are probably reluctant to splash out on big ticket items like cars right now, but overall, they are still willing to spend.

The central conundrum

The key question going forward is whether it is more likely that manufacturing rebounds or that service weaken from here?

That is the conundrum that central banks need to weigh up in setting policy.

So far, the majority have decided that they are sufficiently concerned about the downside risks to take out some insurance and adopt policies designed to support economic growth.

Back in July, the US Federal Reserve did something it had not done for over a decade. It reduced interest rates – by a quarter point to 2.25% (upper bound).

It was widely seen as an insurance move against increasing global economic headwinds, emanating mainly from the US-China trade dispute.


It repeated the move last month, lowering the target range for its key interest rate by 25 points to between 1.75% and 2%. The accompanying statement repeated July’s message that, while economic conditions are probably sound, a bit of insurance against downside risk was advisable.

Meanwhile, in his penultimate meeting in September, this month, European Central Bank President Mario Draghi announced a package of stimulus measures including a reduction in its deposit rate to a record low of -0.5% and the introduction of a two-tier system to exempt part of banks’ excess liquidity from negative rates.

He also announced a resumption of the bond-buying programme at €20bn a month from November and, importantly, signalled no end date to purchases.

Draghi can argue that the weak Eurozone PMI suggests the economy is stagnating, supporting this action.

But the UK has not followed this strategy.

On the sidelines

The BOE is still wary enough about potential inflationary pressures from a tight labour market and rising wage growth to talk about the possibility of interest rates needing to go up.

But last month, the BOE concluded that the longer that uncertainty goes on, the more likely it is that growth will slow, especially given the weak global economy.

We will see if the message changes, but the likelihood is that BOE rate setters will want to continue to remain on the sidelines and keep rates unchanged at 0.75%, not least because the Brexit outcome remains unsettled.

The government’s official preferred Brexit position is for a deal and that assumption in the Bank’s forecast points to interest rates rising “at a gradual pace and to a limited extent”.

But the BOE also noted growing concerns about risks to growth, joining the US Federal Reserve and the European Central Bank, which both seem to have decided that risks are skewed to the downside.

But, while escalating tariff wars, slowing growth in the US and China and Brexit uncertainty mean there are credible reasons to worry that 10 years of steady expansion could be coming to an end, it is still far from certain that the current slowdown means a recession is looming.

According to Tony Smith, MD of Business Expert, for the most part, London has bucked this trend by beating even Silicon Valley to becoming the global Fintech hub. The historic financial centre has welcomed thousands of startups via progressive regulation, a forward thinking consumer market for tech products, and a central European location.

With the shadow of Brexit causing mounting uncertainty in the business community, the question of whether London can retain its title as the Fintech capital is becoming a talking point. More than almost any other industry, the ability to scale Fintech companies relies on access to global talent pools and, with post-Brexit employment laws still uncertain, many fear Britain is going to lose one of its greatest financial assets.

European Capitals Mop Up Fintech Exodus

While Theresa May struggles to push through her Brexit plan, other countries have been busy rolling out the red carpet with tax incentives and easy access to funding as a means of luring potential Fintech talent while the going is good.

Paris is one example of this. Sharing London’s historical reputation as business centre, Paris already hosts banks and large insurance companies, alongside a workforce rich in engineers and data scientists. Efforts are being made to entice tech talent via smoother regulation and a city-wide focus on AI training courses.

The German capital, Berlin, is another contender. Berlin is actively promoting Fintech relocation with it’s slogan ‘Keep Calm Startups and Move to Berlin.’ With cheap commercial real estate, governmental funding support, and 100 Fintech startups already placed, Berlin is likely to benefit widely from the political situation in the UK.

Tallinn, Estonia, while smaller than the major capitals, already has the third highest concentration of startups in mainland Europe. Tallinn is now benefiting from the efforts of the post Soviet government who recognised that technological education could drive the economy of the future. Estonia now has one of the most tech-savvy workforces in the world.

London still has a lot to offer

Despite the Brexit gloom, many pundits are at pains to point out that London is by means on the ropes just yet. In addition to its position as one of the world’s financial centres, a number of universities specialising in artificial intelligence have added to its hub status.

