Finance

China-U.S. trade fell by 14.5% in the first half of the year from a year ago, said Xie Feng, China’s ambassador to the U.S., who blamed U.S. tariffs and export controls for the drop.
“We need to find a path for expanding mutually beneficial economic cooperation and trade between China and the United States,” Xie said at Forbes’ U.S.-China Business Forum.
Xie called Biden’s executive order aimed at restricting U.S. investments into Chinese semiconductor and AI “a violation of the principle of free trade.”

Relations between Washington and Beijing are at their lowest in decades amid disputes over trade, technology, human rights and China’s increasingly aggressive approach toward its territorial claims involving self-governing Taiwan and the South China Sea.
Jason Lee | Reuters

BEIJING — China’s ambassador to the U.S., Xie Feng, has blamed U.S. tariffs and export controls for a drop in trade between the two countries.
That’s according to a speech he gave via video on Tuesday at Forbes’ U.S.-China Business Forum in New York, published online by the Chinese Embassy in the U.S.

China-U.S. trade fell by 14.5% in the first half of the year from a year ago, Xie pointed out.
“This is a direct consequence of U.S. moves to levy Section 301 tariffs on Chinese imports, abuse unilateral sanctions and further tighten up export controls,” he said.
“Livelihoods of many families have been affected, and businesses from both countries have born the brunt.”

China’s trade partners

The U.S. is China’s largest trading partner on a single country basis.
Year to date, U.S.-China trade fell further in July with a 15.4% decline from the same period in 2022, China customs data showed.

To shut out China is to close the door on opportunities, cooperation, stability and development.

China’s ambassador to the U.S.

“The biggest risk is any decoupling between China and the United States, and the largest source of insecurity comes from any confrontation between the two,” he said.
“To shut out China is to close the door on opportunities, cooperation, stability and development.”
Exports remain a major contributor to China’s economy, although their share has fallen in recent years.
The U.S. government on Wednesday revised down second-quarter domestic product to a 2.1% annualized pace, contrary to expectations there would be no revision, Reuters said. The report said lower business spending on equipment contributed to the revision.

Xie on Tuesday called for finding “a path for expanding mutually beneficial economic cooperation and trade between China and the United States.”
“Going forward, we need to continue taking concrete steps, no matter how small they may look,” he said, giving examples — such as making it easier for people to travel between the two countries, and renewing an agreement to cooperate on science and technology.
On a regional basis, the European Union and Association of Southeast Asian Nations are China’s largest trading partners. Those trade flows have also dropped this year — albeit at a more moderate pace — amid a decline in global demand.

Xie on Tuesday pointed out China’s global dominance in trade and in industries such as electric vehicles. He noted that France, the U.K. and Japan had significantly increased their foreign investment in China in the first half of the year.
“More efforts will be made to protect foreign investment and ensure national treatment for foreign-invested enterprises,” he said.

U.S. Commerce secretary visits China

In his remarks, Xie noted U.S. Commerce Secretary Gina Raimondo’s trip to China this week. Following her meetings with Chinese government officials, the U.S. and China agreed to establish regular communication channels on commerce, export controls and protecting trade secrets.
Raimondo told reporters she “said no” to China’s requests to reduce export controls and “retract” the executive order on outbound investment screening.
“We don’t negotiate on matters of national security,” she said.

Instead of containing China, it will only curtail the right of American businesses to develop in China.

China’s ambassador to the U.S.

The U.S. government has cited national security concerns for its moves to restrict Chinese companies’ purchases of advanced semiconductors from U.S. businesses.
In 2018, the Trump administration imposed tariffs on Chinese goods, to which Beijing responded with tariffs of its own.
Xie claimed that average U.S. tariffs on Chinese products were 19%, while the Chinese tariffs on U.S. goods averaged 7.3%.
“Is this fair? Does this truly serve U.S. interests?”

The ambassador assumed his role in May after a period of about six months in which China had no ambassador to the U.S. 
In August, U.S. President Joe Biden signed an executive order aimed at restricting U.S. investments into Chinese semiconductor, quantum computing and artificial intelligence companies over national security concerns. Treasury Secretary Janet Yellen is mostly responsible for determining the details, which currently remain open to public comment. 
Xie called the executive order “a violation of the principle of free trade.”

