Latest news with #post-BrettonWoods
TimesLIVE
11 hours ago
- Business
- TimesLIVE
Gold glitters in 2025 as investors seek safe bets, says Standard Bank
Gold prices have surged nearly 28% since the start of 2025, with investors in gold indices seeing similar gains — the S&P GSCI Gold Index is up almost 26% year-to-date. In a year marked by heightened volatility, fuelled by escalating global trade tensions and the unravelling of the post-Bretton Woods consensus after 79 years, it's little surprise that investors are turning to gold as a haven. Now, Standard Bank is offering individual investors an opportunity to get in on the glitter through a thematic structured investment with a lower minimum investment value of R25,000. Structured investments, known for providing targeted exposure to areas showing huge growth potential, usually require investors to have minimum deposits of around R50,000 to R100,000. This makes Standard Bank's structured product, dubbed the Gold Miners Autocall, one of the most accessible options of its kind in SA. Why a structured investment? Structured investments are usually built around specific investment themes or trends, such as technology, healthcare, renewable energy, or demographic changes. They're built to deliver returns over a set time (usually a few years), with less risk than investing directly in shares. In this case, the focus is on gold, allowing investors to capitalise on the sector's current growth trajectory. The bank's Gold Miners Autocall is linked to the performance of the VanEck Gold Miners ETF, which tracks top global gold mining companies. Even if the index stays flat or only rises slightly over a three-year period, the product has a favourable return profile together with a capital guarantee attached to your investment. 'We're seeing strong interest in these types of investments, even outside our high-net-worth clients,' says Nivedna Maharaj, head of Global Markets Retail Investments at Standard Bank. 'They're a great way for individuals to diversify their portfolios.' Why consider gold now? Gold has always been a popular and reliable option among investors seeking to hedge against market volatility and currency fluctuations. It protects against inflation and tends to hold its value when other assets, like stocks or currencies, fall. Globally, more investors are moving beyond just bullion and ETFs, diversifying to structured products that target gold mining equities. 'These offer a balanced way to protect and grow wealth, especially in times of inflation and geopolitical risk,' says Maharaj. 'There's also growing interest in sustainable gold production, which adds another dimension to how investors think about gold exposure.' Adrian Hammond, Gold analyst at SBG Securities, believes the price of gold could rise even higher, potentially up to $4,000/oz in the future. Current Price/NAVs are lower, making now a good time to add gold exposure, he says. Reasons for retail investors to add gold to their portfolios: Protection against uncertainty and inflation: Gold can help shield your money during global instability and when inflation eats away at the value of cash. Diversification: Gold doesn't move in the same way as stocks or bonds, so including it in your portfolio can reduce your overall risk. Alignment with financial goals: Whether you're planning for the long term or looking for more stability, gold can support your investment goals. It's important to review your personal needs and speak to a financial adviser before making decisions. Investing in gold through structured products like the Gold Miners Autocall gives investors a smart way to tap into gold's potential, with built-in protections and clear outcomes. Investors can visit Standard Bank's Online Share Trading platform or speak to their financial adviser or banker at Standard Bank to learn more about accessing the Gold Miners Autocall Structured Product.
Yahoo
29-04-2025
- Business
- Yahoo
Digital Payment Systems Are the Latest Geopolitical Battlefield
In a recent interview on the Irish radio program Newstalk, European Central Bank President Christine Lagarde listed the payment systems that most Europeans depend on for everyday transactions. 'Visa, MasterCard, PayPal, Alipay,' she said, counting them off on one hand, before ending with a question: 'Where are all these coming from?' The interviewer grasped the point even before Lagarde answered her own question: the U.S. and China. Europe's 'march toward independence,' Lagarde went on to explain, must involve bringing 'digital payments under [its] control.' In other words, out with foreign providers, in with a 'European option.' But in making it clear that sovereign payment systems are now central to Europe's quest for strategic autonomy, Lagarde was only saying the quiet part out loud. In the weeks since U.S. President Donald Trump unleashed the most sweeping tariffs in a century, only to put the most draconian among them on pause for 90 days, commentators have called into question the future of the U.S. dollar as the cornerstone of the global economy. But amid the headlines about bond yields and stock prices, it is easy to miss a quieter transformation of the international financial system that is already underway: efforts to wrestle back local control over digital payments. To get more in-depth news and expert analysis on global affairs from WPR, sign up for our free Daily Review newsletter. Beneath the basic function of transferring money digitally lies a dense, largely invisible architecture of clearinghouses, settlement mechanisms and messaging platforms, as well as a web of banks and other financial intermediaries. In 2024, an estimated $195 trillion crossed borders, nearly twice the value of global GDP. Whether it's a billion-dollar bond purchase or a $100 remittance from a migrant worker, each transaction moves through a complex system of financial plumbing that few understand but everyone depends on. Much of that system is controlled, directly or indirectly, by the United States. Though the U.S. was surpassed by China as the world's largest trading nation a decade ago and today accounts for just a quarter of global GDP, it exerts outsize influence over how money moves both across and within borders worldwide. Nowhere is U.S. control over international payment systems more