Economy

The writer is a professor at Cornell, senior fellow at Brookings and author of ‘The Future of Money’With cash on its way out, many central banks around the world are experimenting with — or in some cases rolling out — retail central bank digital currencies. Their time may have come and they have many advantages over cash, but CBDCs also pose threats to the very institutions issuing them. Private digital payments are working well in many countries, limiting demand for CBDCs. Central banks face the challenge of making the latter viable in retail and peer-to-peer payments but not so successful that they displace private payments altogether. Consequently, the notion of a CBDC as the digital equivalent of cash, bearing a zero interest rate and with no special features, is giving way to the prospect of programming digital money for specific purposes. The possibilities are exciting. The Monetary Authority of Singapore’s recent white paper describes how such “purpose-bound money” can be designed to be “utilised for its intended purposes, such as validity within a certain period, at specific retailers, and in pre-determined denominations”.Doling out money with expiry dates could incentivise consumption. Government cash transfers in times of heightened uncertainty, such as Covid-19 stimulus payments, often go into savings, reducing their impact. Such money could be targeted even more precisely, say for purchases of durable goods, sharpening the economic potency of transfers. With cash gone, other options also come into play: imposing negative nominal interest rates to disincentivise saving and boost demand in periods of extreme economic distress. The programmable aspects of money could facilitate contractual arrangements, with funds automatically released only when conditions are met by all contracting parties. Such innovations open up new vistas of how money could improve the functioning of economies and societies. But it is worth reflecting on the darker sides of any new technology. Cash can be used anonymously and has a stable value (in nominal, not inflation-adjusted terms) relative to an economy’s unit of account, which is usually central bank-issued fiat currency. If units of central bank money with different characteristics were put in circulation, secondary markets for trading them become conceivable. People who prefer to save rather than spend might willingly trade their “programmable” money at a discount. Money held in CBDC digital wallets may be seen as safer than that in commercial bank deposits. After all, central banks never fail. A flight of money into CBDC wallets could decimate bank deposits and put central banks in the undesirable position of making credit allocation decisions. These risks can be limited. New cryptographic tools could restrict the use of CBDCs by unverified persons while allowing for privacy in low-value transactions. Capping balances in CBDC digital wallets would reduce the risk of deposit flight from banks. Legislative guardrails could prevent central banks from becoming too closely tied to government operations. Still, innovations in money do pose subtle risks. Central banks could be viewed as political agents if their visibility into payment transactions is used for law enforcement or surveillance purposes. “Helicopter drops” of money by the government into CBDC digital wallets are fiscal operations but in the public mind would become associated with central banks, causing these institutions to be seen as instruments of fiscal policy. In times of financial panic, caps on CBDC digital wallet balances could prove difficult to sustain, causing central banks to displace commercial ones as the main repository of an economy’s savings.What’s worse, authoritarian or even ostensibly benevolent governments could consider central bank money as a means to achieve their social objectives. They could prohibit its use for purchases of ammunition, illegal drugs, pornography, or for services such as abortions.Central banks already face threats to their independence, credibility and legitimacy. The more extensive the functionality of the money they issue, the greater the political pressures they will be exposed to. At a minimum, such innovations pose risks to the integrity of central bank money. It would be a sad irony if digitising central bank money to maintain its relevance undermines the very features that make it trustworthy. While they have little choice, central banks may well come to rue the day they embarked on upgrading their retail money.  More

