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Commentary

Tue 25 Sep 2018 / Africa

Risks of Belt and Road in Africa

Apprehension over China's Belt and Road initiative continues to build. Some observers have accused Beijing of unduly exerting influence on other countries in the guise of infrastructure assistance. It is increasingly apparent that the risks to recipient African economies in particular are substantial, but their governments are left with little choice. It will take several years of use before one can properly measure the full economic benefits of new Chinese-built infrastructure. Meanwhile, the risks are self-evident.

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Mon 24 Sep 2018 / Europe

Proposals for new Brexit statecraft

After the failure of the EU Salzburg summit to agree Theresa May's plan for withdrawal, the chances that Britain will leave without a deal have risen significantly. What is needed is a totally different statecraft mapping out how this outcome can be turned into a partnership that both parties can accept. Britain must realise that it was not asked to leave; it decided to leave. Equally, Brussels must accept that it is not a crime for a member to decide that the EU's governing principles are no longer compatible with views about its place in the world.

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Fri 21 Sep 2018

Banks prepared for 'guillotine Brexit'

Based on discussions with major international banks, it appears they are well advanced in their preparations for Britain's departure from the European Union. On the assumption that policy-makers will adopt a pragmatic approach to the major potential cliff effects, there is only a slim chance that a 'guillotine Brexit' would lead to chaos in financial markets. It is hard to imagine Bank of England Governor Mark Carney and European Central Bank President Mario Draghi allowing politicians needlessly to create a market meltdown.

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Fri 21 Sep 2018

New world

Trump's words are powerful. His pledges to deregulate, cut taxes and boost business have caused the stock market and business confidence to soar. His tough statements on immigration have vastly diminished the flow of illegal aliens across the Mexican border. But these processes will go into reverse if he fails to deliver on his promises. The success or failure of his presidency will depend not on what he says but on what he does.

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Thu 20 Sep 2018 / Global

A regulatory approach to fintech

On the one hand, regulators must protect consumers and investors against fraud and combat tax evasion, money laundering and the financing of terrorism. They must also protect the integrity and stability of the financial system. On the other, they must beware of stifling innovation that benefits the public. By engaging with market participants at the centre of financial innovation, regulators can stay abreast of the benefits of new technologies. Developing a forward-looking regulatory framework calls for flexibility and new expertise.

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Wed 19 Sep 2018 / Global

Measuring geopolitics' impact on markets

In Alexandre Dumas's 1844 novel The Count of Monte Cristo, news of an impending revolution in Spain creates financial panic among French investors. Some sell Spanish bonds at a great loss, only to see the price bounce back after the news proves to be erroneous. In the light of rising protectionism and the apparent dismantling of the postwar global order, geopolitics continues to matter a great deal to markets in 2018. But, as in Dumas's tale, it can be hard for investors to know how to react to such uncertainty.

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Tue 18 Sep 2018 / Africa

Managing economic integration in Africa

In the West, protectionism and an affinity for hard borders are on the rise. Other parts of the world, however, are adopting market-orientated initiatives appealing to the centre ground of politics, most notably Africa. In March, 44 nations signed the Kigali Declaration in Rwanda that brings the region one step closer to meaningful integration. However, one overlooked aspect is that only 30 countries adopted the Free Movement Protocol, which, it is hoped, will lead eventually to the creation of a 'borderless' Africa.

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Mon 17 Sep 2018 / Europe

Overblown rhetoric over UK withdrawal

The rhetorical battle over the best way for Britain to exit the EU has witnessed a ratcheting up of overblown invective from all sides. We have dire technocratic admonitions on the effects of a 'no deal' Brexit without a formal withdrawal agreement. Mark Carney, Bank of England governor, weighed in by telling May's ministers that a 'no deal' departure would drive up mortgage rates, knock the pound and drive down house prices by 35%. It can be safely presumed that none of these dire predictions will come to pass.

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Fri 14 Sep 2018 / Global

Threat of 'currency bullying'

In July the IMF released its 2018 External Sector Report, its latest assessment of the current account balances of the world's 30 largest economies. There are reasons to expect abrupt alterations ahead, particularly in the light of US fiscal easing, US-led trade wars and bouts of Chinese exchange rate depreciation. It is possible that currencies will be subjected to their own war or 'currency bullying'. Rhetoric from Washington is likely to remain clamorous as the US trade and current account deficits rise and global imbalances worsen.

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Thu 13 Sep 2018 / Europe

Euro area humiliates Bulgaria

This summer brought news out of Bulgaria that is relevant not just to the Balkan state, but to every European Union member that has not negotiated a permanent opt-out from the euro. Talks about Bulgaria joining the euro area ended with the country 'voluntarily' accepting, at least on paper, a humiliating list of conditions that would see it, and other prospective euro adopters, assume a large proportion of costs for the single currency before knowing when or even whether it will be accepted into the bloc.

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