Read more about China from CNBC Pro

“It is simply confusing that the United States, which repeatedly urged China to expand access for foreign investment in the past, is now imposing restrictions itself,” he said. “Instead of containing China, it will only curtail the right of American businesses to develop in China.”
As part of Raimondo’s trip to China, the U.S. Commerce secretary said she spoke with more than 100 businesses and increasingly heard from them that “China is uninvestible because it’s become too risky.”
“My message was there’s a desire to do business, but we need predictability, due process and a level playing field,” Raimondo added in an exclusive interview with CNBC’s Eunice Yoon on Wednesday. More

The exterior of a Dollar General convenience store is seen in Austin, Texas, March 16, 2023.
Brandon Bell | Getty Images

Check out the companies making the biggest moves before the bell:
Dollar General — The discount retailer tumbled 15.3% after reporting second-quarter earnings per share of $2.13, missing the StreetAccount consensus estimate of $2.47. Revenue also missed, coming in at $9.80 billion versus the $9.93 billion expected. Guidance for the second-quarter and full year also disappointed.

Campbell Soup — Shares added about 1% after the company reported revenue of $2.07 billion, beating the $2.06 billion expected from analysts polled by Refinitiv. Earnings were in line with expectations.
UBS — U.S.-listed shares of the Swiss bank popped nearly 5% after UBS reported a second-quarter profit of $28.88 billion, versus the projected net profit of $12.8 billion, according to a Reuters poll.
Shopify — The e-commerce platform rallied about 7% after its announcement late Wednesday that its merchants can use Amazon’s “Buy with Prime” option.
Palantir — Shares shed 3.6% in premarket trading after being downgraded by Morgan Stanley to underweight from equal weight. The Wall Street firm said investors are now looking for tangible revenue from the company’s generative artificial intelligence initiatives and may be disappointed. The stock has soared 154% this year.
Salesforce — The software company jumped 6.2% following its earnings beat after the bell Wednesday. Adjusted earnings per share came in at $2.12 for the second quarter, versus the consensus estimate of $1.90, per Refinitiv. Revenue was $8.60 billion, topping the $8.53 expected. Goldman Sachs subsequently hiked its price target by $15 to $340 a share, suggestions 58% upside.

Canopy Growth, Cronos Group, Tilray Brands — The cannabis stocks moved higher after the U.S. Department of Health and Human Services recommended reclassifying marijuana as a lower-risk drug. The reclassification could potentially expand the market for marijuana. Cronos climbed 2.6%, while Tilray gained 2.3%, and Canopy Growth added about 1%.
Victoria’s Secret — Shares tumbled 6.5% after the lingerie retailer reported an earnings and revenue miss following Wednesday’s close. Victoria’s Secret also said it expects a third-quarter loss of 70 cents to $1 per share, versus the 14 cents loss expected by analysts.
Arista Networks — The network equipment stock added 276% after Citi upgraded shares to buy from neutral. The firm said Arista can be considered an early artificial intelligence play.
Okta — The stock popped 10.6% in premarket trading following its earnings and revenue beat after the bell Wednesday. Second-quarter adjusted earnings per share came in at 31 cents, versus the 22 cents expected from analysts polled by Refinitiv. Revenue was $556 million, compared to the $535 million expected. Okta also issued a strong outlook for the full year.
SkyWest — The regional airline added 3.7% after being upgraded by Raymond James to outperform from market perform. The Wall Street firm said pilot attrition trends have been improving and the company has been able to get partners to absorb higher costs. SkyWest has already rallied 150% year to date.
Five Below — Shares of the discount retailer fell nearly 5% after Five Below’s guidance for the third quarter came in below expectations. The company said it expected earnings per share between 17 and 25 cents on revenue of $715 million to $730 million. Analysts surveyed by Refinitiv were expected 40 cents per share on $738 million of revenue. The company said that the earnings guidance was due in part to increased reserves for “shrink,” a retail term that includes theft. Five Below’s second-quarter results were roughly in line with estimates.
Chewy — The pet food retailer fell 4.8% despite an earnings and revenue beat postmarket Wednesday. However, its revenue guidance for the third quarter of $2.74 billion to $2.76 billion fell short of the $2.79 billion expected from analysts, per StreetAccount.
— CNBC’s Jesse Pound and Alex Harring contributed reporting. More

Klarna reported overall net operating income of 9.2 billion Swedish krona ($843.8 million), up 21% year-over-year from 7.5 billion krona in the same period a year ago.
Klarna didn’t manage to report a profit though. The firm posted a net loss for the period of 2.1 billion Swedish krona, down 67% from 6.4 billion krona between January to June 2022.
Klarna recorded a monthly profit in the first half, which the company attributed to cost optimization via cutting expenses and boosting efficiency through artificial intelligence.