The two sides in April began talks on a contract covering the company’s U.S. drivers, package handlers and loaders. An existing five-year labor pact expires on July 31. “With the contract expiration less than two weeks away, we need to work quickly to finalize a fair deal that provides certainty for our customers, our employees and businesses across the country, Atlanta-based UPS said on Saturday.A spokesperson for the International Brotherhood of Teamsters confirmed the Tuesday talks and pointed to a statement detailing its goals for a five-year agreement that increases pay and full-time jobs, and strengthens protections for workers. UPS said it hope to “resolve the few remaining open issues” at the talks. The company started negotiations “prepared to increase the already industry-leading pay and benefits we provide our full and part-time union employees and are committed to reaching an agreement that will do just that.”The two sides have reached tentative agreements on eliminating a two-tier pay structure for delivery drivers and putting air conditioning on package cars. However, they remain at odds over pay increases for part-time workers who sort packages and load trucks.Talks broke down on July 5 with each side blaming the other. More

HAVANA (Reuters) – Cuba’s economic growth is less than 2% this year and remains 8 percentage points below pre-pandemic levels, while production in sectors such as agriculture, mining and manufacturing was further behind, Economy Minister Alejandro Gil said on Saturday.Speaking before the country’s parliament, Gil said the primary sector, which includes agriculture, mining and other basic production, was down 34.9% compared with 2019, while manufacturing was off 20%. A third sector that includes services such as tourism, communications and education was down 4.9%.Cuba, heavily dependent on food, fuel and other imports, largely blames U.S. sanctions and the coronavirus pandemic for more than a 50% decline in its export earnings, which are needed to purchase imports, while admitting that market-oriented reforms have moved too slowly in the Communist-run country.Gil said export earnings so far this year were $1.3 billion, 35.7% of what had been expected, while imports were $4.4 billion, also well below the Cuban government’s forecast. The minister said inflation was raging at a 45% clip this year, on top of last year’s 39% jump, a figure many economists say underestimates the rate as it does not adequately account for a growing informal market driven by scarcity.Cuba has resorted to increased price controls to slow inflation, with little success to date, while conceding that other factors are driving up prices, such as low productivity and output. “If there is no supply and production, we will not achieve effective price control,” Esteban Lazo Hernandez, the president of Cuba’s parliament, said during a session earlier this week. Gil said the crisis, which has left residents reeling, protesting and leaving the island nation, was “complicated,” but he added that the government was working on solutions.”The gradual recovery of the Cuban economy has not yet reached the necessary pace,” he said. “Growth (this year) is very light at 1.8% and also asymmetric. In other words, it does not occur in productive sectors.” More

(Reuters) – Matthew Keith bought his first Barbie dolls in the 1970s using his allowance money, hiding them from his parents for fear they would say the toys were not masculine enough.Today, 22 feet of bookshelves in his Los Angeles home are filled with his Barbie collection, worth around $20,000. The middle school teacher’s Instagram account, “DollsOnTheBrain,” has more than 70,000 followers – about 15,000 of whom he picked up in the last few weeks. What used to be an arcane hobby has become far more popular recently, fueled by the advertising campaign and audience anticipation around this weekend’s film release of “Barbie.” At thrift stores, vintage Barbie dolls have become a treasured find, prices in the collectibles market have soared, and antiques appraisers have been flooded by calls from new collectors. Keith, 55, welcomes the enthusiasm.”I am both happy and hopeful that this will move the needle on Barbie acceptance for everyone,” he said in an interview, adding there are still many little boys who feel pressured not to play with the dolls. The “Barbie” movie, which opened Friday, is expected to rake in $100 million in U.S. theaters on its opening weekend. Retailers around the world are also hoping to profit off its hype with Barbie-themed offerings from hotel suites to toothbrushes and apparel.Not all longtime collectors of the iconic doll are as delighted as Keith by the recent interest in Barbie collecting. On a Reddit forum devoted to the pasttime, some complained they were being priced out by wealthy new buyers, due to a spike in interest that surged in the lead-up to the movie.”I’ve largely stopped collecting dolls themselves and invest in clothing and accessories instead,” wrote one user. “What started out as an affordable hobby has grown too expensive to maintain.” Florida-based veteran Barbie doll dealer Marl Davidson said prices have climbed about 25% in recent months. Her site, MarlBe.com, has been receiving about 3,000 