apparent than with the Society for Worldwide Interbank Financial Telecommunication, or SWIFT. Based in Belgium, SWIFT was designed as a neutral body to standardize communication between banks in the post-Bretton Woods era of financial liberalization. But in the aftermath of 9/11, the network became a tool of U.S. statecraft. In 2006, the New York Times revealed that U.S. intelligence agencies had been granted access to SWIFT data as part of their counterterrorism surveillance efforts. Since then, Washington has used political leverage, including the threat of secondary sanctions, to cut Iran, North Korea and Russia out of the SWIFT system. Countries wary of U.S. economic coercion have sought to build alternatives to SWIFT, with limited success. Russia's SPFS system now connects financial institutions in 20 countries, but processes less than 1 percent of SWIFT's traffic. China's CIPS, a clearinghouse for yuan, has signed up 170 direct participants, but an estimated 80 percent of CIPS payments use SWIFT technology. The proposed BRICS Pay system, which would facilitate payments among BRICS countries using blockchain technology, remains for now more rhetoric than reality. Domestic digital payments are a different story. Through Visa and Mastercard, which process the vast majority of digital retail transactions outside of China, the U.S. also has leverage over other countries' domestic payment systems. But in an overlooked example of how countries are adapting to a world of weaponized interdependence, central banks and other public payments corporations have begun to deploy homegrown systems in an effort to bring critical payment infrastructures under local control. Digital public infrastructure, or DPI, has been the most successful approach to date. Core to that approach is the development of open protocols that connect and allow competition between private providers of payment apps and banks. An analogy for understanding protocols is email. Just as a user of Outlook can seamlessly send an email to a user of Gmail, both of which use the SMTP protocol, an individual using an open protocol can pay peers, businesses or even government agencies running on any payments processor that plugs into the system. And instead of Visa, MasterCard, AliPay or a domestic monopoly charging fees for these transactions, they are governed by public interest entities domiciled in the countries where they operate. Brazil's Pix and India's Unified Payments Interface, or UPI, are two of the leading public instant payments infrastructures. They already process hundreds of millions of transactions per day, catapulting their countries to the top of the global real-time payments list. According to research from University College London, at least 93 countries operate DPI payment systems at varying levels of adoption. One of the key motivators for developing these systems is their impact on financial inclusion, as interoperable instant payments tend to be cheaper than credit cards or mobile money. For example, peer-to-peer transactions on Pix are free, and transactions involving merchants run at 0.22 percent of transaction value, compared to 2.2 percent for credit card payments. UPI reduced the cost that internal migrants in India spent to send money home from between 5 percent and 10 percent, to between 1 percent and 2 percent, putting money back in the pockets of consumers instead of financial intermediaries. And lower cost means these systems reach hundreds of millions of new users: Pix introduced over 70 million Brazilians to the digital economy. But the move toward DPI is not just about inclusion. It is also fundamentally about sovereignty, as Lagarde emphasized in her interview with Newstalk. The withdrawal of U.S. payment providers from Russia after the 2022 all-out invasion of Ukraine underscored that payment systems have become part of the arsenal of U.S. economic coercion, raising the stakes when it comes to building sovereign alternatives. Countries are now beginning to think about linking up domestic payment systems as a strategy for contesting SWIFT, taking a bottom-up approach where top-down approaches have failed. Singapore's digital payments infrastructure is connected to UPI, for instance, allowing users in Singapore to transact in India. Efforts like the Bank of International Settlements' Project Nexus as well as regional projects, like the Pan-African Payment and Settlement System or Mojaloop's deployment across the 21-member Common Market for Eastern and Southern Africa, share a vision of a federation of national payment infrastructures that are able to speak to each other—and that no single country can switch off. Now the European Union is looking at these creative solutions from emerging economies as it charts its own roadmap to financial sovereignty. It's not the first time the EU has made such an effort. In 2007, eight member states backed a pan-European payment solution, the Monnet Project, which they hoped to operationalize by 2010. But the project quickly collapsed amid technical hurdles, the absence of a viable business model and diverging priorities among participating banks. The revived European Payments Initiative, or EPI, which was launched in 2020, has similarly stalled. What has changed is the context. Trump's sweeping tariffs and erratic foreign policy have further destabilized an already fragile global financial order, injecting urgency into efforts across and beyond Europe to reclaim economic sovereignty. Visa's mission statement is to connect businesses and individuals through the world's most 'reliable and secure' payments network. But for as long as Trump is in the White House, it will be hard for any U.S. company working abroad to guarantee reliability or security. 'We have to reduce that vulnerability and make sure that there is a European offer that is available,' Lagarde explained.' Just in case. You never know.' Jeremy McKey is an international tech policy researcher at Princeton University and was formerly director of special projects at the Rockefeller Brothers Fund. Jordan Sandman is honorary research fellow at University College London and principal at Co-Develop, a philanthropic fund for digital transformation. The post Digital Payment Systems Are the Latest Geopolitical Battlefield appeared first on World Politics Review.