At the recent Amsterdam Money conference, London’s Deputy Mayor for Business, Rajesh Agrawal commented: “London is the greatest city in the world, and it’s no wonder that so many financial tech companies proudly call it home. As a fintech entrepreneur myself, I know that London has the right mix of clear regulation, world-beating talent, and a massive customer base to make it the international fintech capital.”

Here Ramesh Ramani, Cognizant Head of Banking & Financial Services, argues that for banks to remain relevant in a context of regulatory pressure and intense competition, during an era when experience is overtaking trust as a key differentiator, they have three options: become a multiservice provider; go beyond banking to become part of people’s lives; or find a niche segment.

So what are the Steps to unlocking future banking growth?

Today, banks are no longer just competing with each other. The BigTech firms are nipping at their heels, trying to gain market share within the financial services industry. For example, both Google and Facebook have already secured e-money licences. And, according to Crunchbase, there are now over 12,000 fintechs operating globally, with new entrants such as N26, the branchless digital bank offering a paperless sign-up process that can be completed on a smartphone, with identification verified by a video or selfie, which is building a large customer base rapidly. As digital banks such as Monzo report less than one-tenth the cost of servicing a retail account compared to a large traditional bank, these fintechs, built on technology from the outset, are undoubtedly luring away previously loyal customers and revenue through their ability to offer a more digital customer experience.

Trust is no longer the holy grail and experience has taken over

Customer experience has now become the most important differentiator. Where trust was once hailed as the holy grail for banking institutions with customers sticking with their bank for long periods – indeed, sometimes their entire lives – this is no longer the case. Trust and legacy are diminishing over time as younger consumers, brought up in a world surrounded by the BigTechs, increasingly look for speed and convenience. There are, however, notable instances of big-name banks being early adopters, using technology to streamline their operations, improve customer experience and enhance their offering. For example, in Spain, BBVA has developed an app feature called Bconomy, which helps customers set goals, save money and track their progress. The app makes suggestions about how to save money and compares prices on things like utilities and groceries. Idea Bank in Poland makes its products available on the go with branches and co-working spaces on commuter trains. These Idea Bank cars feature desks and conference spaces, plus free office supplies, Wi-Fi and coffee.

It is clear that banks are aware they need to change their strategy to remain relevant. To survive in the evolving banking landscape, banking institutions have three options:

  1. Become a “multiservice provider” – as profit margins decrease with new entrants coming into the market, banks must consider partnering with the new digital players to ensure they remain an important element of the banking ecosystem. If it is done right, an ecosystem with fintechs need not cause them to lose or dilute their relationships with customers – nor come at the expense of their bottom line. Many fintechs are now offering flexible partnership options that include white-labelling services. And, if done correctly, a partnership with a fintech can bring multiple benefits. For example, ING and Santander have white-labelled Kabbage’s automated SME lending platform and integrated it into their product portfolios.
  2. Go beyond banking to become part of people’s lives – banks should transform their customer experience, and one way is to make themselves integral to their customer’s lives. For example, besides supplying a mortgage to a family that has just moved into the area, a bank could become their hub for the move, offering them advice on the best schools for their children as well as providing information on local amenities.
  3. Find a niche segment – banks today are trying to be everything to everyone, which is causing their innovation to stall. Those identifying a market niche will have the best chance of survival in the digital era. We are already seeing examples of household names in the banking world, such as Credit Suisse and Barclays becoming more selective about areas they want to be in to differentiate themselves.

New regulations continue to shake up the landscape

Even as little as three years ago, one could argue that banks still held some form of advantage over new players due to the vast amounts of customer data they held, giving them unrivalled access to consumer spending patterns. However, with new regulations, such as Open Banking, forcing financial institutions to make their data available, this data ceases to give them the competitive advantage it once did.

However, these regulations are certainly improving the landscape. For consumers, it means they can more easily pick and choose banks for different purposes by managing all accounts and payments in one centralised place. For example, taking advantage of the UK's new Open Banking environment, ING Bank has developed Yolt, a free mobile app which allows users to centralise their finances and manage their money with different banks for different financial services in one place. And, in theory, this improved access to payment information and spending data will lead to better banking products that offer more efficient service to consumers.

