Deutsche Bank&nbsp;is creating a new technology division in a strategy shift designed to reduce complexity and lower costs while transforming systems that have held back the bank for years.

The German lender's<a href="https://www.wionews.com/world/us-congressional-probe-finds-possible-lapses-in-deutsche-bank-controls-report-247969"> legacy IT systems have been blamed in part for the bank's failure</a> to control costs and for its slow progress in keeping up with the wave of financial technology innovation across the industry.

Technology has long been a problem for Deutsche Bank. Former Chief Executive John Cryan complained in 2015 about "lousy systems" and "very slow processes", and former operations chief Kim Hammonds last year described Deutsche as "vastly complex" and the "most dysfunctional" workplace she has known.

The central technology division announced on Monday will be led by Bernd Leukert, overseeing tech security, data and innovation functions among others, the bank said in a note to employees seen by Reuters.

"At its heart, our technology strategy empowers our businesses to control 'what' is produced, while technology has control of the 'how'. In the past, the 'how' offered too much optionality and did not consistently follow group-wide architecture and tooling," it said.

The lender also established a board-level Technology, Data and Innovation Committee in May and has vowed to invest $14.2 billion&nbsp;in technology by 2022.

It will be doing so amid a technology arms race in banking. Research from UBS this year found that JPMorgan&nbsp;has budgeted $11.4 billion for technology in 2019 alone.

In its note to staff, <a href="https://www.wionews.com/world/deutsche-bank-says-to-slash-18000-jobs-by-2022-233897">Deutsche Bank also said that moving systems to the cloud</a> would not happen overnight, meaning it would continue to invest in legacy infrastructure on which it operates today.

However, it pledged to continue to reduce the number of applications and barriers to technology functions.

"We have a bank-wide commitment to strengthen engineering expertise in the bank by increasing the share of expert internal technology staff," it said.

Deutsche Bank is creating a new technology division in a strategy shift designed to reduce complexity and lower costs while transforming systems that have held back the bank for years.

Deutsche Bank is creating a new technology division in a strategy shift designed to reduce complexity and lower costs while transforming systems that have held back the bank for years. The German lender's legacy IT systems have been blamed in part for the bank's failure to control costs and for its slow progress in keeping up with the wave of financial technology innovation across the industry. Technology has long been a problem for Deutsche Bank. Former Chief Executive John Cryan complained in 2015 about "lousy systems" and "very slow processes", and former operations chief Kim Hammonds last year described Deutsche as "vastly complex" and the "most dysfunctional" workplace she has known. The central technology division announced on Monday will be led by Bernd Leukert, overseeing tech security, data and innovation functions among others, the bank said in a note to employees seen by Reuters. "At its heart, our technology strategy empowers our businesses to control 'what' is produced, while technology has control of the 'how'. In the past, the 'how' offered too much optionality and did not consistently follow group-wide architecture and tooling," it said. The lender also established a board-level Technology, Data and Innovation Committee in May and has vowed to invest $14.2 billion in technology by 2022. It will be doing so amid a technology arms race in banking. Research from UBS this year found that JPMorgan has budgeted $11.4 billion for technology in 2019 alone. In its note to staff, Deutsche Bank also said that moving systems to the cloud would not happen overnight, meaning it would continue to invest in legacy infrastructure on which it operates today. However, it pledged to continue to reduce the number of applications and barriers to technology functions. "We have a bank-wide commitment to strengthen engineering expertise in the bank by increasing the share of expert internal technology staff," it said.

Deutsche Bank in strategy shift to address tech woes

The Finance Minister (FM) last week announced a historic decision of reducing the corporate tax rate from 30 per cent to 22 per cent. For new manufacturing companies registered on October 1 or afterwards, tax rate has been reduced to 15 per cent.&nbsp;

These rates are exclusive of cess and surcharge. The companies availing of 22 per cent tax rate cannot benefit from any other exemption/incentives.

The step has been hailed as the second most landmark measure after the 1991 reforms announced by then Finance Minister Manmohan Singh. The Sensex was up nearly 2000 points, the highest rally in a day in a decade. Tax cuts have been a long pending demand of corporates.&nbsp;

This decision increases the competitiveness of industry and brings India’s tax structure on par with the countries with the lowest tax rates in the world. It is expected to activate the animal spirits of our entrepreneurs, resulting in investments and capacity additions, boosting GDP growth.

The whole exercise is expected to result in a loss of Rs 1.45 lakh crore loss to the exchequer. This is likely to push up fiscal deficit from 3.3% levels projected for 2019-20 to 3.6% levels if all other numbers projected are achieved (a big task, given the lag in tax collections this year).&nbsp;

The government has coughed up Rs. 86,000 crore extra from RBI, which will help absorb some of this loss. In the Budget presented in July this year, the Finance Minister had already extended the tax rate cut to 25 per cent for companies with a turnover of up to Rs 400 crore, representing 99.3 per cent of the entire universe.&nbsp;

This cut is expected to accrue to and benefit top 6,000 companies in India, which account for more than 80% of government’s corporate tax revenues.&nbsp;

The 15% tax rate for new manufacturing companies is likely to help India take advantage of the trade war between US and China. It is a big step to woo companies shifting their manufacturing base out of China and will give a boost to our exports while creating thousands of jobs.&nbsp;

Many commentators have hailed it as an early Diwali for corporate sector. It has given a boost to the investor sentiment. The government has fulfilled their wish and now the onus is on the corporates to take advantage of this step and create jobs and take the economy out of slowdown.&nbsp;

The demand for goods and services in the economy has taken a beating due to the liquidity crisis, post the IL&amp;FS default. The demand from biscuits, to shampoos, to automobiles to housing has been badly impacted. Unless this is revived and capacity utilisation ratio of companies goes up to 85%, corporates would tread with caution before investing. So, what do the companies do with this tax gain? Some of them are expected to pass a portion of the gains to the consumer by offering discounts in the hope of reviving demand. Some could even give their employees a Diwali bonus. This also could help putting a break on further job cuts.&nbsp;

Some would just keep the cash and build reserves in anticipation that global headwinds are likely to continue for some time, while others could pare their debt and improve their balance sheet health.&nbsp;

Then there are those who could pay higher dividends, specifically the public sector companies, thus helping government to recoup some of the tax forgone.&nbsp;

While investor sentiment has been restored, there is growing demand now to slash personal income taxes. Income above Rs. 10 lakh for individuals is taxed at 30 per cent. Only a relief would leave more money in the hands of individual taxpayers and give a boost to demand.&nbsp;

However, with the Model Code of Conduct now in place for Maharashtra and Haryana elections, it will be difficult for the government to take any such step. Further, there is not much fiscal room left this year after the bonanza to corporates. In the medium to long term, this step will prove to be a big positive and boost growth. However, this is not the steroid needed to provide immediate relief and improve consumer sentiment.&nbsp;

(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-after-tax-boost-companies-need-to-stimulate-indian-economy-2791919">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL) &nbsp; 
&nbsp;

The Finance Minister (FM) last week announced a historic decision of reducing the corporate tax rate from 30 per cent to 22 per cent. For new manufacturing companies registered on October 1 or afterwards, tax rate has been reduced to 15 per cent.

The Finance Minister (FM) last week announced a historic decision of reducing the corporate tax rate from 30 per cent to 22 per cent. For new manufacturing companies registered on October 1 or afterwards, tax rate has been reduced to 15 per cent. These rates are exclusive of cess and surcharge. The companies availing of 22 per cent tax rate cannot benefit from any other exemption/incentives. The step has been hailed as the second most landmark measure after the 1991 reforms announced by then Finance Minister Manmohan Singh. The Sensex was up nearly 2000 points, the highest rally in a day in a decade. Tax cuts have been a long pending demand of corporates. This decision increases the competitiveness of industry and brings India’s tax structure on par with the countries with the lowest tax rates in the world. It is expected to activate the animal spirits of our entrepreneurs, resulting in investments and capacity additions, boosting GDP growth. The whole exercise is expected to result in a loss of Rs 1.45 lakh crore loss to the exchequer. This is likely to push up fiscal deficit from 3.3% levels projected for 2019-20 to 3.6% levels if all other numbers projected are achieved (a big task, given the lag in tax collections this year). The government has coughed up Rs. 86,000 crore extra from RBI, which will help absorb some of this loss. In the Budget presented in July this year, the Finance Minister had already extended the tax rate cut to 25 per cent for companies with a turnover of up to Rs 400 crore, representing 99.3 per cent of the entire universe. This cut is expected to accrue to and benefit top 6,000 companies in India, which account for more than 80% of government’s corporate tax revenues. The 15% tax rate for new manufacturing companies is likely to help India take advantage of the trade war between US and China. It is a big step to woo companies shifting their manufacturing base out of China and will give a boost to our exports while creating thousands of jobs. Many commentators have hailed it as an early Diwali for corporate sector. It has given a boost to the investor sentiment. The government has fulfilled their wish and now the onus is on the corporates to take advantage of this step and create jobs and take the economy out of slowdown. The demand for goods and services in the economy has taken a beating due to the liquidity crisis, post the IL&FS default. The demand from biscuits, to shampoos, to automobiles to housing has been badly impacted. Unless this is revived and capacity utilisation ratio of companies goes up to 85%, corporates would tread with caution before investing. So, what do the companies do with this tax gain? Some of them are expected to pass a portion of the gains to the consumer by offering discounts in the hope of reviving demand. Some could even give their employees a Diwali bonus. This also could help putting a break on further job cuts. Some would just keep the cash and build reserves in anticipation that global headwinds are likely to continue for some time, while others could pare their debt and improve their balance sheet health. Then there are those who could pay higher dividends, specifically the public sector companies, thus helping government to recoup some of the tax forgone. While investor sentiment has been restored, there is growing demand now to slash personal income taxes. Income above Rs. 10 lakh for individuals is taxed at 30 per cent. Only a relief would leave more money in the hands of individual taxpayers and give a boost to demand. However, with the Model Code of Conduct now in place for Maharashtra and Haryana elections, it will be difficult for the government to take any such step. Further, there is not much fiscal room left this year after the bonanza to corporates. In the medium to long term, this step will prove to be a big positive and boost growth. However, this is not the steroid needed to provide immediate relief and improve consumer sentiment. (This article was originally published on The DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

After tax boost, companies need to stimulate Indian economy

In a country that is diverse and divided by culture and socio-economic barriers, financial inclusion is a challenge. Given the fact that boundaries are blurring, and consumer spending is on the rise, Indian masses are growing aspirational and moving to greener pastures for improving their lives.&nbsp;

In such a scenario, they are seeking all monetary options that can to make their dreams come true. Traditionally, there have been several methods of lending and borrowing amongst the unbanked masses of the country, which has resulted in a large population remaining excluded from the formal system that has hindered economic growth at the bottom of the pyramid.

That is why we still have almost 80 per cent of the population as unbanked and underserved because they are not financially literate and do not understand the concept of formal lending.&nbsp;

Financial literacy is much more than just a sharp acuity for handling money. It is a powerful source for the masses to gain access to formal financial systems and grow their monetary prospects.&nbsp;

Once aware of the options, individuals realise that borrowing from formal systems can unlock opportunities, which not just helps grow their wealth, but also increases their saving capabilities. &nbsp;

While there has been an evolution of sorts in the urban and semi-urban areas, it is the masses in the hinterland, which are missing out on the benefits.&nbsp;

In order to cater to an urgent requirement, they continue to borrow from informal sectors (family, friends, and moneylenders). Even though the availability and the provision of money from such sectors are alarmingly quick, there exists a flip side to it, which includes social as well as financial concerns.&nbsp;

Borrowing from the informal sector leads to a lack of financial discipline, as flexibility gives rise to an even bigger liability than the initially borrowed sum, thus becoming an unmanageable non-transparent spiral. The individual is caught in a vicious circle of borrowing only to pay back previous sums.&nbsp;

Formal lending from the fiscal sector provides people with multiple benefits, one of them being the concept of credit rating. It is a respectable way of becoming a part of the formal world of the financial sector and eventually trailing into banking systems. This is what is known as financial inclusion. The process is rather simple — you take a loan, follow a timely pattern of EMIs and earn a credit ranking.&nbsp;

It is a transparent method agreed upon between the borrower and lender with regulatory checks and balances and leaves. Usually, a first-time borrower with no credit history could borrow for fulfilling the smallest of aspirations — a mobile upgrade, a refrigerator or even education and marriage of his children.

It is a myth that one needs to be academically sound to be financially literate. One may start with not being averse to being a part of the formal financial sector — it is important to understand that the formal sectors are present in order to make dreams come true in a systematic way.&nbsp;

To be able to manage basic electronic-based financial transactions and modern methods (example: phone-based) is another way an individual may start his journey on the path of financial literacy. &nbsp;

Along with this, being disciplined in the course of paying back loans and acquiring good track record as well as saving money, is like education.&nbsp;

Lately, the government and the Reserve Bank of India have been laying thrust on financial inclusion across the country. Several policy changes and initiatives have been initiated.

