Issue #44

Bankers get faster bonuses, central banks losing faith in CBDCs, Netherlands fights over manure, and more. 

‍News from November 21 - November 28, 2024‍

Bankers Get Faster Bonuses

The Bank of England proposed changes to banker bonuses, allowing faster payouts and dividends on deferred bonuses. Deferral periods for senior executives would drop from seven to five years, aligning with EU standards. These changes aim to simplify rules, giving banks more discretion and easing restrictions on pay.

The UK imposed strict bonus deferrals after outrage over bankers blamed for the 2008 crash walking away with massive payouts. Regulators now seek global alignment, citing a need to boost competitiveness and risk-taking without repeating past mistakes.

Source 

Japanese PM’s Investments Up 102%

Japan’s Prime Minister Shigeru Ishiba’s stock portfolio has grown by 102% since 2020, beating Japan’s Topix benchmark, which rose 60%. He also outperformed his cabinet members, including Finance Minister Katsunobu Kato, whose portfolio grew 83%. Ishiba’s investments in defense companies Mitsubishi and Kawasaki Heavy Industries benefited from Japan’s increased defense spending. Despite his financial success, Ishiba faces political challenges, including a 31% approval rating, falling asleep in parliament, and missing a group photo at the Apec summit.

The worst investor in the cabinet is the minister for health, labour, and welfare, who oversees the $1.45 trillion Government Pension Investment Fund, the world’s largest retirement savings pool. Former Prime Minister Fumio Kishida, who resigned in August, owned no stocks. 

Tomochika Kitaoka, an equity strategist at Nomura Securities, one of Japan’s leading financial firms, said cabinet members should set an example by actively investing, reflecting the government’s push for Japanese households to move their cash savings into riskier assets like stocks.

Source

Central Banks Losing Faith in CBDCs 

Support for central bank digital currencies (CBDCs) is fading. Just 13% of central bankers see them as the best solution for cross-border payments, down from 31% last year, while 10% are still developing them. One driver for CBDCs is the fear of tech giants like Google or Meta dominating payments, but tokenization raises risks, such as losing monetary control to foreign treasury token holders.

Geopolitical divides are deepening. The BIS recently left China’s mBridge project—the leading cross-border CBDC initiative—despite denials of political motives. Its alternative, Agorá, is backed by only seven institutions, mostly Western, while Russia’s BRICS payment network remains sidelined.

Efforts to coordinate CBDC governance face immense challenges, from licensing and oversight to regulatory alignment. Many now favor improving systems like Swift, yet progress is slow, especially in emerging markets. 

Source

Bulletin Board

• Netherlands Fights Over Manure. The Netherlands is in a dispute with the EU over new rules requiring biomethane blended with natural gas to come only from domestic manure and organic waste. Brussels has criticized the policy as illegal trade protectionism, arguing it restricts imports of green gas. Dutch officials claim they lack an EU-wide certification system to verify foreign biogas origins. The debate highlights tensions between sustainability goals and compliance with EU trade laws. Source 
• Tech Boss Predicts Firms Training AI. Infosys chair Nandan Nilekani predicts companies will move away from costly, large AI systems like ChatGPT, opting instead for smaller, specialized models. He highlights the appeal of tailored solutions for specific needs, citing Infosys’ work training custom AI models for clients as an example. This trend, he argues, empowers businesses to control their AI strategies, reducing reliance on tech giants while reshaping the competitive landscape in the process. Source  
• Musk Rewards Twitter Investors. Investors in Elon Musk’s $44bn Twitter takeover were granted 25% of shares in his AI company, xAI, which has seen its valuation soar from $24bn to $50bn in just six months, following a $5bn fundraising round. Beneficiaries include Fidelity, Larry Ellison, Saudi Prince Alwaleed, Jack Dorsey, Sequoia Capital, and Andreessen Horowitz. While Twitter’s value has plummeted, xAI’s growth showcases Musk’s ability to leverage loyalty and generate significant returns across his ventures. Source 
• Smithfield Meat Market To Close. The City of London is set to vote on closing the 900-year-old Smithfield Meat Market instead of proceeding with an £800m relocation to east London. The relocation plan, which has already cost £308m, was paused over “financial sustainability” concerns. Closing Smithfield would save millions, free up prime central London real estate, and ensure traders are compensated and aided with a move to a different site. Final approval requires UK parliament consent. Source 
• Mexico Hits Back at Trump. Mexican President Claudia Sheinbaum pushed back against US President-elect Donald Trump’s proposed 25% tariffs on Mexican and Canadian imports, warning of retaliatory measures that could jeopardize shared industries like car manufacturing. Sheinbaum noted tariffs would lead to inflation and job losses in both countries. Sheinbaum: “One tariff will come in response to another, and so on until we put shared companies at risk.” The Mexican peso dropped 1.4% against the dollar after the tariff announcement. Trump also announced reduced, but still significant, tariffs on China, leading to a global decline in the yuan. Source 

‍Disclaimer: This blog offers insights into international business and global events for informational purposes only. It is not intended as investment or business advice. WeavePay is not liable for any decisions made based on the content provided.

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