As the use and implementation of technology continues to change the banking landscape, we can expect a dramatic change in the sector within the next five years. A decade ago, many investment banking leaders thought it was ridiculous to suggest that software would run and complete their research analysis whilst today, many are almost entirely reliant on automation and AI to provide thorough and fast analysis. The question is, which banks will recognise and take advantage of the market changes ahead? Only time will tell.

When considering where to take your company to, try to think differently to all of the other companies out there. Don’t jump for the easy route of heading straight to the US or an easy nearby market, for example from the UK to Ireland.

Home in on your options

Before you make a move, decide on your options. Does it make financial and logical sense to expand by city, country or by language?  If you’re looking to expand straight into another country over a city first, then take a private jet charter and talk to the locals. It’s imperative when expanding your business globally, to spend some time on the ground where you are wanting to set up base and speak to people who live and work there. You could look at all the data trends for your business sector in that country and analyse whether or not the market will suit your model, but nothing beats the invaluable insight of the people who reside there full time.

Prioritise the markets

There isn’t much point trying to jump into every single market that’s detailed in your statistics document. Think about what really matters to your business and what direction you’re heading in.

Is this new market as big as your home market or bigger? If the answer is no, then it’s meaningless expanding your business into this country, unless you have a strong reason. Are there similarities across markets? If you are a logistics or eCommerce business, the likelihood is that you’ll need established distribution hubs that cover most of Europe and beyond – make sure you check out factors like this before you make the move.

Can you get ahead of the local competition? When you head to your desired location and speak to the locals, get an idea of how established your competitors are. Are they start ups who you will have certain advantages over, or are they big conglomerates who may be hard to beat?

Leverage Partner and Channel Relationships

Working with your partners is a solid strategy when looking to expand globally. Maybe the distribution company you work with has its headquarters in your desired country or has a strong presence there. Keep your partners in the loop with your growth plans, you never know when you’ll need to lean on them for a greater insight and potential assistance as you drive your expansion forwards.

A decade after the global recession, the world’s economy is vulnerable again. Ryan Avent, our economics columnist, considers how the next recession might happen—and what governments can do about it

According to the Independent, many companies are struggling to decide on importing and exporting in light of confusion over the direction Brexit will take businesses.

But what is the current state of the nation’s trading with the wider world? In this article British brand Gola, that is renowned for its classic trainers, take an in-depth look at the UK’s imports and exports, from the items we sell the most of to what we’re buying in, as well as which countries are our top import and export locations.

Terminology rundown

With so much talk in the tabloids and newsrooms about trade and Brexit, you might be wondering what some or all of the terminology springing up means.

Before we delve further into what the UK has to offer in terms of trade, let’s break down some of the terminology:

It is important to note that, regarding the “special relationship” with the US, the UK does export more to the US than any other country. However, when considering the EU as a whole with the same trade laws etc, rather than 27 separate countries, the EU imports more from the UK than the US by far.

What are we exporting?

According to the Observatory of Economic Complexity (OEC), in 2016 the UK’s top export item was cars, which accounted for 12% of the overall $374 billion export value that year. One of example of this is the world renowned Mercedes-Benz, which offer a variety of cars, including the Mercedes Gle.

Other popular UK products were gas turbines (3.5%), packaged medicaments (5.2%), gold (4.0%), crude petroleum (3.4%), and hard liquor (2.1%).

We also export a fair amount of food and drink, with items such as whisky and salmon popular abroad.

The BBC also points out that exports and imports are not just physical goods. In this digital age, it’s easier than ever to offer services as exports too, and the UK does just that, via financial services, IT services, tourism, and more.

Where are we exporting to?

In 2016, our top export destinations were:

  1. United States (14%)
  2. Germany (9.5%)
  3. The Netherlands (6.0%)
  4. France (6.0%)
  5. Switzerland (5.1%)

China, one of the countries the UK is eyeing up for a potential trade deal after Brexit, accounted for 5%. Again, it is worth considering that Europe as a whole accounted for 55% of our top export destinations.

What are we importing?

We are importing rather similar items as we’re exporting. Top imports into the UK in 2016 included gold (8.2%), packaged medicaments (3.1%), cars (7.8%) and vehicle parts (2.5%).

Where are we importing from?