daily hits, triple the usual, many of whom are from people starting collections.”I’ve never seen this kind of interest. It’s really bringing a lot of new adults into the Barbie-collecting world,” Davidson said.Collector dolls are usually around $100, while non-collector dolls typically range from $10-$30. The so-called “Holy Grail” Barbie, the first model produced in 1959, sells for thousands of dollars.Dr. Lori Verderame, an art historian and TV personality with 25 years of experience as an antiques appraiser, said the Barbie doll owners who usually seek her expertise are seasoned collectors assessing the insurance value of their trove.But the movie has generated a roughly 60% increase in demand for Barbie appraisals in the past month, beating out other brands of dolls that are usually more popular, according to Verderame.”Barbie appraisals don’t normally come the way they’ve been coming,” she said. “I’ve seen some very rare and wonderful dolls for appraisals that we might not have seen if it wasn’t for the movie.”Many of those have come from people with little or no experience in doll collecting, such as a person who purchased a Barbie at a thrift store that turned out to be valued at more than $10,000. Another found a doll that had been sitting in her mother’s house for years, which turned out to be worth $8,500.Verderame said many valuable Barbies are “still out there to be found on the treasure hunt in thrift stores,” but added that the current spike in seller interest is only likely to last about two more weeks.Keith, the Los Angeles collector, has never paid more than $230 for a Barbie doll, but he said many of the dolls in his collection have appreciated in value since he bought them. “I feel like Barbie has elevated my personal finances, even though I’ve put a lot of money into her since 1991,” he said. More

In an interview published by Milano Finanza, Andrea Enria said that European banks were stronger than before but that financial markets were still in a “delicate phase” due to the Ukrainian war, higher inflation and fast-rising interest rates.All these factors can increase liquidity and funding risks, Enria said, adding that the ECB would be very focused on this in the stress tests and other supervisory processes underway.”We have decided to send banks, starting in September, a request for information on a weekly basis, in order to have fresher data that will allow us to better monitor liquidity developments,” Enria said. Currently banks are required to provide liquidity information to the ECB on a monthly basis.The results of the bank stress tests will be unveiled in the next few days, and Enria said they would show that the European lenders can face a potential financial crisis from a stronger footing, with higher capital levels and more solid and reliable assets.Asked if in Italy there was a need for a third big banking group besides UniCredit and Intesa Sanpaolo (OTC:ISNPY), Enria said there was margin for further consolidation as in other European member states. More

With the Teamsters contract set to expire Aug. 1, pay for part-time workers is a major hurdle. A walkout could rattle the U.S. economy.Barely a week before the contract for more than 325,000 United Parcel Service workers expires, union and company negotiators have yet to reach an agreement to avert a strike that could knock the American economy off stride.UPS and the union, the International Brotherhood of Teamsters, have resolved a variety of thorny issues, including heat safety and forced overtime. But they remain stalemated on pay for part-time workers, who account for more than half the union’s workers at UPS.A strike, which could come as soon as Aug. 1, could have significant consequences for the company, the e-commerce industry and the supply chain.UPS handles about one-quarter of the tens of millions of packages that are shipped daily in the United States, according to the Pitney Bowes Parcel Shipping Index. Experts have said competitors lack the scale to seamlessly replace that lost capacity.The Teamsters have cited the risks its members took to help generate the company’s strong pandemic-era performance as a reason that they deserve large raises. UPS’s adjusted net income rose more than 70 percent between 2019 and last year, to over $11 billion.The contract talks broke down on July 5 in vituperation. The two sides are to resume negotiations in the coming days, but the window for an agreement before the current five-year contract expires is tight.In a Facebook post this month, the union said the company’s latest offer would have “left behind” many part-timers, whose jobs include sorting packages and loading trucks. The post said part-timers earned “near-minimum wage in many parts of the country.”UPS, which says it relies heavily on part-timers to navigate bursts of activity over the course of a day and to ramp up its work force during