“Buy-now, pay-later” firm Klarna aims to return to profit by summer 2023.
Jakub Porzycki | NurPhoto | Getty Images

Swedish buy now, pay later firm Klarna reduced its losses by roughly 67% in the first half of 2023, as the company dramatically cut costs in a bid toward profitability.
The company reported overall net operating income of 9.2 billion Swedish krona ($843.5 million), up 21% year-over-year. Failing to record a half-year profit, the firm posted a net loss of 2.1 billion Swedish krona for the period, down 67% from 6.4 billion krona between January to June 2022.

Klarna did, however, say that it recorded one month of profitability in the first half of the year, ahead of its internal target to post profit on a monthly basis in the second half.
Klarna CEO and founder Sebastian Siemiatkowski hailed the firm’s profitability milestone, saying that its results “clearly rebut the misconceptions around Klarna’s business model, evidencing that it is incredibly agile and sustainable,” and supporting a “healthy consumer base.”
“Some claimed Klarna would face difficulties in the tough macro-economic climate with high interest rates, but having led the company through the 2008 financial crisis I knew we had a strong and resilient business model to see us through. Despite the volatile environment, we have done exactly what we set out to do,” Siemiatkowski said.
Credit losses, a measure of how much the company sets aside for customer defaults, sank by 39% to 1.8 billion krona from 2.9 billion.
Buy now, pay later, or BNPL, firms allow shoppers to defer payments to a later date or purchase things over installments on interest-free credit.

These firms are able to offer zero-interest loans by charging merchants, rather than customers, a fee on each transaction — but as interest rates have risen, the BNPL funding model has been challenged.
Siemiatkowski previously told CNBC the company was planning to achieve profitability on a monthly basis in the second half of 2023, suggesting that an aggressive cost-cutting strategy in 2022 — which included hundreds of redundancies — had paid off.
Klarna cut 10% of its workforce in May last year.
“To some degree, all of us were lucky that we took that decision in May [2022] because, as we’ve been tracking the people who left Klarna behind, basically almost everyone got a job,” Siemiatkowski said at an interview in Helsinki, Finland, at the Slush technology conference last November.
“If we would have done that today, that probably unfortunately would not have been the case.”
Klarna said that cost optimization was a key factor behind its ability to churn out a monthly profit in the first half of the year.
The company said that operating expenses before credit losses improved by 26% year-on-year, thanks in part to its push into artificial intelligence.
Klarna said a recently-launched customer services feature “made solving merchant disputes for customers more efficient, saving over 60,000 hours annually.”
Like other fintech companies, Klarna has made a big push into AI lately, as it looks to capitalize on the growing boom in the industry’s growth, following the birth of OpenAI’s ChatGPT.
In April, the company revamped its app with a host of new personalized shopping features. It is trying to make the software similar to TikTok, which has a discovery feed for users to find content suited to their preferences.
David Sandstrom, Klarna’s chief marketing officer, told CNBC at the time that the aim was to “offer people products and brands before they knew they wanted them.”
Klarna last year saw 85% erased from its market value in a so-called “down round,” taking the company’s valuation down from $46 billion to $6.7 billion.
Some of the company’s peers, like PayPal, Affirm, and Block, also saw their shares plummet sharply amid a wider sell-off in technology valuations.
Klarna at the time blamed deteriorating macroeconomic conditions, including higher inflation, rising interest rates, and a shift in consumer sentiment. More