Micro-finance institutions have been seen to contribute immensely to the financially under-penetrated regions. Digitisation of processes, payment banks and small finance banks have all helped improve the outreach of formal financial services to economically disadvantaged sections even in geographically remote regions.&nbsp;

However, the road is yet long. Clearly, the lack of effective and broad-based financial and digital literacy is inhibiting full-scale implementation.&nbsp;

The pinnacle of the process of progress will only be achieved when all citizens decide to empower themselves by joining hands with the formal financial sector and become a part of the big Indian dream to realise their own small, yet important dreams.&nbsp; 
&nbsp;

(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-financial-literacy-enables-poorest-to-follow-their-dreams-2776729">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)&nbsp; 
&nbsp; 
&nbsp;

In a country that is diverse and divided by culture and socio-economic barriers, financial inclusion is a challenge. Given the fact that boundaries are blurring, and consumer spending is on the rise, Indian masses are growing aspirational and moving to greener pastures for improving their lives.

In a country that is diverse and divided by culture and socio-economic barriers, financial inclusion is a challenge. Given the fact that boundaries are blurring, and consumer spending is on the rise, Indian masses are growing aspirational and moving to greener pastures for improving their lives. In such a scenario, they are seeking all monetary options that can to make their dreams come true. Traditionally, there have been several methods of lending and borrowing amongst the unbanked masses of the country, which has resulted in a large population remaining excluded from the formal system that has hindered economic growth at the bottom of the pyramid. That is why we still have almost 80 per cent of the population as unbanked and underserved because they are not financially literate and do not understand the concept of formal lending. Financial literacy is much more than just a sharp acuity for handling money. It is a powerful source for the masses to gain access to formal financial systems and grow their monetary prospects. Once aware of the options, individuals realise that borrowing from formal systems can unlock opportunities, which not just helps grow their wealth, but also increases their saving capabilities. While there has been an evolution of sorts in the urban and semi-urban areas, it is the masses in the hinterland, which are missing out on the benefits. In order to cater to an urgent requirement, they continue to borrow from informal sectors (family, friends, and moneylenders). Even though the availability and the provision of money from such sectors are alarmingly quick, there exists a flip side to it, which includes social as well as financial concerns. Borrowing from the informal sector leads to a lack of financial discipline, as flexibility gives rise to an even bigger liability than the initially borrowed sum, thus becoming an unmanageable non-transparent spiral. The individual is caught in a vicious circle of borrowing only to pay back previous sums. Formal lending from the fiscal sector provides people with multiple benefits, one of them being the concept of credit rating. It is a respectable way of becoming a part of the formal world of the financial sector and eventually trailing into banking systems. This is what is known as financial inclusion. The process is rather simple — you take a loan, follow a timely pattern of EMIs and earn a credit ranking. It is a transparent method agreed upon between the borrower and lender with regulatory checks and balances and leaves. Usually, a first-time borrower with no credit history could borrow for fulfilling the smallest of aspirations — a mobile upgrade, a refrigerator or even education and marriage of his children. It is a myth that one needs to be academically sound to be financially literate. One may start with not being averse to being a part of the formal financial sector — it is important to understand that the formal sectors are present in order to make dreams come true in a systematic way. To be able to manage basic electronic-based financial transactions and modern methods (example: phone-based) is another way an individual may start his journey on the path of financial literacy. Along with this, being disciplined in the course of paying back loans and acquiring good track record as well as saving money, is like education. Lately, the government and the Reserve Bank of India have been laying thrust on financial inclusion across the country. Several policy changes and initiatives have been initiated. Micro-finance institutions have been seen to contribute immensely to the financially under-penetrated regions. Digitisation of processes, payment banks and small finance banks have all helped improve the outreach of formal financial services to economically disadvantaged sections even in geographically remote regions. However, the road is yet long. Clearly, the lack of effective and broad-based financial and digital literacy is inhibiting full-scale implementation. The pinnacle of the process of progress will only be achieved when all citizens decide to empower themselves by joining hands with the formal financial sector and become a part of the big Indian dream to realise their own small, yet important dreams. (This article was originally published on The DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Financial literacy enables poorest to follow their dreams

Finance Minister<a href="https://www.wionews.com/.../nirmala-sitharaman-the-first-full-time-woman- defence-minister-retained-as-union-minister-222866"> Nirmala Sitharaman</a> has ruled out reconsidering a plan to issue foreign currency overseas sovereign bonds, she was quoted as saying in an interview published on Sunday, despite warnings of long-term risk for the economy.

On Thursday, Reuters reported that the Prime Minister's Office (PMO) wanted the finance ministry to reassess the idea of issuing foreign currency overseas sovereign bonds and seek wider consultation.

"I am not doing any review. I have not been asked by anybody to do a review," Sitharaman told the Economic Times.

This month, Sitharaman, presenting the&nbsp;<a href="https://www.wionews.com/videos/budget-2019-nirmala-sitharaman-focuses-on-gaon-gareeb-aur-kisan-in-her-first-budget-233232">budget</a> for the fiscal year 2019/2020 that began on April 1, said India would look to issue overseas foreign currency sovereign bonds in addition to raising funds from the domestic market.

The proposal has been criticised by former heads of the Reserve Bank of India, economists and allies of the ruling Bharatiya Janata Party, who argue it could create long-term economic risks by exposing the government's liabilities to currency fluctuations.

“The government would start raising a part of its gross borrowing programme in external markets in external currencies. This will also have a beneficial impact on the demand situation for government securities in the domestic market,” Sitharaman told the Economic Times.

The government plans to borrow nearly $10 billion from the foreign overseas market, out of total planned borrowing of about $103 billion in 2019/20.

Sitharaman told the newspaper that details such as the timing of the issue and the exact size had not been worked out.

Finance Minister Nirmala Sitharaman has ruled out reconsidering a plan to issue foreign currency overseas sovereign bonds, she was quoted as saying in an interview published on Sunday, despite warnings of long-term risk for the economy.

Finance Minister Nirmala Sitharaman has ruled out reconsidering a plan to issue foreign currency overseas sovereign bonds, she was quoted as saying in an interview published on Sunday, despite warnings of long-term risk for the economy. On Thursday, Reuters reported that the Prime Minister's Office (PMO) wanted the finance ministry to reassess the idea of issuing foreign currency overseas sovereign bonds and seek wider consultation. "I am not doing any review. I have not been asked by anybody to do a review," Sitharaman told the Economic Times. This month, Sitharaman, presenting the budget for the fiscal year 2019/2020 that began on April 1, said India would look to issue overseas foreign currency sovereign bonds in addition to raising funds from the domestic market. The proposal has been criticised by former heads of the Reserve Bank of India, economists and allies of the ruling Bharatiya Janata Party, who argue it could create long-term economic risks by exposing the government's liabilities to currency fluctuations. “The government would start raising a part of its gross borrowing programme in external markets in external currencies. This will also have a beneficial impact on the demand situation for government securities in the domestic market,” Sitharaman told the Economic Times. The government plans to borrow nearly $10 billion from the foreign overseas market, out of total planned borrowing of about $103 billion in 2019/20. Sitharaman told the newspaper that details such as the timing of the issue and the exact size had not been worked out.

Finance Minister Nirmala Sitharaman says no rethink on overseas sovereign bonds: Report

Sensex is trading near 37,540 mark while NIFTY 50 is trading near 11,290. Watch this video to know more.

WION Wallet: Indian markets open in green

Rejecting claims about high unemployment in India as “disinformation”, Union Minister Arun Jaitley on Friday said it would be “economic absurdity” to believe that jobs are not being created at a time when the country is witnessing high economic growth.

Jaitley, who could not present the interim Budget because of his indisposition, also defended the budgetary provision of Rs 6000 for each marginal farmer which has been mocked by the Opposition as a meagre amount, saying it is meant to be an “additional support” to the agriculturists.

In an interview to ANI here, he underlined that the Narendra Modi government had efficiently maintained the fiscal discipline as the fiscal deficit and Current Account Deficit (CAD) have been contained and inflation has been reduced drastically while GDP kept growing.

"Our fiscal deficit, we inherited about, 4.5-4.6 per cent, which is now down to 3.4 %, we had targeted 3.3 % but because of the last minute adjustments in the farm sector, we had to make 0.1 % compromise," he said.

He was asked about the ‘leaked report’ of the National Sample Survey Office (NSSO) which said there was unprecedented unemployment in the country, “I don’t think it is a report. It is a draft which has not been approved,” he replied.

Jaitley, the Finance Minister since 2014 whose charge has been temporarily given to Piyush Goyal, said it would be “economic absurdity to say that there are no jobs” when the country is witnessing high economic growth rate.“I completely refute (claims about joblessness),” he said.

While terming the contention as “disinformation”.He said if there was such acute joblessness as projected, there would have been agitation, which is not the case.

Talking about the budgetary provision of Rs 6000 each for marginal farmers, Jaitley said it is an additional support to the agriculturists.

Reacting to the Opposition mocking the amount as being meagre, he said they should stop shedding “crocodile tears for the farmers”.

Noting that the provision will involve annual outlay of Rs 75,000 crore, the senior minister said this allocation is for the first year which can increase in the future.

Jaitley emphasised that loan waivers are not a solution to the farmers’ woes but acknowledged that India’s farm sector still needs support.

Attacking the Congress, Jaitley questioned what the UPA government had done during its 10-year rule."What did the UPA do in 10 years of power- a onetime loan waiver of 70,000 crores. Only 52,ooo crores were waived.&nbsp;

And the CAG report was that, out of the 52,ooo crores a significant part went to the traders and businessmen and not to the farmers. &nbsp;So a political group or a party which came out with a national hoax of this kind has the audacity to say that a scheme like this at a pan-India level is too little, " he said."Please don’t shed crocodile tears today for the farmers.&nbsp;

The opposition also has several governments, let them announce similar schemes, I am sure the other governments within their fiscal space will also consider this and therefore you can top it off. And it is not like this is the sole prerogative or the responsibility of the Centre, we are in a cooperative federalism both Centre and state must cooperate.&nbsp;

This is a huge amount we are doing and we are now as against a onetime loan waiver of 52,000 cr which was partly eaten by traders and businessmen. This is 75,000 cr in the first year itself, I am sure it will expand in future years," he added.

Asked to comment on criticism that the interim Budget presented on Friday was aimed at wooing the voters in the upcoming Lok Sabha elections, Jaitley said, “Budgets are a part of Parliamentary democracy, so are the elections.”Citing the previous examples of populist budgets, he said in 2009 and 2014 the then Finance Ministers of UPA governments Pranab Mukherjee and P. Chidambaram had announced stimulus packages.

&nbsp;"In the 2009 interim budget, Mr. Paranab Mukherjee, not even in the interim budget, but while replying to it announced a stimulus package, where he reduced the excise duty to 2 per cent across the board, well the same argument was applicable then? In 2014 Mr. Chidambaram on a number of products including engineering products and automobiles gave a duty rebate, the same argument can be taken now?" he asked.

He also refuted allegations of any agrarian crisis in the nation and said, " I guess by saying crisis, we are overstating it. the Indian farmer is really the producer of our food, his productivity levels have immensely improved and therefore in the last few decades we have seen shortages becoming into surpluses.

&nbsp;Four years ago pulses were in shortage, he is now producing in surpluses. Now he gets hit because he is producing more and the cost goes down and therefore world over, even the US is subsidizing its farmers, the EU is subsidizing there farmers ."

"Everywhere you maintain a balance between food prices and subsidizing the framers so that the farmer gets the incentive for producing something.

I think our farm sector still needs support and I am quite sure if the Centre and the states come together, with these kinds of programs, rather than mere myopic slogans, which really will not give long term sustenance to the farmers, &nbsp;it can certainly achieve a lot more," he added.

He saw no wrong if the middle class, which is a big chunk in India, gets some help through a budgetary exercise."The kind of fiscal space that we have created enables us to help the middle class and mind you India`s middle class is being very vastly strengthened.

&nbsp;I recently went through a study; Which said in 2005, &nbsp;we had 18 % middle class, in 2015 it was 29 %, in 2025 it is projected to be 44 %," he said."So within a generation, you will see a large majority of Indians graduating into the middle class.

&nbsp;And if the UPA inflicted a 10% inflation on them, which we brought down, obviously the taxpayer also, his real value of money has declined and therefore exempting the smaller taxpayer and mind you his ability to spend more &nbsp;means a boost to the economy.

&nbsp;What given by a way of direct tax benefit also comes back by a way of indirect taxes &nbsp;because the purchasing power of the India`s middle class has improved," he added. &nbsp;(ANI)&nbsp; 
&nbsp;

Rejecting claims about high unemployment in India as “disinformation”, Union Minister Arun Jaitley on Friday said it would be “economic absurdity” to believe that jobs are not being created at a time when the country is witnessing high economic growth.