Business Times
29-04-2025
- Business
- Business Times
The spectre of dollar doomsday still looms
IN 2019, I wrote a column about the coming 'dollar doomsday scenario' in which a fundamental shift in globalisation and towards a post-Bretton Woods system would lead to a fall in both the value of the US dollar and dollar assets. This would raise bond yields, as well as the price of gold and various foreign currencies. And here we are. The S&P may rise and fall on President Donald Trump's daily mood swings, but the die for a new era has been cast. While I have never been great at predicting the timing of big market shifts – as a child of immigrants, I tend to de-risk too early – I do have a strong world view. I hold fast to the idea that the entire paradigm for investing is changing, and that rebalancing away from the US market is important. This will be the case with or without a trade war. Even if Kamala Harris were in office today, we would be in a post-Washington consensus world (the Biden White House said as much). We would also be heading, albeit more slowly than we are now, to a multipolar world in which the US dollar and dollar assets are no longer the only game in town. Few big investing stories hold for much more than a decade, and the US has been on top for far longer than that. The highly financialised, concentrated, debt-driven model that put it there is tapped out in ways that go beyond Trump and his antics. I would point to three fundamental issues, starting with an over-reliance on asset price-driven economic growth. Nearly all major US economic decisions of the past half-century have been about bolstering asset prices – from interest rate deregulation in the late 1970s to the legalisation of share buybacks to tax-favoured 'performance pay' in shares, which created Silicon Valley's massive paper wealth. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Trump and his aides talk about how Main Street does not care about stock prices. But the fact that asset price growth has so wildly outstripped income growth means we are all more reliant on capital markets. The exposure of US households to stocks is near an all-time high (equities and mutual funds represent 26 per cent of total household assets), which implies much more vulnerability to any market downturn, for both individuals and the overall economy. Consider that since 1995, 'equities have become the marginal driver of US federal tax receipts', according to a January presentation by analyst Luke Gromen. 'If stocks fall too far and stay down, US consumer spending and GDP (gross domestic product) will go into recession, sending deficits up,' he wrote. This would come at a time when inflation remains a worry and risk premiums that investors are demanding for US assets are rising. Tariffs or not, most analysts believe there is a bigger US share price correction to come. US stocks are still overvalued relative to their peers. And the International Monetary Fund's latest financial stability report tagged this as a big risk to global markets. Another significant concern I have about US markets is the sharp increase in private-sector debt and leverage over the past few years. Corporate borrowing from private credit markets has been booming, particularly from companies that would have been considered too risky for bank loans. Many of the private credit funds doing the lending have maturity dates, meaning a period at which they can no longer roll over loans, that will come due between now and 2027. As Corey Frayer, a former senior US Securities and Exchange Commission (SEC) adviser on financial stability and now director of investor protection at the Consumer Federation of America, pointed out to me: 'If you had a downturn in the business environment at the same time that a lot of private credit comes due, you may see multiple bankruptcies.' This could eventually result not only in shadow banking failures but problems in the formal banking sector, which is far more exposed to non-bank entities than it was in 2008, when the global financial crisis erupted. The final point to make concerns the introduction of additional risk into the US financial system in the form of cryptocurrency, at a time when the Trump administration has taken a lax attitude towards regulatory enforcement, actively cut staff at the SEC and gutted the Consumer Financial Protection Bureau. Republicans and Democrats alike have supported the Genius Act, which would open the floodgates to the use of crypto in the real economy, potentially amplifying the risks laid out above. The Biden government was already forced to de facto support the crypto platform Circle when Silicon Valley Bank failed. The new legislation, which recently passed initial hurdles in both the Senate and House of Representatives, would encourage more formal and informal players to get into crypto, which is of course an area that both Trump and his consigliere Elon Musk have a vested interest in. I am not necessarily predicting that a corporate debt or crypto-fuelled liquidity crunch will take down the US economy – although I would not be surprised if the next financial crisis came from those areas. Rather, my point is that you do not have to believe that a trade war is imminent to see that American asset markets are increasingly risky and still overpriced. Add to this the trust deficit created by Trump, and I would say the dollar doomsday scenario still has room to run. FINANCIAL TIMES