For 2016, the top origins of the UK’s imported products were:

  1. Germany (14%)
  2. China (9.8%)
  3. United States (7.5%)
  4. The Netherlands (7.3%)
  5. France (5.8%)

The UK’s trade deficit

Despite our popular products, the nation is sitting with a trade deficit to the EU — we import more from the EU than we sell to the EU. In 2017, we exported £274 billion worth to the EU, and imported £341 billion’s worth from the EU. In fact, the only countries in the EU that bought more from us than we bought from them were Ireland, Sweden, Denmark, and Malta. Our biggest trade deficit is to Germany, who sold us £26 billion more than we sold to them.

The UK also has a trade deficit with Asia, having sold £20 billion less in goods and services than we bought in.

As previously mentioned, we have a trade surplus with the United States, as well as with Africa.

A trade deficit is generally viewed in a poor light, as it is basically another form of debt: the UK imported $88.4 billion from Germany in 2016. Germany imported $35.5 billion from the UK, making a difference of $52.9 billion owed by the UK to Germany.

With uncertainty abound about the impact of Brexit on imports and exports, it remains to be seen how UK businesses will continue to trade abroad, and if focuses will shift.


Below, Rune Sørensen, at Nets, explores with Finance Monthly the impact that sophisticated card infrastructure can have on mobile-led banking.

All this innovation is pushing and pulling card infrastructures in ways no-one could have predicted a decade ago. Mobile banking, ecommerce integration, loyalty and rewards schemes and even IoT payments all link to cards. That’s a lot to ask of a back-end system.

So the question is: how can issuers balance a need to be perceived as innovative with providing a reliable, compliant and fit-for-purpose payment infrastructure?

Payment revenue is falling, so issuer’s profit margins are being squeezed. Technological change is advancing faster than internal systems can be updated, and the demand for developers with the skills to design and implement back-end solutions is growing faster than supply. As a result, the most forward-thinking banks are taking a critical look at their go-to-market strategies, and questioning if a business model where they design, implement and maintain their own systems is still feasible.

Technological change is advancing faster than internal systems can be updated, and the demand for developers with the skills to design and implement back-end solutions is growing faster than supply.

Take payment gateways as an example. Banks need a payment gateway to the card schemes as they are the backbone of broad e-commerce payment acceptance for their customers, thereby enabling banks to benefit from the international e-commerce market - set to grow to $4.5 trillion by 2021[1]. To avoid locking themselves in with a single scheme, these gateways must also be card scheme agnostic. Issuers now have the choice of whether to develop and maintain these gateways themselves, or to prioritise reliability and time to market by working in collaboration with a trusted partner.

The debate around outsourcing infrastructure has been simmering under the surface for the last few years, and was brought into focus by the Second Payment Services Directive (PSD2). Open banking is bringing huge opportunities to banks because the importance of national borders in the provision of financial services is diminishing. This opens up the market and benefits consumers, and enables banks to target whole new countries of potential customers. However, these opportunities come hand in hand with two significant challenges.

Open banking is bringing huge opportunities to banks because the importance of national borders in the provision of financial services is diminishing.

First, banks must ensure that their payments infrastructure is compliant not only with EU and their own national regulations, but the domestic regulations of any other international markets they intend to enter, as well as the complex and constantly evolving requirements of the card schemes. Card scheme compliance alone is a great responsibility, demanding increasingly more resources as the service portfolio diversifies and becomes more complex, predominantly driven by mobile payment enablement. This is an enormous undertaking – and one difficult to justify when there are dedicated providers of back-end systems offering full compliance for less than it would cost a bank to create and maintain it themselves.

Second, scalability is key. In the increasingly globalised world of financial services, exciting new products must be made available to all customers at the same time, without any of the downtime associated with launching new products and systems. Stability and security are fundamental to banks; innovation alone means nothing.

It’s clear that, in an era where banking and financial services are evolving faster than ever before, banks need to put their money where it counts. A flexible and reliable card infrastructure will be crucial to a successful transition as more and more financial services move to being predominantly mobile – and in the future, maybe even mobile-only.

Although most consumer-facing financial institutions now offer mobile applications, that doesn’t mean that they are ready for a world where smartphones are the primary point of contact with their customers. This is a new reality, and as the industry changes issuers must evolve too. Those that survive and thrive will be the banks that focus on their delivered customer journey and value-adding core business areas – and it’s time to ask if this really includes developing and maintaining back-end systems.