busier months, said it had proposed significant wage increases before the talks broke down. According to the company, part-timers currently earn about $20 an hour on average after 30 days as well as paid time off, health care and pension benefits. The company noted that many part-timers graduated to jobs as full-time drivers, which pay $42 an hour on average after four years.The union has gone out of its way to highlight the challenges facing part-time workers. In television interviews and at rallies, the Teamsters president, Sean O’Brien, has emphasized what the union calls “part-time poverty” jobs. He has frequently been joined by leaders of other unions and politicians, including Representative Alexandria Ocasio-Cortez, the New York Democrat.UPS said Wednesday that it was “prepared to increase our industry-leading pay and benefits.” But it is unclear if the company will satisfy the union’s demands.“UPS certainly wants to reach an agreement, but not at the expense of its ability to compete long-term,” said Alan Amling, a former UPS executive and a fellow at the University of Tennessee’s Global Supply Chain Institute.Professor Amling estimated that it would cost the company $850 million per year to increase wages $5 an hour for all part-time employees represented by the Teamsters.The company, which normally reports its second-quarter earnings in late July, has delayed the report this year until after the strike deadline. UPS said that the timing was within the required window for reporting its earnings and that it had never published a date other than Aug. 8 for the coming release.The sometimes-volatile negotiations began in April, and the Teamsters announced in mid-June that their UPS members had voted, with a 97 percent majority, to authorize a strike.Less than two weeks later, the union said that it was walking away from the table over an “appalling counterproposal” from the company on raises and cost-of-living adjustments and that a strike “now appears inevitable.”The two sides resumed their discussions the week before the Fourth of July and soon resolved what was arguably their most contentious issue: a class of worker created under the existing contract.UPS said the arrangement was intended to allow workers to take on dual roles, like sorting packages some days and driving on other days — especially Saturdays — to keep up with growing demand for weekend delivery.UPS handles about one-quarter of the tens of millions of packages that are shipped daily in the United States.Maansi Srivastava/The New York TimesBut the Teamsters said that the hybrid idea hadn’t come to pass, and that in practice the new category of workers drove full time Tuesday through Saturday, only for less pay than other drivers. (The company said some employees did work under the hybrid arrangement.)Under the agreement reached this month, the lower-paid category would be eliminated and workers who drove Tuesday through Saturday would be converted to regular full-time drivers.That agreement also stipulated that no driver would be required to work an unscheduled sixth day in a week, which drivers had at times been forced to do to keep up with Saturday demand.Despite progress on these issues, Mr. O’Brien could face a delicate test persuading members to approve a deal if it falls short of the lofty expectations he helped set. He won the union’s top position in 2021 while regularly criticizing his immediate predecessor, James P. Hoffa, for being too accommodating toward employers.Mr. O’Brien argued that Mr. Hoffa had effectively forced UPS workers to accept a deeply flawed contract in 2018, even after they voted it down, and accused his rival in the race to succeed Mr. Hoffa of being reluctant to strike against the company.He began focusing members’ attention on the contract and a possible strike even before formally taking over as president in March last year, and has spoken in superlative terms about the union’s goals for a new contract.“This UPS agreement is going to be the defining moment in organized labor,” he told activists with Teamsters for a Democratic Union, a group that backed his candidacy, in a speech last fall.The union under Mr. O’Brien has held training sessions in recent months for strike captains and contract action team members, who rally co-workers to help pressure the company.And he has strongly urged the White House not to wade into the contract negotiation. In his Boston youth, “if two people had a disagreement, and you had nothing to do with it, you just kept walking,” he said during a recent webinar with members. “We echoed that to the White House on numerous occasions.” (Administration officials have said they are in touch with both sides.)In some ways the context for this year’s negotiations resembles the circumstances of the nationwide Teamsters strike at UPS in 1997. UPS was also in the midst of several profitable years, and the rapid