Rejecting claims about high unemployment in India as “disinformation”, Union Minister Arun Jaitley on Friday said it would be “economic absurdity” to believe that jobs are not being created at a time when the country is witnessing high economic growth. Jaitley, who could not present the interim Budget because of his indisposition, also defended the budgetary provision of Rs 6000 for each marginal farmer which has been mocked by the Opposition as a meagre amount, saying it is meant to be an “additional support” to the agriculturists. In an interview to ANI here, he underlined that the Narendra Modi government had efficiently maintained the fiscal discipline as the fiscal deficit and Current Account Deficit (CAD) have been contained and inflation has been reduced drastically while GDP kept growing. "Our fiscal deficit, we inherited about, 4.5-4.6 per cent, which is now down to 3.4 %, we had targeted 3.3 % but because of the last minute adjustments in the farm sector, we had to make 0.1 % compromise," he said. He was asked about the ‘leaked report’ of the National Sample Survey Office (NSSO) which said there was unprecedented unemployment in the country, “I don’t think it is a report. It is a draft which has not been approved,” he replied. Jaitley, the Finance Minister since 2014 whose charge has been temporarily given to Piyush Goyal, said it would be “economic absurdity to say that there are no jobs” when the country is witnessing high economic growth rate.“I completely refute (claims about joblessness),” he said. While terming the contention as “disinformation”.He said if there was such acute joblessness as projected, there would have been agitation, which is not the case. Talking about the budgetary provision of Rs 6000 each for marginal farmers, Jaitley said it is an additional support to the agriculturists. Reacting to the Opposition mocking the amount as being meagre, he said they should stop shedding “crocodile tears for the farmers”. Noting that the provision will involve annual outlay of Rs 75,000 crore, the senior minister said this allocation is for the first year which can increase in the future. Jaitley emphasised that loan waivers are not a solution to the farmers’ woes but acknowledged that India’s farm sector still needs support. Attacking the Congress, Jaitley questioned what the UPA government had done during its 10-year rule."What did the UPA do in 10 years of power- a onetime loan waiver of 70,000 crores. Only 52,ooo crores were waived. And the CAG report was that, out of the 52,ooo crores a significant part went to the traders and businessmen and not to the farmers. So a political group or a party which came out with a national hoax of this kind has the audacity to say that a scheme like this at a pan-India level is too little, " he said."Please don’t shed crocodile tears today for the farmers. The opposition also has several governments, let them announce similar schemes, I am sure the other governments within their fiscal space will also consider this and therefore you can top it off. And it is not like this is the sole prerogative or the responsibility of the Centre, we are in a cooperative federalism both Centre and state must cooperate. This is a huge amount we are doing and we are now as against a onetime loan waiver of 52,000 cr which was partly eaten by traders and businessmen. This is 75,000 cr in the first year itself, I am sure it will expand in future years," he added. Asked to comment on criticism that the interim Budget presented on Friday was aimed at wooing the voters in the upcoming Lok Sabha elections, Jaitley said, “Budgets are a part of Parliamentary democracy, so are the elections.”Citing the previous examples of populist budgets, he said in 2009 and 2014 the then Finance Ministers of UPA governments Pranab Mukherjee and P. Chidambaram had announced stimulus packages. "In the 2009 interim budget, Mr. Paranab Mukherjee, not even in the interim budget, but while replying to it announced a stimulus package, where he reduced the excise duty to 2 per cent across the board, well the same argument was applicable then? In 2014 Mr. Chidambaram on a number of products including engineering products and automobiles gave a duty rebate, the same argument can be taken now?" he asked. He also refuted allegations of any agrarian crisis in the nation and said, " I guess by saying crisis, we are overstating it. the Indian farmer is really the producer of our food, his productivity levels have immensely improved and therefore in the last few decades we have seen shortages becoming into surpluses. Four years ago pulses were in shortage, he is now producing in surpluses. Now he gets hit because he is producing more and the cost goes down and therefore world over, even the US is subsidizing its farmers, the EU is subsidizing there farmers ." "Everywhere you maintain a balance between food prices and subsidizing the framers so that the farmer gets the incentive for producing something. I think our farm sector still needs support and I am quite sure if the Centre and the states come together, with these kinds of programs, rather than mere myopic slogans, which really will not give long term sustenance to the farmers, it can certainly achieve a lot more," he added. He saw no wrong if the middle class, which is a big chunk in India, gets some help through a budgetary exercise."The kind of fiscal space that we have created enables us to help the middle class and mind you India`s middle class is being very vastly strengthened. I recently went through a study; Which said in 2005, we had 18 % middle class, in 2015 it was 29 %, in 2025 it is projected to be 44 %," he said."So within a generation, you will see a large majority of Indians graduating into the middle class. And if the UPA inflicted a 10% inflation on them, which we brought down, obviously the taxpayer also, his real value of money has declined and therefore exempting the smaller taxpayer and mind you his ability to spend more means a boost to the economy. What given by a way of direct tax benefit also comes back by a way of indirect taxes because the purchasing power of the India`s middle class has improved," he added. (ANI)

Claims on joblessness economic absurdity: Arun Jaitley

In a new year gift to the common man, the government has notified reduction in <a href="http://www.wionews.com/videos/gst-rates-cut-on-33-items-7-items-moved-from-28-gst-rate-185880">GST rates </a>on 23 goods and services, including movie tickets, TV and monitor screen.

The consumers will pay less for these items of common consumption as the incidence of <a href="http://www.wionews.com/business-economy/revised-gst-rates-what-becomes-cheaper-185876">Goods and Services Tax (GST) </a>on them will come down from Tuesday.

The GST Council on December 22 decided to cut tax rates on 23 goods and services, including movie tickets, TV and monitor screens and power banks and exempted frozen and preserved vegetables from the levy.

The Council had rationalised the 28 per cent slab and restricted the highest slab to luxury, demerit, and sin goods, besides cement, large screen TV, Air Conditioners and dishwashers.

The goods on which GST has been lowered to 18 per cent from 28 per cent at present include pulleys, transmission shafts and cranks, gear boxes, retreaded or used tyres, power banks of lithium ion batteries, digital cameras, video camera recorders and video game consoles.

The GST Council has also decided to slash tax rate on parts and accessories for the carriages for disabled persons from 28 per cent to 5 per cent. Also third party insurance premium of goods carrying vehicles has been reduced from 18 per cent to 12 per cent.

The other items which will attract lower GST rate of 5 per cent include marble rubble, natural cork, walking stick, fly ash blocks.

Music books and vegetables (uncooked or cooked by steaming or boiling in water), frozen, branded and put in an unit container and vegetables provisionally preserved but unsuitable in that state for immediate consumption have been exempted from GST.

Services supplied by banks to basic savings bank deposit account holders under the Jan Dhan Yojana will not attract the GST.

Air travel of pilgrims by non-scheduled/charter operations being facilitated by the government under bilateral arrangements will attract a lower GST rate of 5 per cent.

GST on movie tickets costing up to Rs 100 has been cut to 12 per cent, from 18 per cent. Also tickets over Rs 100 will attract 18 per cent GST, against 28 per cent earlier.&nbsp;

Monitors and TV screens up to 32 inches and power banks will attract 18 per cent GST, as against 28 per cent earlier.

In a new year gift to the common man, the government has notified reduction in GST rates on 23 goods and services, including movie tickets, TV and monitor screen.

In a new year gift to the common man, the government has notified reduction in GST rates on 23 goods and services, including movie tickets, TV and monitor screen. The consumers will pay less for these items of common consumption as the incidence of Goods and Services Tax (GST) on them will come down from Tuesday. The GST Council on December 22 decided to cut tax rates on 23 goods and services, including movie tickets, TV and monitor screens and power banks and exempted frozen and preserved vegetables from the levy. The Council had rationalised the 28 per cent slab and restricted the highest slab to luxury, demerit, and sin goods, besides cement, large screen TV, Air Conditioners and dishwashers. The goods on which GST has been lowered to 18 per cent from 28 per cent at present include pulleys, transmission shafts and cranks, gear boxes, retreaded or used tyres, power banks of lithium ion batteries, digital cameras, video camera recorders and video game consoles. The GST Council has also decided to slash tax rate on parts and accessories for the carriages for disabled persons from 28 per cent to 5 per cent. Also third party insurance premium of goods carrying vehicles has been reduced from 18 per cent to 12 per cent. The other items which will attract lower GST rate of 5 per cent include marble rubble, natural cork, walking stick, fly ash blocks. Music books and vegetables (uncooked or cooked by steaming or boiling in water), frozen, branded and put in an unit container and vegetables provisionally preserved but unsuitable in that state for immediate consumption have been exempted from GST. Services supplied by banks to basic savings bank deposit account holders under the Jan Dhan Yojana will not attract the GST. Air travel of pilgrims by non-scheduled/charter operations being facilitated by the government under bilateral arrangements will attract a lower GST rate of 5 per cent. GST on movie tickets costing up to Rs 100 has been cut to 12 per cent, from 18 per cent. Also tickets over Rs 100 will attract 18 per cent GST, against 28 per cent earlier. Monitors and TV screens up to 32 inches and power banks will attract 18 per cent GST, as against 28 per cent earlier.

New GST rates in effect from today: 23 goods and services to get cheaper

Indian shares ended higher on Wednesday, underpinned by financials after the central bank announced liquidity injection via open market bond purchase for January, and as crude prices hovered near 14-month lows.

The benchmark BSE Sensex closed 0.38 per cent firmer at 36,484.33.&nbsp;

The broader NSE Nifty ended 0.54 per cent higher at 10,967.3.&nbsp;

Both the indexes recorded a seventh straight session of gains, with the Nifty clocking its best rally since a nine-day streak in April.

Markets received a boost after the Reserve Bank of India announced a higher-than-expected 500 billion rupees ($7.13 billion) of open market bond purchases for next month, reinforcing expectations that the central bank was turning dovish under Shaktikanta Das who was appointed as governor last week.

Softer crude prices have also strengthened India`s macroeconomic indicators, including inflation and its trade deficit, given the South Asian nation imports some two-thirds of its oil needs.

Axis Bank Ltd and Indiabulls Housing Finance Ltd, which were among the top gainers on the NSE index, closed up 3.33 per cent and 7.85 per cent, respectively.

The 10-year benchmark bond yield was at a more-than-eight-month low of 7.25 per cent, while the rupee was trading at 70.37 to the dollar, after climbing to 69.85 earlier in the session.

Markets will also keep a close watch and look for cues on rate hikes from the US Federal Reserve meeting, which concludes later in the day.

Indian shares ended higher on Wednesday, underpinned by financials after the central bank announced liquidity injection via open market bond purchase for January, and as crude prices hovered near 14-month lows.

Indian shares ended higher on Wednesday, underpinned by financials after the central bank announced liquidity injection via open market bond purchase for January, and as crude prices hovered near 14-month lows. The benchmark BSE Sensex closed 0.38 per cent firmer at 36,484.33. The broader NSE Nifty ended 0.54 per cent higher at 10,967.3. Both the indexes recorded a seventh straight session of gains, with the Nifty clocking its best rally since a nine-day streak in April. Markets received a boost after the Reserve Bank of India announced a higher-than-expected 500 billion rupees ($7.13 billion) of open market bond purchases for next month, reinforcing expectations that the central bank was turning dovish under Shaktikanta Das who was appointed as governor last week. Softer crude prices have also strengthened India`s macroeconomic indicators, including inflation and its trade deficit, given the South Asian nation imports some two-thirds of its oil needs. Axis Bank Ltd and Indiabulls Housing Finance Ltd, which were among the top gainers on the NSE index, closed up 3.33 per cent and 7.85 per cent, respectively. The 10-year benchmark bond yield was at a more-than-eight-month low of 7.25 per cent, while the rupee was trading at 70.37 to the dollar, after climbing to 69.85 earlier in the session. Markets will also keep a close watch and look for cues on rate hikes from the US Federal Reserve meeting, which concludes later in the day.

Nifty, Sensex post seventh session of gains; financials lead

Shares of housing finance firms came crashing sharply Friday, with Dewan Housing Finance tumbling up to 60 per cent on massive selling.

The scrip of Dewan Housing Finance Corporation plummeted 59.67 per cent to Rs 246.25 -- its 52-week low -- on BSE.

Among others, Indiabulls Housing Finance nosedived 35 per cent, Gruh Finance tumbled 17.66 per cent, Can Fin Homes plunged 14.55 per cent, PNB Housing Finance tanked 9.23 per cent.

The broader market also witnessed huge sell-off, with the BSE benchmark index crashing over 1,100 points within a matter of minutes during the afternoon trade.&nbsp;

The index had plunged 1,127.58 points, or 3.03 per cent, to hit an intra-day low of 35,993.64. It, however, recovered nearly 900 points within minutes of the fall.&nbsp;

Shares of housing finance firms came crashing sharply Friday, with Dewan Housing Finance tumbling up to 60 per cent on massive selling. The scrip of Dewan Housing Finance Corporation plummeted 59.

