Rising wealth hits new highs
The number of high net worth individuals – those with free assets of more than $1m – has grown exponentially, as booming stock markets in the US and Europe propelled more than a million people into the ranks of the super wealthy, bringing the current global count to a record 16.5 million.
According to a recent report by business consultancy Capgemini, the world’s high net worth individuals (HNWI) have collectively amassed an eye-watering fortune of $63.5 trillion. Last year alone, 1.1 million people joined this exclusive club – a rise of 8.2% – far outstripping the 6.5% annualised growth across the previous five years. Researchers predict that HNWI wealth is on track to exceed $100 trillion by 2025.
If you can’t beat them…
Six of the world’s biggest banks have teamed up with UBS to pilot a project to create a new kind of digital cash that is designed to exploit the blockchain technology that already facilitates bitcoin transactions.
Barclays, Credit Suisse, and HSBC are among the major organisations to announce their collaboration with UBS over the ‘utility settlement coin’ (USC), a virtual currency that was originally the brainchild of London start-up Clearmatics. Further discussions with central banks, as well as a review of data privacy and cyber security measures are scheduled but it’s hoped that the USC will speed up settlements and could bring central banks one step closer to the introduction of a formal digital currency.
Head of strategic investment and fintech innovation at UBS, Hyder Jaffrey, said in a statement that discussions would continue over the next 12 months, with the aim of a limited ‘go live’ towards the end of 2018.
Libor to be phased out
In the wake of news that a US court has overturned two former Rabobank traders’ convictions over a conspiracy to fix yen and dollar Libor rates, comes an announcement from the head of the Financial Conduct Authority, Andrew Bailey, that it has become ‘not only unsustainable, but also undesirable’ for Libor to continue in its current form.
The decision was taken because banks no longer want to participate in setting the rate, which, at its peak, was used to price more than $350tn of financial products around the world. Plans are currently being made to move to alternative benchmarks by the end of 2021.
You know you’ve had a bad week when two adverse rulings come home to roost – with billion-dollar consequences. So, it’s hard not to feel a little of Google’s pain as it faces down a pair of expensive and potentially damaging international judgements.
A record fine for anti-competitive practices
First up, the European Union’s record $2.7-billion fine for anti-competitive behaviour. This relates to the company’s practice of handling its own shopping search engine – Google Shopping – in a different way from those of its competitors by defaulting it to the top of searches while bumping others down the list. Regulators say that by illegally promoting its own price comparison service in this way, Google has ‘abused its market dominance as a search engine’ and demoted the services of competitors like Kelkoo.
Are we on the cusp of a Bitcoin bubble?
What goes up must come down – or must it? Bitcoin’s recent stratospheric rise has helped push the value of crypto-currencies through the $50 billion-mark, triggering concerns over the creation of an unstable asset bubble in what is a largely unregulated market.
The rapid growth in alternative digital currencies — so-called ‘alt-coins’ — as well as in Bitcoin itself is without precedent; the value of Bitcoin alone has risen by more than 50% in a month and is currently worth more than gold. It’s an astonishing trajectory for a virtual, non-fiat currency.
Tax reforms finally announced
In line with Trump’s pre-election promises – and with all the pomp and circumstance we’ve come to expect from the new administration – the White House unveiled its plans to reform the US tax system this week.
Heralding ‘the biggest tax cuts in history’, the document itself was something of a damp squib – just a single A4 page summarising the main points of the reform agenda which would at a stroke simplify the US tax system, slash business taxes and consign inheritance taxes to history.