growth in its part-time work force loomed large.Sean O’Brien, the Teamsters president, right, at the Los Angeles rally. He was elected in 2021 after criticizing his predecessor as having been too accommodating toward employers.Jenna Schoenefeld for The New York TimesBut while a reformist president, Ron Carey, had mobilized the union for a fight, its ranks appeared divided between his supporters and those of Mr. Hoffa, who had narrowly lost an election for the union’s presidency the year before. The union may have more leverage this time because its members appear far more unified under Mr. O’Brien.Barry Eidlin, a sociologist at McGill University in Montreal who studies labor and follows the Teamsters closely, said that while the ramp-up to the current contract fight had lagged in some parts of the country, where more conservative local officials are less enthusiastic, Mr. O’Brien had no serious opposition within the union.“Not everybody is a fan of O’Brien, but they’re not actively organizing to undermine him the way people were with Ron Carey in the ’90s,” Dr. Eidlin said. “It’s a huge, huge difference.”Still, for all his pugilistic statements, Mr. O’Brien remains an establishment figure who appears to prefer reaching a deal to going on strike, and he has subtly acted to make one less likely.Earlier in the negotiations, Mr. O’Brien had said that UPS employees wouldn’t work beyond Aug. 1 without a ratified contract, and that the two sides needed to reach a deal by July 5 to give members a chance to approve it in time. But last weekend he said UPS employees would continue working on Aug. 1 as long as the two sides had reached a tentative deal.“This isn’t a shift,” a Teamsters spokeswoman said Friday by email. “This is how you get a contract. Our pressure and deadline on UPS forced them to move in ways they hadn’t before.”Niraj Chokshi More

Three-quarters of British holidaymakers who travelled abroad last year blew their budget for weekly spending by an average 38 per cent, underlining the impact of inflation in popular summer destinations. The raised cost of meals and drinks emerged as a key factor in their overspending, according to research by Post Office Travel Money, the foreign exchange provider. Nine out of 10 parents quizzed in the survey spent an average of £310 on eating out or shop-bought food and drink over a week, having budgeted for £145. The average spending on sightseeing was £87, while spending on treats for their children had risen by 35 per cent compared with their last overseas holiday. Laura Plunkett, head of travel money at the Post Office, said: “Although sterling is at a 2023 high against European currencies, inflation has hit local prices abroad just as it has in the UK. This means families should expect to pay more for meals, drinks and other tourist items in most resorts.”Surveying the costs of 16 different European destinations as schools in England prepare to break up for the summer holidays, the researchers said 15 of these places had seen price rises. But the biggest rises were in Turkey and Bulgaria, two of the places that remained cheapest overall. Costs in Marmaris had doubled since last year because of inflation in Turkey — running at an annual 38 per cent in the year to June — and the impact of a volatile economy. But the researchers calculated that a fall of 64 per cent year-on-year in the value of the Turkish lira translated into a more modest 33 per cent increase in costs for British holidaymakers once local prices were converted to sterling.At the other end of the cost ranking, Ibiza, Porec in Croatia, Lanzarote and Crete were the most expensive locations. Travellers will fork out 56 per cent more for day-to-day living costs in Ibiza than last year. The research was conducted with Tui, the travel group. Richard Sofer, commercial director at Tui UK and Ireland, said demand remained strong for all-inclusive packages, as well as self-catering options that gave customers the opportunity for cost savings. “We’re also seeing some customers taper their holiday slightly, such as reducing holiday duration from 14 nights to seven, 10 or 11 nights.”The analysis tracks prices of 12 items, from a three-course family meal, alcoholic and soft drinks, to ice cream, and the rent of a sun lounger or pedalo.  More