Shares of housing finance firms came crashing sharply Friday, with Dewan Housing Finance tumbling up to 60 per cent on massive selling. The scrip of Dewan Housing Finance Corporation plummeted 59.67 per cent to Rs 246.25 -- its 52-week low -- on BSE. Among others, Indiabulls Housing Finance nosedived 35 per cent, Gruh Finance tumbled 17.66 per cent, Can Fin Homes plunged 14.55 per cent, PNB Housing Finance tanked 9.23 per cent. The broader market also witnessed huge sell-off, with the BSE benchmark index crashing over 1,100 points within a matter of minutes during the afternoon trade. The index had plunged 1,127.58 points, or 3.03 per cent, to hit an intra-day low of 35,993.64. It, however, recovered nearly 900 points within minutes of the fall.

Housing finance firms crash; DHFL nosedives 60%

In just five months of the ongoing financial year, the government has unearthed goods and services tax (GST) evasion to the tune of Rs 5.70 crore.&nbsp;

The government has detected GST evasion amounting to a whopping Rs 5.70 crore in 16 cases during July-November 2017-18, Minister of State for Corporate Affairs PP Chaudhary said in a written reply to Rajya Sabha.

Service tax evasion worth Rs 9,660 crore in a total of 2,938 cases has also been registered during April-December, 2017-18. Evasion of central excise to the tune of Rs 7,242 crore in 614 cases was also registered.&nbsp;

Customs evasions worth Rs 3,987 crore in 26,969 cases were found in the first nine months of the current financial year.

The minister noted that the tax department plans to take appropriate action to keep evasions in check.

The tax department plans to carry out searches, seizures, assessment of income, levy of tax, penalty and filing of prosecution complaints before criminal courts to curb tax evasion.&nbsp;

The Goods and Services Tax was introduced on July 1, 2017, and rendered over a dozen of central as well as local taxes ineffective.&nbsp;

 
&nbsp;

Customs evasions worth Rs 3,987 crore in 26,969 cases were found in the first nine months of the current financial year

In just five months of the ongoing financial year, the government has unearthed goods and services tax (GST) evasion to the tune of Rs 5.70 crore. The government has detected GST evasion amounting to a whopping Rs 5.70 crore in 16 cases during July-November 2017-18, Minister of State for Corporate Affairs PP Chaudhary said in a written reply to Rajya Sabha. Service tax evasion worth Rs 9,660 crore in a total of 2,938 cases has also been registered during April-December, 2017-18. Evasion of central excise to the tune of Rs 7,242 crore in 614 cases was also registered. Customs evasions worth Rs 3,987 crore in 26,969 cases were found in the first nine months of the current financial year. The minister noted that the tax department plans to take appropriate action to keep evasions in check. The tax department plans to carry out searches, seizures, assessment of income, levy of tax, penalty and filing of prosecution complaints before criminal courts to curb tax evasion. The Goods and Services Tax was introduced on July 1, 2017, and rendered over a dozen of central as well as local taxes ineffective.

Rs 6 crore GST evasion in five months of this financial year

In 2017, we saw the consolidation of China&rsquo;s power and influence globally, and of Communist Party leader Xi Jinping&rsquo;s power nationally. This year, the party will try to use this to tackle some of its biggest economic hurdles such as financial risk, environmental pollution and maintaining social cohesion.

A first and overriding priority will be managing and preventing major financial risks within the Chinese economy. China will continue to clean up and tighten controls over its financial sector.

Beijing has already banned risk-laden Bitcoin from its financial system, and the government says it will maintain a &ldquo;proactive fiscal policy and prudent monetary policy&rdquo; for 2018.

This is in line with moves earlier in 2017 to curb credit growth and consolidate the country&rsquo;s 100 trillion yuan (US$15 trillion) financial services asset-management industry under a single regulatory umbrella.

Regulators have also issued a 36-point code of conduct for the country&rsquo;s private enterprises to follow when investing overseas. This is part of a move to clip the wings of China&rsquo;s most aggressive global deal makers, firms like HNA Group and Fosun International. These businesses responded enthusiastically to the government&rsquo;s &ldquo;going out&rdquo; policy to link China to the rest of the global economy, launched at the beginning of the century.

On the one hand, China has banned investments in gambling and &ldquo;sensitive&rdquo; industries and restricted investments in property, hotel, film and sports. But projects linked to China&rsquo;s ambitious Belt and Road initiative are actively encouraged. So 2018 should see a continuation of China&rsquo;s expanding economic influence globally through infrastructure and other major projects.

<figure class="align-center zoomable"><a href="https://images.theconversation.com/files/201458/original/file-20180110-48505-14mg7t0.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img alt="" src="https://images.theconversation.com/files/201458/original/file-20180110-48505-14mg7t0.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" /></a>

<figcaption>
Beijing&rsquo;s agenda is clear and the message from the centre is tightly controlled. How Hwee Young/AAP

&nbsp;
</figcaption>
</figure>

Tackling pollution, of all kinds

In line with the party&rsquo;s focus on stability and risk minimisation is a clear determination to move away from high-speed growth to high-quality growth. &ldquo;Quality&rdquo; here means an economy that is cleaner and more user friendly.

The government is trying to reduce pollution. Measures to close down polluting factories and make local officials more accountable for environmental damage are starting to make a difference.

A major component of the shift to a cleaner economy is China&rsquo;s determination to free itself from any reliance upon carbon imports. This has potentially major implications for the Australian economy, which has done so well over the past few decades largely because of its commodity exports to China.

China is also no longer willing to accept imports of Australian waste, leaving Australia with the question of how else to deal with its accumulating stockpiles.

Social stability for economic and political stability

In an unusual move during last year&rsquo;s annual end-of-year economic convention, the government detailed concerns from the wider public on issues such as online scams, sex discrimination in the workplace and a lack of kindergarten services in certain regions. This reflects the party&rsquo;s concern with social cohesion.

Maintaining a harmonious society has long been a concern of China&rsquo;s leaders. In 2018, the anti-poverty campaign - one of Xi Jinping&rsquo;s pet projects - will accelerate, with millions of rural poor being relocated to new housing with water and power. This will not only boost GDP and economic growth figures, it&rsquo;s also aimed at promoting support for the party and its leaders.

Chinese leadership&rsquo;s emphasis on social harmony extends to supporting the party in its policy endeavours. A series of recent measures have been aimed at strengthening party organisations in business and civil society organisations.

In line with existing provisions in China&rsquo;s Company Law, these measures seek to ensure that all organisations in China (local and foreign, commercial and non-profit) make room within the organisation for the operations of a Communist Party cell. This allows the party to monitor and influence the operations of any organisation.

The rolling out of a social credit system is also aimed at monitoring and influencing the behaviour of both organisations and individuals. It operates by awarding social credit points for good social behaviour, whether it be corporate philanthropy or an individual picking up rubbish on the kerbside. It also deducts points for bad behaviour, such as traffic law violations, failing to pay bills on time or domestic violence. There are even &ldquo;blacklists&rdquo; for the worst offenders.

Beijing&rsquo;s agenda is clear and the message from the centre is tightly controlled. But the messiness and the unknowns will lie in its local implementation.

China has always struggled, and always will struggle, with the question of how to balance direction from a central government with local implementation for local circumstances.

For example, a recent decree requiring all local areas to move away from coal fired heating, towards natural gas, hit a snag when thousands of houses and schools were left without heating in freezing conditions in northern China. It forced authorities to back-track on implementing the policy.

The key for the government will be to strike a balance between reform and preserving stability. Aggressive reforms will be duly countered by other policies if they are seen as posing risks to economic stability.

If successful, China&rsquo;s reforms will allow its economy to take the lead in adapting to a dynamic world. But the sheer size of its ambitions (both global and local) also contains the risk that failures, if they occur, could have devastating impacts.

&nbsp;

&nbsp;

This article was originally published on <a href="http://theconversation.com" rel="nofollow" target="blank">The Conversation</a>. Read the <a href="https://theconversation.com/what-we-can-expect-from-chinas-economy-in-2018-89911" rel="nofollow" target="blank">original article</a>.

&nbsp;

In China, aggressive reforms will be duly countered by other policies if they are seen as posing risks to economic stability.

In 2017, we saw the consolidation of China’s power and influence globally, and of Communist Party leader Xi Jinping’s power nationally. This year, the party will try to use this to tackle some of its biggest economic hurdles such as financial risk, environmental pollution and maintaining social cohesion. A first and overriding priority will be managing and preventing major financial risks within the Chinese economy. China will continue to clean up and tighten controls over its financial sector. Beijing has already banned risk-laden Bitcoin from its financial system, and the government says it will maintain a “proactive fiscal policy and prudent monetary policy” for 2018. This is in line with moves earlier in 2017 to curb credit growth and consolidate the country’s 100 trillion yuan (US$15 trillion) financial services asset-management industry under a single regulatory umbrella. Regulators have also issued a 36-point code of conduct for the country’s private enterprises to follow when investing overseas. This is part of a move to clip the wings of China’s most aggressive global deal makers, firms like HNA Group and Fosun International. These businesses responded enthusiastically to the government’s “going out” policy to link China to the rest of the global economy, launched at the beginning of the century. On the one hand, China has banned investments in gambling and “sensitive” industries and restricted investments in property, hotel, film and sports. But projects linked to China’s ambitious Belt and Road initiative are actively encouraged. So 2018 should see a continuation of China’s expanding economic influence globally through infrastructure and other major projects. Beijing’s agenda is clear and the message from the centre is tightly controlled. How Hwee Young/AAP Tackling pollution, of all kinds In line with the party’s focus on stability and risk minimisation is a clear determination to move away from high-speed growth to high-quality growth. “Quality” here means an economy that is cleaner and more user friendly. The government is trying to reduce pollution. Measures to close down polluting factories and make local officials more accountable for environmental damage are starting to make a difference. A major component of the shift to a cleaner economy is China’s determination to free itself from any reliance upon carbon imports. This has potentially major implications for the Australian economy, which has done so well over the past few decades largely because of its commodity exports to China. China is also no longer willing to accept imports of Australian waste, leaving Australia with the question of how else to deal with its accumulating stockpiles. Social stability for economic and political stability In an unusual move during last year’s annual end-of-year economic convention, the government detailed concerns from the wider public on issues such as online scams, sex discrimination in the workplace and a lack of kindergarten services in certain regions. This reflects the party’s concern with social cohesion. Maintaining a harmonious society has long been a concern of China’s leaders. In 2018, the anti-poverty campaign - one of Xi Jinping’s pet projects - will accelerate, with millions of rural poor being relocated to new housing with water and power. This will not only boost GDP and economic growth figures, it’s also aimed at promoting support for the party and its leaders. Chinese leadership’s emphasis on social harmony extends to supporting the party in its policy endeavours. A series of recent measures have been aimed at strengthening party organisations in business and civil society organisations. In line with existing provisions in China’s Company Law, these measures seek to ensure that all organisations in China (local and foreign, commercial and non-profit) make room within the organisation for the operations of a Communist Party cell. This allows the party to monitor and influence the operations of any organisation. The rolling out of a social credit system is also aimed at monitoring and influencing the behaviour of both organisations and individuals. It operates by awarding social credit points for good social behaviour, whether it be corporate philanthropy or an individual picking up rubbish on the kerbside. It also deducts points for bad behaviour, such as traffic law violations, failing to pay bills on time or domestic violence. There are even “blacklists” for the worst offenders. Beijing’s agenda is clear and the message from the centre is tightly controlled. But the messiness and the unknowns will lie in its local implementation. China has always struggled, and always will struggle, with the question of how to balance direction from a central government with local implementation for local circumstances. For example, a recent decree requiring all local areas to move away from coal fired heating, towards natural gas, hit a snag when thousands of houses and schools were left without heating in freezing conditions in northern China. It forced authorities to back-track on implementing the policy. The key for the government will be to strike a balance between reform and preserving stability. Aggressive reforms will be duly countered by other policies if they are seen as posing risks to economic stability. If successful, China’s reforms will allow its economy to take the lead in adapting to a dynamic world. But the sheer size of its ambitions (both global and local) also contains the risk that failures, if they occur, could have devastating impacts. This article was originally published on The Conversation. Read the original article.

Opinion: China needs to balance aggressive reforms with economic stability

Authors: Larisa Yarovaya and Brian Lucey*

In the last year, the price of Bitcoin has increased from less than US$800 to more than US$12,000. This huge spike in value has many asking if it is a bubble or if the high price today is here to stay.

Finance defines a bubble as a situation where the price of an asset diverges systematically from its fundamentals. Investment mogul Jack Bogle says there is nothing to support Bitcoin, and the head of JP MorganChase, Jamie Dimon has called it a fraud &ldquo;worse than tulip bulbs&rdquo;.