Germany’s economic model is known for close relations between bosses and unions; the Mittelstand, the country’s world-leading manufacturing firms; and the political system’s federalism, which spreads prosperity widely. Another ingredient is less renowned but no less fundamental: the country’s banks, many regionally focused, provide long-term funding to Mittelstand companies nice and cheaply.Unfortunately, this model is no longer delivering: German growth is forecast by the imf to be the lowest of any g7 member this year. And the country’s banks are struggling, too. The European Banking Authority estimates that in the first three months of 2023 their weighted-average return on equity, a measure of profitability, was 6.5%, compared with 10.4% across the eu. In 2020 banks in eight countries in the eu offered worse returns than German lenders. In the first three months of this year only those in Luxembourg did.In part, this poor performance reflects quirks of the German market. The country’s banks are unusually keen on making fixed-rate loans, which has limited their ability to profit from higher interest rates. Their net interest margin—what a bank collects on loans minus what it pays for funding—has grown by just 0.1 percentage points since June 2020, half the eu average.Yet there are also deeper issues at play. German lenders are unusually structured, coming in three categories: private-sector lenders, including Commerzbank and Deutsche Bank; public banks, including 361 savings banks and five Landesbanken, which act as wholesale banks for the savings banks; and 737 co-operatives.Non-private lenders, which hold 57% of banking-sector assets, are conservative outfits with goals besides profits, such as supporting local firms. Many public banks have politicians as chairs or board members. This politicised governance brings poor risk management, says Nicolas Véron of Bruegel, a think-tank. Lots are highly exposed to property, for instance, leaving them vulnerable to recent price falls.Public banks and co-operatives also operate on a “regional principle” that bars them from seeking business in one another’s territory. They form networks, with the biggest possessing more assets than any single European bank, allowing them to share costs and reducing the amount of capital with which they are required to fund themselves. As a result, margins for private-sector banks are squeezed, making it hard for them to compete with other institutions. Deutsche Bank’s price-to-book ratio languishes at 0.3, about half that of bnp Paribas, a French rival.Germany’s unusual financial system is well-suited to supporting regional companies. It is rather less well-suited to supporting riskier business (say, startups needed for the green transition or digitisation) that require funding from capital markets alongside more traditional forms of finance. Although German politicians and policymakers are engaged in a lively debate about the country’s economic future, discussion of its financial institutions has yet to feature prominently. Perhaps the country’s banks are simply too much of a fixture to be questioned. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Europe’s summer was a strange mixture of heavy rainfall and wildfires. The continent’s economy was also plagued by extremes. Inflation remained hot: prices rose by 5.3% in August compared with a year earlier. And officials are increasingly worried by the cloudy growth outlook. A recent drop in the purchasing managers’ index (pmi) suggests the bloc is facing recession.Ahead of the next meeting of the European Central Bank (ecb) on September 14th, policymakers will be worried by the possible emergence of stagflation (a situation in which low growth is paired with entrenched inflation). Christine Lagarde, the central bank’s president, recently reiterated her commitment to bringing down inflation and setting interest rates at “sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to our 2% medium-term target”. In plain English: the ecb would much prefer a “hard landing”, featuring economic pain, than failing to reduce price rises.The problem is that the ecb risks crashing the plane. Euro-zone inflation is proving as stubborn as the American variety. In Europe, price rises were sparked by increasing energy costs; in America, they were more demand-driven. But in both places inflation has followed a similar path, with Europe slightly behind. Now the question is whether core inflation, which excludes volatile energy and food prices, will come in to land. So far, it is staying stubbornly high (see chart).This is in part because Europe has, like America, so far managed to dodge recession. At the end of last year, when many expected a European downturn, monetary tightening had yet to hit the economy and national governments offered generous handouts in order to counteract the energy shock. The service sector showed decent growth, and industrial order books remained full from the post-covid boom.Gloom is now spreading across the continent. The global economy is weakening, and order books have plenty of blank pages. State support for households is also running out. Retail energy prices remain higher than before last year’s crisis; real incomes have yet to recover. Activity in the service industry contracted in August, according to the pmi survey. The sector is at its weakest in two and a half years.Higher interest rates have also started to affect the European economy, as intended by the ecb’s policymakers. Construction, which is traditionally sensitive to interest rates, is feeling the pain. Stingier bank lending is leading to a 0.4 percentage-point reduction in gdp growth each quarter, according to Goldman Sachs, a bank. Corporate insolvencies rose by more than 8% in the year’s second quarter, compared with the first, and have reached their highest since 2015. The impact of tighter monetary policy will peak in the second half of this year, predicts Oliver Rakau of Oxford Economics, a consultancy.A hard landing is thus almost guaranteed. But the return of inflation to the ecb’s 2% target remains some way off. Two forces are pulling prices in different directions. One is the situation in the labour market. Unemployment remains at a record low. Although firms are hiring fewer workers, there is no imminent danger of mass lay-offs—in part because bosses want to hold on to workers that are increasingly scarce in an ageing continent. As a result, wages across the bloc are rising, even if not by enough to make up for earlier inflation.The other force, which is pulling down inflation, is weakening demand for goods and services. During the covid pandemic, price growth took off in advance of wage growth, causing companies’ profits to rise strongly alongside inflation. If companies now find that demand is drying up, it is possible that inflation will fall at the same time as wage growth stays high, bringing profits back down. Indeed, prices on wholesale markets for goods are already falling fast, and import prices are also declining. At some point, these lower prices will be passed on to consumers.Which of these two forces will win out? At the moment, it looks like the answer will be weak demand, since it has spread to the service sector, too. This suggests that euro-zone inflation might fall in relatively short order. But the ecb appears unconvinced, and seems ready to lift its main rate to 4.5% from 4.25%. Policymakers would be better off holding rates steady, so that they can assess the danger of a crash. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