BRUSSELS/BEIJING (Reuters) – Record-breaking heat in China. Wildfires forcing Swiss villages to evacuate. Drought ravaging Spanish crops. As the costs of climate change rack up, a debate is surging among governments: who should pay? The question has been in the spotlight amid this week’s climate talks between the U.S. and China, where the world’s two biggest economies tried to find ways to work together on issues ranging from renewable energy deployment to climate finance ahead of this year’s U.N. climate summit, COP28, in Dubai. Given China’s rapid economic growth and increasing emissions, pressure has grown on Beijing to join the group of countries providing this funding. During the talks in Beijing, U.S. climate envoy John Kerry said the two sides would continue to discuss climate finance over the next four months, before the COP28 conference starting Nov. 30.”It’s difficult to argue that countries like China, Brazil or Saudi Arabia should still be put at the same level as the least developed countries and small island developing states,” a diplomat from one European Union country told Reuters. The EU, today the biggest contributor of climate finance, has lobbied to expand the pool of donor countries that provide it.Climate finance refers to money that wealthy countries pay toward helping poorer nations reduce CO2 emissions and adapt to a hotter, harsher world. So far, the few dozen wealthy countries obliged to make these payments have not delivered cash in the amounts promised. That list of financing nations was decided during U.N. climate talks in 1992, when China’s economy was still smaller than Italy’s.Now, some countries are calling for China to contribute. U.S. officials including Treasury Secretary Janet Yellen have noted that Chinese contributions would boost the efficacy of the U.N. climate fund. Other countries under similar pressure include Qatar, Singapore and the United Arab Emirates, three of the world’s richest nations in terms of GDP per capita. So far, China has resisted calls that could group it alongside wealthy nations.In a meeting with Kerry on Tuesday, Chinese Premier Li Qiang stressed that developed countries should deliver their unfulfilled climate finance commitments and take the lead in cutting emissions, according to Li’s office. He suggested developing countries could make contributions “within their capabilities.” That resistance suggests the effort faces serious challenges. Changing the official U.N. donor list would require international consensus.”There is much too much resistance among countries like China and Saudi Arabia to touch the official definition,” one EU official said on condition of anonymity. Advocates for the change argue that an expansion needs to happen before a new – and, likely, far bigger – U.N. target for climate finance kicks in after 2025. Countries still need to negotiate the size of that target and who will contribute to it.”All countries that are able, must contribute to global climate finance,” said Ambassador Pa’olelei Luteru, who chairs the Alliance of Small Island States.The bigger issue, Luteru said, is which of the poor and most vulnerable countries will be in line to receive it. WHO IS RESPONSIBLE?The U.N. climate financing arrangement is based on the principle that rich countries have a greater responsibility to tackle climate change, because they have contributed the bulk of the CO2 emissions heating the planet since the industrial revolution.The United States’ historical CO2 emissions are bigger than those of any other country, but China today is the world’s biggest CO2 emitter in terms of pollution produced each year.Countries will face the question of historical responsibility at COP28, as they aim to launch a new fund to compensate vulnerable states for costs already being incurred in climate-fuelled natural disasters. The EU dropped its years-long resistance to that fund last year, but on the condition that a larger group of countries pay into it. Countries have not yet decided who will contribute.The United States has been cagey about making payments that could be seen as reparations for climate change. Some countries not obliged to contribute to UN climate funds have done so anyway, including South Korea and Qatar. Others have begun channelling aid through other channels. China launched the South-South Climate Cooperation fund in 2015 to help least developed countries’ tackle climate issues, and so far has delivered about 10% of the $3.1 billion pledged, according to think tank E3G. That’s a fraction of the hundreds of billions that Beijing is spending on its Belt and Road Initiative, backing projects including oil pipelines and ports.Such arrangements allow countries to contribute without obligation, although if done outside of U.N. funds they can face less stringent criteria for public reporting – making it harder to track where the money is going and how much is paid.Byford Tsang, a senior policy advisor at E3G, said a Chinese offer of more climate finance would be a “win-win” for Beijing. “It would earn China diplomatic clout, and pressure Western donors to raise their stakes on climate finance,” he said.Some vulnerable countries, frustrated with the flagging finance to date, are looking to new sources for cash. The Barbados-led Bridgetown Initiative is pushing for a revamp of multilateral development banks so they can offer more support for climate projects. Other nations have rallied behind a global CO2 levy on shipping to raise funds. More