Like any asset, Bitcoin has some fundamental value, even if only a hope value, or a value arising from scarcity. So there are reasons to hold it. But our research does show that it is experiencing a bubble right now.

Together with Shaen Corbet at Dublin City University, we took as the fundamentals of Bitcoin elements of the technology that underpins it (and other cryptocurrencies). We looked at measures, which represent the key theoretical and computational components of how cyrptocurrencies are priced.

New Bitcoin is created by a process of mining units called blocks. Bitcoin is built on blockchain technology &ndash; a digital ledger of transactions &ndash; which enables the currency to be traded independently from any central banking system, without risk of fake or duplicate Bitcoins being used. Instead of having a bank verify pending transactions (a &ldquo;block&rdquo;), miners check them and, if approved, the block is cryptographically added to the ever-expanding ledger.

So the first measure we examined relates to mining difficulty. It calculates how difficult it is to find a new block relative to the past. As per the Bitcoin Protocol, the number of Bitcoin is capped at 21m (there are currently 16.7m in circulation). This means that as more people mine for Bitcoin and more blocks are created, each block is, all things being equal, worth less than the previous block.

The second measure we looked at relates to the &ldquo;hash rate&rdquo;. This is the speed at which a computer operates when mining. To successfully mine Bitcoin, you must come up with a 64-digit hexadecimal number (called a &ldquo;hash&rdquo;), which is less than or equal to the target hash. The faster you can do this, the better chance you have of finding the next block and receiving payment. 
The third measurement was &ldquo;block size&rdquo;. This relates to how large the chain is at any given time, with larger chains taking longer to mine than shorter ones.

And lastly we looked at the volume of transactions conducted. Any asset, in particular any currency, which is more widely used will be more valuable than one which is used less frequently.

In our study, we examined data from Bitcoin&rsquo;s early days &ndash; from July 2010 to November 2017. The price of one Bitcoin did not rise above US$1 until April 16, 2011, then to US$10 on June 3, 2011 and US$100 on April 2, 2013. Since then the price rise has clearly been exceptional.

<iframe allowfullscreen="allowfullscreen" allowtransparency="true" frameborder="0" height="450" mozallowfullscreen="mozallowfullscreen" msallowfullscreen="msallowfullscreen" oallowfullscreen="oallowfullscreen" scrolling="no" src="https://datawrapper.dwcdn.net/mygLM/1/" webkitallowfullscreen="webkitallowfullscreen" width="100%"></iframe>

<figure class="align-center zoomable">
We then applied an accepted method that is used to detect and date stamp bubbles after they burst. In essence, this involves identifying the existence of an explosive component in a series. As the series, here the price of bitcoin, &ldquo;explodes&rdquo;, it runs the risk, like any explosion, of flying apart.

A possibly counter-intuitive result of this approach is that if a fundamental driver and the price of an asset both show an explosive component, we might not conclude a bubble is present. A bubble is when something deviates from its fundamental value. If the fundamental value is itself growing explosively then the price would also.

Think of dividends on a stock. If, somehow, these were to grow at an explosive rate we might expect to see the price do the same. While unsustainable, this is not technically a bubble. To overcome this, we then date stamp a bubble as being present when the price shows an explosive component and the underlying fundamentals do not.

Here are the results of the analysis:

<a href="https://images.theconversation.com/files/197566/original/file-20171204-4062-195jztn.jpeg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img alt="" src="https://images.theconversation.com/files/197566/original/file-20171204-4062-195jztn.jpeg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" /></a>

<figcaption>The Bitcoin Bubbles.Authors own calculations</figcaption>
</figure>

&nbsp;

The orange lines denote when the price is showing explosive behaviour. We also see a period where the hash rate was growing explosively &ndash; the blue columns in late 2013 and early 2014. This is also an indication of a price bubble, which went on to burst.

So there are clear points where bubbles are visible &ndash; including now. The price of Bitcoin at present shows explosive behaviour in the absence of anything similar in its fundamentals. We see the price moving upwards in a manner that is not related to the technical underpinnings. It is a clear bubble.

A weakness of these tests and indeed all bubble identification tests is that they take place after the bubble has burst. Even this test, which can be redone as swiftly as new data arrives, is such. Bubbles by their nature grow in a compound manner &ndash; so even a day or two delay in addressing the situation can make a bubble significantly worse.

What is not yet available is an accurate advanced warning bubble indicator. In its absence, this approach may be the best. Unfortunately, we cannot use this approach to determine the extent of the bubble. There is no well-accepted model that suggests a &ldquo;fair&rdquo; value for Bitcoin. But whatever that level is, it is almost certain that, at present, it is well below where we are now.

This article was originally published on <a href="http://theconversation.com" rel="nofollow" target="blank">The Conversation</a>. Read the <a href="https://theconversation.com/the-bitcoin-bubble-how-we-know-it-will-burst-88511" rel="nofollow" target="blank">original article</a>.

*Brian Lucey:&nbsp;Professor of International Finance and Commodities, Trinity College Dublin

(Disclaimer: Both authors write here in a personal capacity).

An analysis of Bitcoin's fundamentals shows how much of a bubble its price has inflated to

Authors: Larisa Yarovaya and Brian Lucey* In the last year, the price of Bitcoin has increased from less than US$800 to more than US$12,000. This huge spike in value has many asking if it is a bubble or if the high price today is here to stay. Finance defines a bubble as a situation where the price of an asset diverges systematically from its fundamentals. Investment mogul Jack Bogle says there is nothing to support Bitcoin, and the head of JP MorganChase, Jamie Dimon has called it a fraud “worse than tulip bulbs”. Like any asset, Bitcoin has some fundamental value, even if only a hope value, or a value arising from scarcity. So there are reasons to hold it. But our research does show that it is experiencing a bubble right now. Together with Shaen Corbet at Dublin City University, we took as the fundamentals of Bitcoin elements of the technology that underpins it (and other cryptocurrencies). We looked at measures, which represent the key theoretical and computational components of how cyrptocurrencies are priced. New Bitcoin is created by a process of mining units called blocks. Bitcoin is built on blockchain technology – a digital ledger of transactions – which enables the currency to be traded independently from any central banking system, without risk of fake or duplicate Bitcoins being used. Instead of having a bank verify pending transactions (a “block”), miners check them and, if approved, the block is cryptographically added to the ever-expanding ledger. So the first measure we examined relates to mining difficulty. It calculates how difficult it is to find a new block relative to the past. As per the Bitcoin Protocol, the number of Bitcoin is capped at 21m (there are currently 16.7m in circulation). This means that as more people mine for Bitcoin and more blocks are created, each block is, all things being equal, worth less than the previous block. The second measure we looked at relates to the “hash rate”. This is the speed at which a computer operates when mining. To successfully mine Bitcoin, you must come up with a 64-digit hexadecimal number (called a “hash”), which is less than or equal to the target hash. The faster you can do this, the better chance you have of finding the next block and receiving payment. The third measurement was “block size”. This relates to how large the chain is at any given time, with larger chains taking longer to mine than shorter ones. And lastly we looked at the volume of transactions conducted. Any asset, in particular any currency, which is more widely used will be more valuable than one which is used less frequently. In our study, we examined data from Bitcoin’s early days – from July 2010 to November 2017. The price of one Bitcoin did not rise above US$1 until April 16, 2011, then to US$10 on June 3, 2011 and US$100 on April 2, 2013. Since then the price rise has clearly been exceptional. We then applied an accepted method that is used to detect and date stamp bubbles after they burst. In essence, this involves identifying the existence of an explosive component in a series. As the series, here the price of bitcoin, “explodes”, it runs the risk, like any explosion, of flying apart. A possibly counter-intuitive result of this approach is that if a fundamental driver and the price of an asset both show an explosive component, we might not conclude a bubble is present. A bubble is when something deviates from its fundamental value. If the fundamental value is itself growing explosively then the price would also. Think of dividends on a stock. If, somehow, these were to grow at an explosive rate we might expect to see the price do the same. While unsustainable, this is not technically a bubble. To overcome this, we then date stamp a bubble as being present when the price shows an explosive component and the underlying fundamentals do not. Here are the results of the analysis: The Bitcoin Bubbles.Authors own calculations The orange lines denote when the price is showing explosive behaviour. We also see a period where the hash rate was growing explosively – the blue columns in late 2013 and early 2014. This is also an indication of a price bubble, which went on to burst. So there are clear points where bubbles are visible – including now. The price of Bitcoin at present shows explosive behaviour in the absence of anything similar in its fundamentals. We see the price moving upwards in a manner that is not related to the technical underpinnings. It is a clear bubble. A weakness of these tests and indeed all bubble identification tests is that they take place after the bubble has burst. Even this test, which can be redone as swiftly as new data arrives, is such. Bubbles by their nature grow in a compound manner – so even a day or two delay in addressing the situation can make a bubble significantly worse. What is not yet available is an accurate advanced warning bubble indicator. In its absence, this approach may be the best. Unfortunately, we cannot use this approach to determine the extent of the bubble. There is no well-accepted model that suggests a “fair” value for Bitcoin. But whatever that level is, it is almost certain that, at present, it is well below where we are now. This article was originally published on The Conversation. Read the original article. *Brian Lucey: Professor of International Finance and Commodities, Trinity College Dublin (Disclaimer: Both authors write here in a personal capacity).

Opinion: The Bitcoin bubble ? how we know it will burst

China will raise foreign ownership limits in financial firms in a step granting access to a tantalizing multi-trillion dollar financial services market, as the world&#39;s second-biggest economy seeks to position itself as a major global finance hub.

The move, announced on Friday by vice finance minister Zhu Guangyao, comes a day after US&nbsp;President Donald Trump reiterated calls for better access to Chinese markets in meetings with Chinese President Xi Jinping.

Xi is driving broad economic reforms by opening up China&rsquo;s capital markets, internationalising the yuan currency, and seeking technical know-how through the pursuit of massive inbound and outbound investments.

The latest changes include raising the limit on foreign ownership in joint-venture firms involved in the futures, securities and funds markets to 51 per cent from the current 49 per cent.

They will take effect immediately following the drafting of specific related rules, Zhu told a news conference, adding China is &quot;formulating a timetable and roadmap for financial sector reform and opening up&quot;.

The foreign business community gave a cautious welcome to the news.

&quot;Financial services further opening definitely has been high on our list,&quot; said Ken Jarrett, President of American Chamber of Commerce in Shanghai.

&quot;It&#39;s a step in the right direction. We&#39;ll have to see the detailed rules. In China you always have to pay attention to the fine print to see how quickly it moves, but to finally ease up on the cap is something that is welcome.&quot;

The plan to ease ownership restrictions comes as Beijing faces mounting pressure from Western governments and business lobbies to remove investment barriers and onerous regulations that restrict overseas companies&#39; operations in its markets.

During his trip to Beijing this week, Trump said that trade between the two nations was unfair, and called for greater market access for US&nbsp;companies.

&quot;We really have to look at access, forced technology transfer, and the theft of intellectual property, which just, by and of itself, is costing the United States and its companies at least $300 billion a year,&quot; Trump said.

&quot;Both the United States and China will have a more prosperous future if we can achieve a level economic playing field. Right now, unfortunately, it is a very one-sided and unfair one.&quot;

Reuters reported on Tuesday that China planned to allow global banks to take a stake of up to 51 per cent in their onshore securities ventures for the first time and tie up with local non-financial firms.

China has been sluggish to give foreign players more access to its financial sector, but has promised to quicken the pace as foreign investment into Asia&#39;s economic powerhouse slows.

It has implemented strict capital controls to contain capital outflows, while opening up new channels for foreign money to come into the domestic markets.

Foreign financial firms are still small players in the financial sector, and the sheer size of the market is a big lure for overseas players.

Western investment banks operating through joint ventures with local partners in China have struggled to make much headway in the last decade, with many of them loss-making as they struggle to win business against much larger local rivals.

A Reuters survey of data from China&rsquo;s Securities Association in 2014 found that the average sino-foreign JV lost 21 million yuan a year over the prior 10 years.

However, several have said they would be keen to invest more in China and do more broking and investment banking if they had full control over their joint ventures.

UBS, which holds a 25 per cent interest in domestic firm UBS Securities Co Ltd, said the changes on Friday were an important step in further opening up China&#39;s financial sector.

&quot;China is a key market for UBS and, as indicated previously, we continue to work towards increasing our stake in UBS Securities Co Ltd&quot;, said Eugene Qian, Chairman of UBS China Strategy Board and a member of the Asia Pacific Executive Committee.

Morgan Stanley, which earlier this year increased its stake in joint venture Morgan Stanley Huaxin Securities from 33 per cent to the then upper limit of 49 per cent, said the reforms would create new momentum for the finance industry in China.

&quot;Morgan Stanley is committed to growing our businesses in China,&quot; said a spokesman for the firm.

Some industry watchers said the changes are too little too late.

&quot;This looks good, but in reality it is pretty small and it is too late,&quot; said Keith Pogson, head of the Asia financial services team at EY.