The world’s public finances look increasingly precarious. In the year to July America’s federal government borrowed $2.3trn, or 8.6% of GDP—the sort of deficit usually seen during economic catastrophes. By 2025 five of the G7 group of big rich countries will have a net-debt-to-GDP ratio of more than 100%, according to forecasts by the imf. Such debts may have been sustainable in the low-interest-rate era of the 2010s. But those days are long gone. This month the ten-year Treasury yield briefly hit 4.3%, its highest since before the global financial crisis of 2007-09.How will governments shed these burdens? Economists are increasingly gripped by the question. A recent paper by Serkan Arslanalp of the imf and Barry Eichengreen of the University of California, Berkeley, presented at America’s annual monetary-policy jamboree in Jackson Hole, Wyoming, on August 26th, sets out a menu of options. It is not exactly an appetising one.Big economies have had big debts before. Broadly speaking, they have dealt with them by employing one of two strategies. Call them the austere and the arithmetic. The austere method is to run primary surpluses (ie, surpluses before debt-interest payments). In the 1820s, after the Napoleonic wars, Britain’s debts reached almost 200% of GDP; the Franco-Prussian war left France owing nearly 100% of GDP in the 1870s. Previously Mr Eichengreen and co-authors found that between 1822 and 1913 Britain ran primary surpluses sufficient to reduce the debt-to-GDP ratio by more than 180 percentage points; France did enough to reduce its ratio by 100 percentage points in just 17 years after 1896.Messrs Arslanalp and Eichengreen are pessimistic about the prospect of democracies repeating the trick today. In the 19th century welfare states were minimal. British politicians followed the Victorian philosophy of “sound finance”; the French sought to reduce debts so as to be ready for their next war. In contrast, modern welfare states are weighed down by ageing populations, and the need for more defence spending and green investment means the size of the state is growing. Politicians could raise taxes. But other research by the IMF finds that in advanced economies, from 1979 to 2021, fiscal consolidations were less likely to succeed in cutting debts if they were driven by tax increases instead of spending cuts, perhaps because raising taxes harms economic growth.What about the arithmetic approach? This was the path many countries followed after the second world war, when America’s debts peaked at 106% of GDP (a level they could soon surpass). It involved the rate of economic growth exceeding the inflation-adjusted rate of interest, such that legacy debts shrank relative to GDP over time, with small primary surpluses chipping in. It is possible to argue that recent high rates of inflation have started the world economy on the arithmetic debt-reduction route. Indeed, advanced-economy net debts have fallen by about four percentage points after shooting up in 2020 when covid-19 struck.Yet inflation only reduces debt when it is unexpected. If bondholders anticipate fast-rising prices, they will demand higher returns, pushing up the government’s interest bill. Persistent inflation helped after the second world war only because policymakers held down nominal bond yields in a policy known as financial repression. Until 1951 the Federal Reserve capped long-term rates by creating money to buy bonds. Later a ban on paying interest on bank deposits would redirect savings to the bond market.The resulting low real interest rates were paired with rapid post-war growth. Between 1945 and 1975, this reduced the debt-to-GDP ratio by a weighted average of 80 percentage points across the rich world. Both sides of the equation were important. Everyone can agree growth is desirable—it is the “painless way of solving debt problems”, write Messrs Arslanalp and Eichengreen, and it averaged an annual 4.5% across the rich world in this period. But high growth typically raises real interest rates. Another working paper, by Julien Acalin and Laurence Ball, both of Johns Hopkins University, finds that with undistorted real interest rates and a balanced primary budget, America’s debt-to-GDP ratio would have declined to only 74% in 1974, rather than the actual figure of 23%.Unless artificial intelligence or another technological breakthrough unleashes a step change in productivity growth, today’s ageing economies have no chance of matching post-war rates of expansion. America’s GDP is expected to rise at an annual pace of just 2% over the next decade. That immediately limits the arithmetic strategy by putting the onus on real interest rates. There are good reasons to expect rates to be “naturally” low, such as more saving as societies age. But investors seem to be having doubts, as the recent rise in long-term bond yields demonstrates. Financial repression and high inflation to bring down real rates would require sweeping changes, such as central banks abandoning their inflation targets, as well as a reversal of much of the financial liberalisation that took place towards the end of the 20th century.Best of the worstWhat, then, will happen? “Governments are going to have to live with high inherited debts,” reckon Messrs Arslanalp and Eichengreen. The best politicians can do is not to make a bad situation worse. Yet the ongoing accumulation of debt suggests it is unlikely that politicians will follow this advice. On its current path America will match its post-war record of spending 3.2% of GDP on interest in 2030. Two decades later this will pass 6%. The bill could be higher if another pandemic or major war arrives in the meantime.However unlikely it seems that voters and politicians will be willing to tolerate primary surpluses, sustained inflation or financial repression, they will probably reach a point where they are equally unwilling to put up with handing over a large chunk of tax revenues to bondholders. At such a time political constraints will ease—and the danger of a bond-market crisis will rise. The debt-reduction menu will then not look quite so unpalatable. ■Read more from Free exchange, our column on economics:Which animals should a modern-day Noah put in his ark? (Aug 24th)Democracy and the price of a vote (Aug 17th)Elon Musk’s plans could hinder Twitternomics (Aug 7th) More