So, put your cards on the table. Is your infrastructure up to the challenge?


The comments from Ian McLeod of Thomas Crown Art, follow growing concerns that the global economy is likely to experience a significant slowdown before the end of 2019.

Leading economic indicators tracked by the OECD have weakened since the start of the year and suggest slower expansion over the next six to nine months.

Similarly, the wider global expansion that began roughly two years ago has plateaued and become less balanced, according to the International Monetary Fund.

Mr McLeod observes: “There’s a growing list of investment tailwinds to consider for 2019. These include significant trade tensions, rising interest rates, political uncertainties, including Brexit, and complacent financial markets.

“The US, the world’s largest economy, has, of course, considerable influence on Asian and European economies. As such, should ther US stock market plunge – as it did recently scrapping all of its 2018 gains during a major sell-off - global markets are vulnerable too.”

He continues: “Against this backdrop, we can expect cryptocurrencies will increasingly be seen as investors’ ‘safe havens’ in 2019 and beyond.

“When the downside of the economy hits, digital assets cryptocurrencies like Bitcoin and Ethereum are likely to be viewed by investors as a robust means of storing wealth, in the same way they do with gold.”

Mr McLeod adds: “There are several keys reasons why the likes of Bitcoin and Ethereum will be safe havens. These include scarcity, because there’s a limited supply; permanence, they don’t face any decay or deterioration that erode their value; and future demand certainty as mass adoption of cryptocurrencies and blockchain, the technology that underpins them, takes hold globally.”

Of this latter point, he comments: “As mainstream adoption is going to dramatically gain momentum in 2019 as the world, especially business, realise ever-more uses for and value of crypto and blockchain.

“Ethereum’s blockchain, for instance, is used in our art business. It has allowed us to create a system to use artworks as a literal store of value; it becomes a cryptocurrency wallet.

“It also solves authenticity and provenance issues – essential in the world of art. All our works of art are logged on the Ethereum’s blockchain with a unique ‘smART’ contract.”

The tech expert concludes: “We are some way off from cryptocurrencies replacing the Swiss Franc, the Japanese Yen or gold as the preferred safe haven assets.

“However, as the world moves from fiat money to digital, and as adoption of crypto picks up, there can be no doubt that cryptocurrencies will be firmly in the pantheon of safe haven assets within in the next decade.”

(Source: Thomas Crown Art)

The biggest risk to stock market investors right now is US Federal Reserve policy error - not a sharp bond market sell-off.

Tom Elliott, International Investment Strategist at deVere Group, is speaking out as financial markets have shown increasing nervousness in recent days.

Mr Elliott comments: “Investors in all assets can be forgiven for fearing a bond market sell-off, given the recent sharp increase in Treasury yields. Higher Treasury yields are likely to lift yields in other core government bond markets, increasing the risk-free rates that other assets have to compete against.

“But if the stock market rally is about to end, is it really going to be because bond investors become afraid of the growth and inflation risks of the strong US economy?

“This is, surely, not realistic given the modest inflation data.

“Fed chair, Jay Powell, has repeatedly made clear his nervousness of reading too much into the recent uptick in US wage growth, and the tightening labour market, which are often considered key determinates for inflation.

“Indeed, it is worth noting not only that September’s hourly wage growth, of 2.8% year-on-year, was actually lower than August’s 2.9%, but also that inflation expectations are broadly stable.

“The Fed’s preferred measure of inflation, the core PCE index, stands at just 2%.”

He continues: “With three more interest rate hikes expected next year, which would take the Fed’s target range to 2.75% – 3%, there is a growing risk not of inflation derailing the U.S economy, but Fed policy error whereby growth is harmed because of an overly-aggressive policy mix.

“This would include not only raising interest rates too fast, but also its quantitative tightening programme that is withdrawing $50bn a month from the U.S. economy, and so contributing to higher bond yields.”

Mr Elliott concludes: “Therefore, the risk to stock market investors comes not from a sharp bond market sell-off which raises the risk-free yields on Treasuries. It is from the Fed ignoring its chair’s own advice and tightening monetary policy faster than the American economy can stand.”

(Source: deVere Group)

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