&quot;If you are an international investment bank, you will be there for the sake of your global franchise and having it as part of your network, not because you think you will make much money in China.&quot;

All the same, markets reacted positively to the news, with insurers and futures-related firms rallying strongly.

New China Life Insurance jumped nearly 6 per cent after the announcement, while Ping An Insurance advanced more than 4 per cent and China Pacific Insurance Group rose over 3 per cent.

China will drop foreign ownership restrictions on local banks and asset management companies, Zhu said.

Full foreign ownership of local firms involved in the futures, securities and funds markets will not be permitted until after three years, while full overseas ownership of insurance firms will be allowed only after five years.

($1 = 6.6388 Chinese yuan renminbi)

The move, announced on Friday by vice finance minister Zhu Guangyao, comes a day after US President Donald Trump reiterated calls for better access to Chinese markets in meetings with Chinese President Xi Jinping.

China will raise foreign ownership limits in financial firms in a step granting access to a tantalizing multi-trillion dollar financial services market, as the world's second-biggest economy seeks to position itself as a major global finance hub. The move, announced on Friday by vice finance minister Zhu Guangyao, comes a day after US President Donald Trump reiterated calls for better access to Chinese markets in meetings with Chinese President Xi Jinping. Xi is driving broad economic reforms by opening up China’s capital markets, internationalising the yuan currency, and seeking technical know-how through the pursuit of massive inbound and outbound investments. The latest changes include raising the limit on foreign ownership in joint-venture firms involved in the futures, securities and funds markets to 51 per cent from the current 49 per cent. They will take effect immediately following the drafting of specific related rules, Zhu told a news conference, adding China is "formulating a timetable and roadmap for financial sector reform and opening up". The foreign business community gave a cautious welcome to the news. "Financial services further opening definitely has been high on our list," said Ken Jarrett, President of American Chamber of Commerce in Shanghai. "It's a step in the right direction. We'll have to see the detailed rules. In China you always have to pay attention to the fine print to see how quickly it moves, but to finally ease up on the cap is something that is welcome." The plan to ease ownership restrictions comes as Beijing faces mounting pressure from Western governments and business lobbies to remove investment barriers and onerous regulations that restrict overseas companies' operations in its markets. During his trip to Beijing this week, Trump said that trade between the two nations was unfair, and called for greater market access for US companies. "We really have to look at access, forced technology transfer, and the theft of intellectual property, which just, by and of itself, is costing the United States and its companies at least $300 billion a year," Trump said. "Both the United States and China will have a more prosperous future if we can achieve a level economic playing field. Right now, unfortunately, it is a very one-sided and unfair one." Reuters reported on Tuesday that China planned to allow global banks to take a stake of up to 51 per cent in their onshore securities ventures for the first time and tie up with local non-financial firms. China has been sluggish to give foreign players more access to its financial sector, but has promised to quicken the pace as foreign investment into Asia's economic powerhouse slows. It has implemented strict capital controls to contain capital outflows, while opening up new channels for foreign money to come into the domestic markets. Foreign financial firms are still small players in the financial sector, and the sheer size of the market is a big lure for overseas players. Western investment banks operating through joint ventures with local partners in China have struggled to make much headway in the last decade, with many of them loss-making as they struggle to win business against much larger local rivals. A Reuters survey of data from China’s Securities Association in 2014 found that the average sino-foreign JV lost 21 million yuan a year over the prior 10 years. However, several have said they would be keen to invest more in China and do more broking and investment banking if they had full control over their joint ventures. UBS, which holds a 25 per cent interest in domestic firm UBS Securities Co Ltd, said the changes on Friday were an important step in further opening up China's financial sector. "China is a key market for UBS and, as indicated previously, we continue to work towards increasing our stake in UBS Securities Co Ltd", said Eugene Qian, Chairman of UBS China Strategy Board and a member of the Asia Pacific Executive Committee. Morgan Stanley, which earlier this year increased its stake in joint venture Morgan Stanley Huaxin Securities from 33 per cent to the then upper limit of 49 per cent, said the reforms would create new momentum for the finance industry in China. "Morgan Stanley is committed to growing our businesses in China," said a spokesman for the firm. Some industry watchers said the changes are too little too late. "This looks good, but in reality it is pretty small and it is too late," said Keith Pogson, head of the Asia financial services team at EY. "If you are an international investment bank, you will be there for the sake of your global franchise and having it as part of your network, not because you think you will make much money in China." All the same, markets reacted positively to the news, with insurers and futures-related firms rallying strongly. New China Life Insurance jumped nearly 6 per cent after the announcement, while Ping An Insurance advanced more than 4 per cent and China Pacific Insurance Group rose over 3 per cent. China will drop foreign ownership restrictions on local banks and asset management companies, Zhu said. Full foreign ownership of local firms involved in the futures, securities and funds markets will not be permitted until after three years, while full overseas ownership of insurance firms will be allowed only after five years. ($1 = 6.6388 Chinese yuan renminbi)

China widens foreign access to its giant financial sector

Divisions&nbsp;between Britain and the EU over mapping out their divorce will be laid bare in Brussels next week when the two sides meet for another round of negotiations whose timetable already looks tight.

London is keen to focus on what happens after Brexit but the bloc says more ground must first be covered on settling the terms of the departure, including the bill, leaving dozens of officials to pick their way through a diplomatic minefield from Monday to Thursday.

The 27 remaining EU states are also insisting on seeing progress on safeguarding expatriate rights and sorting out the future Irish border before they can declare the &quot;sufficient progress&quot; that would allow them to broach talks about Britain&#39;s future relationship with the EU.

Time is short in the negotiations, which started in June and should conclude before the expected Brexit date in late March 2019. Otherwise, Britain risks leaving the EU with little clarity over what happens next.

&quot;There are no major expectations as regards next week&#39;s round. The documents published by Britain (this week) refer more to the future relationship than the things to settle in the first place,&quot; an EU diplomat said.

&quot;Many matters, including the financial aspect most importantly, remain unclear from the British side. So the EU expects no big progress, which makes any &#39;significant progress&#39; less likely in October.&quot;

Talks have been slowed by an ill-judged snap election called by Prime Minister Theresa May that weakened her governing Conservative Party and exposed rifts among her ministers over what sort of Brexit they would seek.

Several position papers released this week have made clear London will often look to replicate as closely as possible its existing arrangements as an EU member after it leaves.

But the EU has dug in its heels, saying it wants to get much more on the three priority areas before anything else.

&quot;We won&#39;t be talking about the future during this round, nothing about customs arrangements or some such,&quot; an EU official said. &quot;We need detail, the withdrawal deal ...has to be a legal text.&quot;

One key point of contention is London&#39;s desire, reaffirmed this week, to break free from the jurisdiction of the EU&#39;s top court, the European Court of Justice (ECJ).

For the EU ensuring the ECJ can police the withdrawal agreement and continue to have the final say in disputes involving EU citizens residing in Britain - and vice versa - is essential.

The bloc largely brushed what May called an initial &quot;generous offer&quot; on citizens&#39; rights, saying much more detailed legal assurances were necessary.

While there is some common ground, sources on both sides say more technical work is needed.

TIME IS MONEY

But the issue of money is seen by both sides as the hardest nut to crack for now.

Concerning Britain&#39;s financial obligations towards the bloc, the EU has floated a divorce bill of around 60 billion euros ($71 billion), which London has said is far too high.

The bloc hopes to agree on a formula with Britain for calculating the figure and sees that as a precondition to moving to any talks about post-Brexit arrangements.

Without an agreement on methodology, the EU has said the talks risk stalling.

But British negotiators have said they will go &quot;line by line&quot; through the EU&#39;s financial expectations and reiterate next week they see the EU&#39;s sum as excessive.

Though the EU&#39;s chief Brexit negotiator Michel Barnier has already warned time is running out, sources on both sides of the table do not anticipate major breakthroughs next week.

Some pieces of the puzzle should, however, start falling into place in more talks next month, they said.

Any clear arrangements around the future border between Britain and EU state Ireland will only come in the second phase of talks anyway, as they would largely depend on the nature of the future bilateral relationship, including on customs.

While opening &quot;phase two&quot; talks had initially been expected in October, Barnier has already signaled this is now less likely to happen.

London has said it was still confident the EU would move towards discussing future relations by October.

London is keen to focus on what happens after Brexit but the bloc says more ground must first be covered on settling the terms of the departure

Divisions between Britain and the EU over mapping out their divorce will be laid bare in Brussels next week when the two sides meet for another round of negotiations whose timetable already looks tight. London is keen to focus on what happens after Brexit but the bloc says more ground must first be covered on settling the terms of the departure, including the bill, leaving dozens of officials to pick their way through a diplomatic minefield from Monday to Thursday. The 27 remaining EU states are also insisting on seeing progress on safeguarding expatriate rights and sorting out the future Irish border before they can declare the "sufficient progress" that would allow them to broach talks about Britain's future relationship with the EU. Time is short in the negotiations, which started in June and should conclude before the expected Brexit date in late March 2019. Otherwise, Britain risks leaving the EU with little clarity over what happens next. "There are no major expectations as regards next week's round. The documents published by Britain (this week) refer more to the future relationship than the things to settle in the first place," an EU diplomat said. "Many matters, including the financial aspect most importantly, remain unclear from the British side. So the EU expects no big progress, which makes any 'significant progress' less likely in October." Talks have been slowed by an ill-judged snap election called by Prime Minister Theresa May that weakened her governing Conservative Party and exposed rifts among her ministers over what sort of Brexit they would seek. Several position papers released this week have made clear London will often look to replicate as closely as possible its existing arrangements as an EU member after it leaves. But the EU has dug in its heels, saying it wants to get much more on the three priority areas before anything else. "We won't be talking about the future during this round, nothing about customs arrangements or some such," an EU official said. "We need detail, the withdrawal deal ...has to be a legal text." One key point of contention is London's desire, reaffirmed this week, to break free from the jurisdiction of the EU's top court, the European Court of Justice (ECJ). For the EU ensuring the ECJ can police the withdrawal agreement and continue to have the final say in disputes involving EU citizens residing in Britain - and vice versa - is essential. The bloc largely brushed what May called an initial "generous offer" on citizens' rights, saying much more detailed legal assurances were necessary. While there is some common ground, sources on both sides say more technical work is needed. TIME IS MONEY But the issue of money is seen by both sides as the hardest nut to crack for now. Concerning Britain's financial obligations towards the bloc, the EU has floated a divorce bill of around 60 billion euros ($71 billion), which London has said is far too high. The bloc hopes to agree on a formula with Britain for calculating the figure and sees that as a precondition to moving to any talks about post-Brexit arrangements. Without an agreement on methodology, the EU has said the talks risk stalling. But British negotiators have said they will go "line by line" through the EU's financial expectations and reiterate next week they see the EU's sum as excessive. Though the EU's chief Brexit negotiator Michel Barnier has already warned time is running out, sources on both sides of the table do not anticipate major breakthroughs next week. Some pieces of the puzzle should, however, start falling into place in more talks next month, they said. Any clear arrangements around the future border between Britain and EU state Ireland will only come in the second phase of talks anyway, as they would largely depend on the nature of the future bilateral relationship, including on customs. While opening "phase two" talks had initially been expected in October, Barnier has already signaled this is now less likely to happen. London has said it was still confident the EU would move towards discussing future relations by October.

Brexit: Britain, EU to meet next week for another round of negotiations

The world&#39;s major economies need to deepen cooperation on tax collection and information sharing as companies seek to minimise the amount they pay to governments, finance ministers at G20 said today.

The issue has become controversial in many countries, with multinational firms from Google to Starbucks facing accusations of not contributing appropriately to the economies where they make their money, and multi-billion-dollar merger proposals being partly driven by tax considerations.

&quot;When the current cross-border tax rules were developed they were tied to concepts that reflected geography and national boundaries,&quot; US treasury secretary Jacob Lew told G20 finance ministers meeting in the Chinese city of Chengdu.

&quot;When we look at technology a lot of that has become harder to define.&quot;

&quot;There needs to be a common standard across countries on important issues of transfer pricing,&quot; he said at a high-level symposium on tax policy, adding that countries had to deal &quot;collectively&quot; with issues that lead to non-taxation.

Closing loopholes, he added, would change the choices businesses make.

The G20 has previously supported proposals requiring authorities to share the identities of shell companies&#39; real owners, and backed creating a blacklist of international tax havens that do not cooperate with information-sharing programmes.

But the discussion as the G20 finance ministers and central bank chiefs meeting opened in Chengdu, in southwestern China, was wider, addressing base erosion and profit shifting, known as BEPS.

The term refers to companies using accounting techniques to shift their profits to low- or no-tax jurisdictions, reducing the amounts they are liable to pay.

Some countries, such as Ireland or Luxembourg, have drawn major firms to establish headquarters or subsidiaries by virtue of their tax rules -&nbsp;a key contributor to Dublin declaring earlier this month that its economy grew by a spectacular 26.3 per cent last year.