Money can look like just about anything. In ancient China, bronze knives circulated as a means of payment; during the Depression, Californians used clamshells instead of cash; in 1970 Irish shoppers were forced, by a banking strike, to make do with ious written on toilet paper. As Hyman Minsky, an economist, put it: “Anyone can create money; the problem is getting it accepted.”Europeans will soon need to accept a new-look euro. A European Central Bank (ecb) survey, which closed at the end of August, asked respondents to choose between seven themes, varying from “hands: together we build Europe” to “rivers, the water of life in Europe” and “our Europe, ourselves”. A design contest will now follow, and updated euros will emerge from cash machines in 2026.Economists see money as a neutral medium of exchange, but images on banknotes are some of the world’s most recreated designs. For governments, they are an opportunity to put propaganda in pockets, and transmit a certain idea of the state. Birds, another possible theme, would symbolise “freedom of movement”, the ecb says, as well as celebrate the eu birds directive, which protects nature. Such a rosy picture of European co-operation is in stark contrast with the messages sent a century ago: the German 10,000 mark note, introduced in 1922, included a vampire, representing France, sucking a German worker dry.Putting dead presidents on money, as America does, or monarchs, like Britain, is a less appealing option in Europe. A squabbling bloc of 20 countries, including those for which the term “nationalism” was coined, are unlikely to be satisfied with a focus on any one country’s leaders, even those long gone. Famous artists, a mooted alternative, will almost certainly end up with an argument over which country’s genius deserves the €500 note, which ends up on the €5 and which misses out altogether.The ecb previously managed to swerve these dilemmas by using imaginary bridges. These showcased the continent’s traditional architectural styles (baroque, neoclassical and so on) without favouring any single country’s monuments. That was until Spijkenisse, in the Netherlands, spoiled things. The suburb of Rotterdam turned the images into reality, employing dyed concrete to match the colour of the banknotes.Whatever the end product looks like, cash is on the way out. According to the ecb, it was used for just 59% of euro transactions last year, down from 72% three years previously. For many Europeans, especially younger ones, money no longer looks like paper or coins, but whatever a smartphone screen displays. Ultimately, then, the new look for the euro will be decided more by graphic designers in Silicon Valley than central bankers in Frankfurt.■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

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