&quot;In the 21st century, talent, capital, and even physical infrastructures are increasingly mobile,&quot; said Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development (OECD).

&quot;So, a global conversation on these issues, on tax policy, is obvious, critical, important,&quot; he said, later naming Google, Apple and Starbucks as example companies.

But he acknowledged that it could be a sensitive subject: &quot;Tax policy has been and remains a sovereign issue.&quot;

The seminar jointly pushed for by Germany, China and the OECD &nbsp;also addressed issues of using tax policy to promote growth.

Earlier French finance minister Michel Sapin said that some countries, &quot;not only China&quot; were &quot;reluctant&quot; on questions of cooperation on tax evasion.

But Chinese finance minister Lou Jiwei said: &quot;We need to deepen the international tax cooperation, building on existing mechanisms.&quot; 
 
(AFP)

The multinational firms use accounting techniques to shift their profits to no-tax jurisdictions, reducing amounts they are liable to pay

The world's major economies need to deepen cooperation on tax collection and information sharing as companies seek to minimise the amount they pay to governments, finance ministers at G20 said today. The issue has become controversial in many countries, with multinational firms from Google to Starbucks facing accusations of not contributing appropriately to the economies where they make their money, and multi-billion-dollar merger proposals being partly driven by tax considerations. "When the current cross-border tax rules were developed they were tied to concepts that reflected geography and national boundaries," US treasury secretary Jacob Lew told G20 finance ministers meeting in the Chinese city of Chengdu. "When we look at technology a lot of that has become harder to define." "There needs to be a common standard across countries on important issues of transfer pricing," he said at a high-level symposium on tax policy, adding that countries had to deal "collectively" with issues that lead to non-taxation. Closing loopholes, he added, would change the choices businesses make. The G20 has previously supported proposals requiring authorities to share the identities of shell companies' real owners, and backed creating a blacklist of international tax havens that do not cooperate with information-sharing programmes. But the discussion as the G20 finance ministers and central bank chiefs meeting opened in Chengdu, in southwestern China, was wider, addressing base erosion and profit shifting, known as BEPS. The term refers to companies using accounting techniques to shift their profits to low- or no-tax jurisdictions, reducing the amounts they are liable to pay. Some countries, such as Ireland or Luxembourg, have drawn major firms to establish headquarters or subsidiaries by virtue of their tax rules - a key contributor to Dublin declaring earlier this month that its economy grew by a spectacular 26.3 per cent last year. "In the 21st century, talent, capital, and even physical infrastructures are increasingly mobile," said Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development (OECD). "So, a global conversation on these issues, on tax policy, is obvious, critical, important," he said, later naming Google, Apple and Starbucks as example companies. But he acknowledged that it could be a sensitive subject: "Tax policy has been and remains a sovereign issue." The seminar jointly pushed for by Germany, China and the OECD also addressed issues of using tax policy to promote growth. Earlier French finance minister Michel Sapin said that some countries, "not only China" were "reluctant" on questions of cooperation on tax evasion. But Chinese finance minister Lou Jiwei said: "We need to deepen the international tax cooperation, building on existing mechanisms." (AFP)

G20 ministers urge tighter tax rules for multinationals

The world cannot depend on China alone to save it from a Brexit-induced downturn, the country&#39;s premier said today. 
 
Li Keqiang made the remarks after meeting the heads of six global economic organisations, days after the International Monetary Fund&nbsp;(IMF)&nbsp;predicted that uncertainty created by Britain&#39;s vote to leave the European Union would slow the world economy into next year. 
 
&quot;Given the financial fluctuations as a result of Brexit, China will advance market-based reform of its exchange rate,&quot; Li said, adding, &quot;we will not engage in a trade war or currency war.&nbsp;But it is impossible to carry all of the burden of the whole world on our shoulders,&quot; he said. 
 
Improving global economic growth would require the world to step up macroeconomic coordination and increase the transparency of macro policies, Li added. 
 
In an update to its April forecast, the IMF said global economic growth was likely to be 3.1 per cent this year and 3.4 per cent in 2017, a downward revision of 0.1 per cent for both years. At the same time it upgraded its growth forecast for China by 0.1 per cent to 6.6. 
 
The Asian giant&#39;s economy expanded at 6.7 per cent in the April-June period, the same as the first three months of the year, and slowing from a growth of 6.9 for the full year 2015, its weakest annual rate in a quarter of a century.&nbsp;But the second-quarter reading was stronger than expected and fuelled hopes that growth in the world&#39;s second-largest economy may be stabilising. 
 
Li said the IMF hike put &quot;pressure&quot; on China to &quot;maintain growth and stability&quot;, adding that the organisation should &quot;encourage all countries to move in the same direction&quot;. 
 
Following Li&#39;s comments, World Bank president Jim Yong Kim praised China for its commitment to international economic cooperation at a &quot;time when in the West there is a very loud rejection of globalisation and multilateralism&quot;. 
 
The remarks come as Beijing finds itself in a dispute with the EU over whether or not it deserves to be granted market economy status, a designation that would make it much harder for major economies to fight Beijing over alleged unfair trading practices. 
 
Li&#39;s meeting came ahead of a G-20 finance ministers summit in the Chinese city of Chengdu, where representatives from the biggest industrialised and emerging economies are expected to discuss the impact of Brexit. 
 
(AFP)

In the West there is a very loud rejection of globalisation and multilateralism: World Bank president, Jim Yong Kim

The world cannot depend on China alone to save it from a Brexit-induced downturn, the country's premier said today. Li Keqiang made the remarks after meeting the heads of six global economic organisations, days after the International Monetary Fund (IMF) predicted that uncertainty created by Britain's vote to leave the European Union would slow the world economy into next year. "Given the financial fluctuations as a result of Brexit, China will advance market-based reform of its exchange rate," Li said, adding, "we will not engage in a trade war or currency war. But it is impossible to carry all of the burden of the whole world on our shoulders," he said. Improving global economic growth would require the world to step up macroeconomic coordination and increase the transparency of macro policies, Li added. In an update to its April forecast, the IMF said global economic growth was likely to be 3.1 per cent this year and 3.4 per cent in 2017, a downward revision of 0.1 per cent for both years. At the same time it upgraded its growth forecast for China by 0.1 per cent to 6.6. The Asian giant's economy expanded at 6.7 per cent in the April-June period, the same as the first three months of the year, and slowing from a growth of 6.9 for the full year 2015, its weakest annual rate in a quarter of a century. But the second-quarter reading was stronger than expected and fuelled hopes that growth in the world's second-largest economy may be stabilising. Li said the IMF hike put "pressure" on China to "maintain growth and stability", adding that the organisation should "encourage all countries to move in the same direction". Following Li's comments, World Bank president Jim Yong Kim praised China for its commitment to international economic cooperation at a "time when in the West there is a very loud rejection of globalisation and multilateralism". The remarks come as Beijing finds itself in a dispute with the EU over whether or not it deserves to be granted market economy status, a designation that would make it much harder for major economies to fight Beijing over alleged unfair trading practices. Li's meeting came ahead of a G-20 finance ministers summit in the Chinese city of Chengdu, where representatives from the biggest industrialised and emerging economies are expected to discuss the impact of Brexit. (AFP)

Chinese premier: We alone cannot save world from Brexit downturn

Britain is expected to submit an application to leave the European Union (EU) following Thursday&#39;s referendum, after which it would have two years to negotiate an exit. Below are possible consequences for Britain and the EU of a Brexit. 
 
ECONOMY 
 
Britain would no longer be subject to EU budget rules, which limit a government&#39;s budget deficit to 3 per cent of Gross Domestic Product (GDP) and public debt to 60 per cent of GDP.&nbsp;It could therefore run whatever budget shortfall it wants without admonishment from the European Commission and other EU ministers. It would also be free from the Commission&#39;s monitoring and advice on future actions. 
 
FINANCE 
 
Financial services firms based in Britain, from banks to clearing houses and funds, could lose their money-spinning EU &quot;passports&quot;, which allows them to sell services across the 28-nation bloc with low costs and a single set of rules. 
 
The passporting system has contributed to making London one of the world&#39;s most important financial centres. UK has been a gateway to European financial market for Non-EU banks based in UK.&nbsp;Some American, Japanese and other non-European banks that have European headquarters in London have said they would consider moving parts of their business inside the European Union, in the event of a BREXIT. 
 
Capital Requirement regulations is legislated through Financial Conduct Authority Handbook and Prudential Regulation Authority Handbook. BREXIT would not likely cause any immediate change in these requirements, however, a certain divergence might be expected in the future. 
 
Individuals and Corporates are covered under EU&#39;s insolvency regulations. This is relevant to banks in their dealings with their borrowers with operations in Member States of EU. Unless replaced by an alternative agreement with the EU or individual EU Member State, banks lending to such borrowers who take enforcement proceedings and/or institute insolvency proceedings in the UK, may find themselves exposed to the risk of competing insolvency proceedings being commenced in one or more other jurisdictions and of not being able to rely on the primacy of the UK proceedings. 
 
Market volatility has caused concerns among borrowers for being exposed to lending risks. 
 
BREXIT would have an impact on capital market instruments.&nbsp;The bond instruments issued in UK, may be amended by borrowers given the conditions in UK post BREXIT. Amendments in syndicate agreements would be costly and ineffective as decisions would be delayed and inadequate. 
 
TRADE 
 
The rest of the EU has a trade surplus in goods of about 100 billion Euros ($110 billion) with Britain, while Britain exports some 20 billion Euros in services than it imports, principally due to financial services. 
 
BREXIT campaigners say if would be in the EU&#39;s interest to agree a free trade deal with Britain even if it leaves the bloc. 
 
However, there tends to be more of a focus on goods than services in free trade deals. Switzerland, where financial services are a larger share of GDP than in Britain, has no general access to EU financial service markets and runs a financial services trade deficit with the bloc. 
 
COMPETITION 
 
British companies acquiring EU peers would still need approval from the UK competition watchdog and the European Commission, resulting in more legal costs and the risk that each delivers a different ruling. 
 
Britain will have a free hand to aid ailing companies or industries without fear of EU action but it will also not be able to oppose subsidies granted by EU governments to their own national champions. 
 
ENERGY 
 
Leaving the EU could make UK energy infrastructure investment costlier and delay new projects at a time when the country needs to plug a looming electricity supply gap. 
 
The uncertainty after BREXIT could make energy investors demand higher returns for the risk of less favourable conditions. Oil and gas majors, BP and Shell are among energy companies who warned about the potential downside. 
 
CLIMATE 
 
Britain is the second-largest emitter of greenhouse gases in Europe and its utilities are among the largest buyers of carbon permits in the EU Emission Trading System (ETS). 
 
Although most analysts believe Britain will remain in the cap-and-trade scheme, the vote is viewed as bearish for the market as Britain would no longer be able to drive tough reforms to drive up the price. 
 
BREXIT would also disrupt the bloc&#39;s plans to share out the burden of its Paris climate change pledge. 
 
The environmentally minded also worry that EU climate targets would be less ambitious without British leadership to balance against more reluctant member states such as coal-dependent Poland. 
 
AVIATION 
 
A BREXIT could call into question EU agreements on open airspace that have granted the region&#39;s airlines unlimited access to the skies of fellow member states, benefiting both UK and EU airlines. 
 
It would also affect transatlantic routes because of the EU-U.S. Open Skies agreement, which gives British airlines unlimited flying rights to the United States. 
 
FOREIGN POLICY 
 
Along with France, Britain is the leading foreign policy power in the EU, boasting a large military and close ties with the United States. After a BREXIT, Washington has made clear it will be less interested in London as an ally because of a perceived loss of influence. 
 
Britain would no longer be bound by joint EU positions, for instance on economic sanctions against Russia. Britain would remain a member of NATO. 
 
JUSTICE AND HOME AFFAIRS 
 
Britain has multiple exemptions from justice and home affairs policies, notably not being part of bloc&#39;s Schengen zone of free travel. 
 
It is not clear what restrictions Britain might place on foreign arrivals. The EU has vowed to respond in kind. 
 
Britain currently recognises other EU members&#39; arrest warrants, exchanges police information, including personal data, and is a member of the bloc&#39;s police agency Europol.&nbsp;Its future involvement, including access to EU databases, could diminish, meaning less cooperation on policing and fighting crime. 
 
DEMANDS BY STAKEHOLDERS 
 
With the impact of BREXIT on several sectors of UK, Britain&#39;s biggest banks have put forward their list of demands to the politicians. 
 
1. Exit from the EU should be made smoothly over time, so there is no change over time 
 
2. UK should negotiate to attain a mechanism similar to the passport regime, so that UK operating firms have access to continental market 
 
3. Promote competitiveness of London financial market implying that the UK politicians should promote a level playing field in global financial regulation, throwing the UK fully into a leading role in the G20, Financial Stability Board, Basel Committee, World Bank and International Monetary Fund. It also means slashing red tape. 
 
4. Banks and finance firms are keen to ensure that the finance sector is not cut off from the international jobs market. This implies that Britain should press the case for continued access to skilled talent from the EU and the rest of the world in order to boost the UK&rsquo;s competitiveness. The banks are also lobbying for accommodating immigration rules. 
 
IMPACT OF BREXIT ON MARKET 
 
Australia lost $56 billion in a day after BREXIT result was clear. 
 
Asian stocks are dumped as Global economic conditions remain uncertain. 
 
Wall Street and British Sterling also observed a slump.&nbsp; 
 
For markets, BREXIT signals failure of monetary policy and change in political attitude that may encourage governments around the world pursue more inward-looking policies,thus, restricting free flow of trade and finance.&nbsp; 
 
(With inputs from Reuters)

With BREXIT, there would be impact on several sectors such as Economy, Finance, Trade, Aviation, Energy, Climate etc.

Britain is expected to submit an application to leave the European Union (EU) following Thursday's referendum, after which it would have two years to negotiate an exit. Below are possible consequences for Britain and the EU of a Brexit. ECONOMY Britain would no longer be subject to EU budget rules, which limit a government's budget deficit to 3 per cent of Gross Domestic Product (GDP) and public debt to 60 per cent of GDP. It could therefore run whatever budget shortfall it wants without admonishment from the European Commission and other EU ministers. It would also be free from the Commission's monitoring and advice on future actions. FINANCE Financial services firms based in Britain, from banks to clearing houses and funds, could lose their money-spinning EU "passports", which allows them to sell services across the 28-nation bloc with low costs and a single set of rules. The passporting system has contributed to making London one of the world's most important financial centres. UK has been a gateway to European financial market for Non-EU banks based in UK. Some American, Japanese and other non-European banks that have European headquarters in London have said they would consider moving parts of their business inside the European Union, in the event of a BREXIT. Capital Requirement regulations is legislated through Financial Conduct Authority Handbook and Prudential Regulation Authority Handbook. BREXIT would not likely cause any immediate change in these requirements, however, a certain divergence might be expected in the future. Individuals and Corporates are covered under EU's insolvency regulations. This is relevant to banks in their dealings with their borrowers with operations in Member States of EU. Unless replaced by an alternative agreement with the EU or individual EU Member State, banks lending to such borrowers who take enforcement proceedings and/or institute insolvency proceedings in the UK, may find themselves exposed to the risk of competing insolvency proceedings being commenced in one or more other jurisdictions and of not being able to rely on the primacy of the UK proceedings. Market volatility has caused concerns among borrowers for being exposed to lending risks. BREXIT would have an impact on capital market instruments. The bond instruments issued in UK, may be amended by borrowers given the conditions in UK post BREXIT. Amendments in syndicate agreements would be costly and ineffective as decisions would be delayed and inadequate. TRADE The rest of the EU has a trade surplus in goods of about 100 billion Euros ($110 billion) with Britain, while Britain exports some 20 billion Euros in services than it imports, principally due to financial services. BREXIT campaigners say if would be in the EU's interest to agree a free trade deal with Britain even if it leaves the bloc. However, there tends to be more of a focus on goods than services in free trade deals. Switzerland, where financial services are a larger share of GDP than in Britain, has no general access to EU financial service markets and runs a financial services trade deficit with the bloc. COMPETITION British companies acquiring EU peers would still need approval from the UK competition watchdog and the European Commission, resulting in more legal costs and the risk that each delivers a different ruling. Britain will have a free hand to aid ailing companies or industries without fear of EU action but it will also not be able to oppose subsidies granted by EU governments to their own national champions. ENERGY Leaving the EU could make UK energy infrastructure investment costlier and delay new projects at a time when the country needs to plug a looming electricity supply gap. The uncertainty after BREXIT could make energy investors demand higher returns for the risk of less favourable conditions. Oil and gas majors, BP and Shell are among energy companies who warned about the potential downside. CLIMATE Britain is the second-largest emitter of greenhouse gases in Europe and its utilities are among the largest buyers of carbon permits in the EU Emission Trading System (ETS). Although most analysts believe Britain will remain in the cap-and-trade scheme, the vote is viewed as bearish for the market as Britain would no longer be able to drive tough reforms to drive up the price. BREXIT would also disrupt the bloc's plans to share out the burden of its Paris climate change pledge. The environmentally minded also worry that EU climate targets would be less ambitious without British leadership to balance against more reluctant member states such as coal-dependent Poland. AVIATION A BREXIT could call into question EU agreements on open airspace that have granted the region's airlines unlimited access to the skies of fellow member states, benefiting both UK and EU airlines. It would also affect transatlantic routes because of the EU-U.S. Open Skies agreement, which gives British airlines unlimited flying rights to the United States. FOREIGN POLICY Along with France, Britain is the leading foreign policy power in the EU, boasting a large military and close ties with the United States. After a BREXIT, Washington has made clear it will be less interested in London as an ally because of a perceived loss of influence. Britain would no longer be bound by joint EU positions, for instance on economic sanctions against Russia. Britain would remain a member of NATO. JUSTICE AND HOME AFFAIRS Britain has multiple exemptions from justice and home affairs policies, notably not being part of bloc's Schengen zone of free travel. It is not clear what restrictions Britain might place on foreign arrivals. The EU has vowed to respond in kind. Britain currently recognises other EU members' arrest warrants, exchanges police information, including personal data, and is a member of the bloc's police agency Europol. Its future involvement, including access to EU databases, could diminish, meaning less cooperation on policing and fighting crime. DEMANDS BY STAKEHOLDERS With the impact of BREXIT on several sectors of UK, Britain's biggest banks have put forward their list of demands to the politicians. 1. Exit from the EU should be made smoothly over time, so there is no change over time 2. UK should negotiate to attain a mechanism similar to the passport regime, so that UK operating firms have access to continental market 3. Promote competitiveness of London financial market implying that the UK politicians should promote a level playing field in global financial regulation, throwing the UK fully into a leading role in the G20, Financial Stability Board, Basel Committee, World Bank and International Monetary Fund. It also means slashing red tape. 4. Banks and finance firms are keen to ensure that the finance sector is not cut off from the international jobs market. This implies that Britain should press the case for continued access to skilled talent from the EU and the rest of the world in order to boost the UK’s competitiveness. The banks are also lobbying for accommodating immigration rules. IMPACT OF BREXIT ON MARKET Australia lost $56 billion in a day after BREXIT result was clear. Asian stocks are dumped as Global economic conditions remain uncertain. Wall Street and British Sterling also observed a slump. For markets, BREXIT signals failure of monetary policy and change in political attitude that may encourage governments around the world pursue more inward-looking policies,thus, restricting free flow of trade and finance. (With inputs from Reuters)

Consequences of BREXIT

Mexico&#39;s finance minister Luis Videgaray announced on Friday a $1.68 billion budget cut to deal with the consequences of Britain&#39;s vote to leave the European Union. 
 
&quot;The British people have surprised the world,&quot; Videgaray said at a news conference. 
 
(AFP)

'The British people have surprised the world,' says Mexico finance minister Luis Videgaray

Mexico's finance minister Luis Videgaray announced on Friday a $1.68 billion budget cut to deal with the consequences of Britain's vote to leave the European Union. "The British people have surprised the world," Videgaray said at a news conference. (AFP)

Mexico announces $1.68 billion budget cut after Brexit

The United States on Wednesday declared North Korea a &quot;primary money laundering concern,&quot; and moved to further block its ability to use the U.S. and world financial systems to fund its weapons programs. 
The U.S. Treasury Department called for a prohibition on certain U.S. financial institutions opening or maintaining correspondent accounts, which are established to receive deposits from or make payments on behalf of a foreign institution, with North Korean financial institutions. 
Crucially, Treasury also prohibited the use of third parties` U.S. correspondent accounts to process transactions for North Korean financial institutions. 
The announcement came days after the latest failed missile launch by the isolated state. Tensions in the region have been high since January when North Korea conducted its fourth nuclear test and then followed that with a satellite launch and test launches of various missiles. 
Those efforts have all fueled calls in Washington, and abroad, for a clampdown on Pyongyang. 
U.S. law already generally prohibited U.S. financial institutions from engaging in transactions with North Korean institutions, but Treasury`s latest actions would impose additional controls, especially the prohibitions on the use of third-country banks` U.S. accounts to process transactions for North Korea. 
&quot;This is meaningful,&quot; said Victor Cha, Korea Chair at the Center for Strategic and International Studies in Washington. &quot;This is designating the entire country, which means essentially that any entity that is interested in interacting with U.S. financial institutions should no longer have any business with North Korea.&quot; 
&quot;Most, if not all, entities, if faced with the choice of having access to the U.S. financial system or doing business with North Korea, are going to make the obvious choice,&quot; Cha added. 
South Korea`s foreign ministry on Thursday welcomed the move, which it said in a statement would boost the effectiveness of existing sanctions on the North and have a broader impact than a 2005 U.S. Treasury measure that targeted a bank in the Chinese territory of Macau. 
About $24 million of North Korean funds was frozen at Macau`s Banco Delta Asia (BDA) after the U.S. Treasury accused it of helping to channel earnings from the North`s illicit activities, leading to a frantic attempt by Pyongyang to retrieve the money. 
The North has since developed tactics to skirt financial restrictions by resorting to informal means to transfer money, including the use of bulk cash hand-carried by officials.&nbsp; 
Adam Szubin, acting under secretary for terrorism and financial intelligence, said Washington expected other governments and financial authorities to make similar moves to prevent Pyongyang from &quot;abusing&quot; global financial institutions to support its development of weapons of mass destruction and ballistic missiles. 
&quot;The regime is notoriously deceitful in its financial transactions in order to continue its illicit weapons programs and other destabilizing activities,&quot; Szubin said in a statement. 
The Treasury was required to assess North Korea`s status as a money laundering jurisdiction under the &quot;North Korea Sanctions and Policy Enhancement Act,&quot; passed nearly unanimously by the U.S. Congress in February. 
A U.N. Security Council resolution in early March also required member states to sever correspondent banking relationships with North Korean financial institutions within 90 days.

The announcement came days after the latest failed missile launch by the isolated state. Tensions in the region have been high since January when North Korea conducted its fourth nuclear test and then followed that with a satellite launch and test launches of various missiles.

The United States on Wednesday declared North Korea a "primary money laundering concern," and moved to further block its ability to use the U.S. and world financial systems to fund its weapons programs. The U.S. Treasury Department called for a prohibition on certain U.S. financial institutions opening or maintaining correspondent accounts, which are established to receive deposits from or make payments on behalf of a foreign institution, with North Korean financial institutions. Crucially, Treasury also prohibited the use of third parties` U.S. correspondent accounts to process transactions for North Korean financial institutions. The announcement came days after the latest failed missile launch by the isolated state. Tensions in the region have been high since January when North Korea conducted its fourth nuclear test and then followed that with a satellite launch and test launches of various missiles. Those efforts have all fueled calls in Washington, and abroad, for a clampdown on Pyongyang. U.S. law already generally prohibited U.S. financial institutions from engaging in transactions with North Korean institutions, but Treasury`s latest actions would impose additional controls, especially the prohibitions on the use of third-country banks` U.S. accounts to process transactions for North Korea. "This is meaningful," said Victor Cha, Korea Chair at the Center for Strategic and International Studies in Washington. "This is designating the entire country, which means essentially that any entity that is interested in interacting with U.S. financial institutions should no longer have any business with North Korea." "Most, if not all, entities, if faced with the choice of having access to the U.S. financial system or doing business with North Korea, are going to make the obvious choice," Cha added. South Korea`s foreign ministry on Thursday welcomed the move, which it said in a statement would boost the effectiveness of existing sanctions on the North and have a broader impact than a 2005 U.S. Treasury measure that targeted a bank in the Chinese territory of Macau. About $24 million of North Korean funds was frozen at Macau`s Banco Delta Asia (BDA) after the U.S. Treasury accused it of helping to channel earnings from the North`s illicit activities, leading to a frantic attempt by Pyongyang to retrieve the money. The North has since developed tactics to skirt financial restrictions by resorting to informal means to transfer money, including the use of bulk cash hand-carried by officials. Adam Szubin, acting under secretary for terrorism and financial intelligence, said Washington expected other governments and financial authorities to make similar moves to prevent Pyongyang from "abusing" global financial institutions to support its development of weapons of mass destruction and ballistic missiles. "The regime is notoriously deceitful in its financial transactions in order to continue its illicit weapons programs and other destabilizing activities," Szubin said in a statement. The Treasury was required to assess North Korea`s status as a money laundering jurisdiction under the "North Korea Sanctions and Policy Enhancement Act," passed nearly unanimously by the U.S. Congress in February. A U.N. Security Council resolution in early March also required member states to sever correspondent banking relationships with North Korean financial institutions within 90 days.

US takes more steps to block North Korea's access to financial system

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