Finance

The lower house of the Russian Parliament will consider a law that permits making international payments via cryptocurrencies, Russia’s central bank governor Elvira Nabiullina said Tuesday.
Russia’s central bank is also itself looking to move money across borders using crypto before the end of 2024, Nabiullina said.
The U.S. and its allies have imposed innumerable sanctions on Russian individuals and entities in retaliation to its assault on Ukraine.

Illustrative image of two commemorative bitcoins seen in front of the national flag of Russia displayed on a computer screen.
Artur Widak | Nurphoto | Getty Images

Russia is considering legalizing the use of cryptocurrency for international payments as the country faces ongoing financial pressure from Western sanctions.
The State Duma, which is the lower house of the Russian Parliament, will on Tuesday consider a law that permits making international payments via cryptocurrencies, Elvira Nabiullina, the governor of Russia’s central bank, said Tuesday.

“Today, the State Duma is considering a law that allows settlements in cryptocurrencies within the framework of an experimental regime,” Nabiullina said, speaking in the Russian Federation Council, the upper house of Russia’s parliament, according to state-owned news agency RIA Novosti.
The Duma is expected to approve the law Tuesday, Reuters reported separately.
Russia’s central bank is also itself looking to move money across borders using crypto, with its chief saying crypto-based payments will take place before the end of 2024.
“We are already discussing the terms of the experiment with ministries and departments, with businesses, and we expect that the first such payments will take place before the end of this year,” she said.
The Russian Embassy in London was not immediately available to comment on the country’s plans to adopt pro-crypto legislation when contacted by CNBC Tuesday.

The central bank’s commitment to use crypto as a method of cross-border payment marks a reversal from the regulator’s previous stance on the technology.
In January 2022, the Russian central bank proposed banning the use of crypto for transactions, as well as the mining of digital currencies, citing threats to financial stability, citizens’ wellbeing and monetary policy sovereignty.

Under pressure from sanctions

It comes as growing tensions between Russia and the U.S. and its allies have led to innumerable sanctions on individuals and entities in Russia in retaliation to its assault on Ukraine.

The U.S., European Union and Britain are among the jurisdictions that imposed sanctions on Russia after its February 2022 invasion of Ukraine. They’ve continued to amp up pressure on the country, targeting President Vladimir Putin, Russia’s financial sector, and countless oligarchs.
Separately, Russia is also exploring the implementation of a digital version of the ruble.
Central bank digital currencies, or CBDCs, are different from crypto. Unlike bitcoin and other cryptocurrencies, which have no central authority governing them, CBDCs are issued by directly by a government and are designed to replicate fiat currencies in the form of a digital token.
Central Bank Governor Nabiullina said Tuesday that the regulator will look to move away from a pilot phase toward mass implementation of the digital ruble from July 2025, Russian news agency Interfax reported.

Can crypto help countries evade sanctions?

Other sanctioned countries have frequently attempted to circumvent such financial curbs through the use of cryptocurrencies.

North Korea has on multiple occasions been accused of raising millions of dollars in crypto to help fund various state programs and evade foreign sanctions.
North Korean state-backed hacking group Lazarus was behind a huge heist on the Ronin Network — a blockchain that supports a popular nonfungible token (NFT) game called Axie Infinity. The hack saw cybercriminals make off with over $600 million worth of digital tokens, blockchain analysis firms Elliptic and Chainalysis have said previously.
Proponents of cryptocurrencies, on the other hand, also claim that the digital assets are a useful tool for countering illicit activities. That’s because the networks that underpin them, called blockchains, are public and show a historical record of transactions that is cryptographically secure and can’t be altered. More

Cooling off is easy in Barcelona. Swim in the sea, sip sangria—or just hang about looking like a holidaymaker. Recently residents have taken part in anti-tourist protests, some firing at guests with water pistols. Other rallies calling for an end to mass tourism have taken place across the Balearic and Canary Islands. And it is not just Spaniards. Locals in Athens have held funerals for their dead neighbourhoods. Authorities in Japan have put up a fence to spoil a popular view of Mount Fuji and prevent tourists gathering. Soon there will be a 5pm curfew for visitors to a historic neighbourhood in Seoul. More

Gentrification occurs when an area experiences a rapid rise in residents’ average incomes and rents. The typical outcome: The white population increases, and people of color are priced out.
Climate change is accelerating this dynamic in some parts of the U.S., a trend known as “climate gentrification.”
In Miami neighborhoods such as Allapattah, Liberty City, Little Haiti, Overtown and West Grove, longtime residents fear what comes next.

A development towers over the Lyric Theater in Miami’s Overtown neighborhood.
Greg Iacurci

MIAMI — Nicole Crooks stood in the plaza of the historic Lyric Theater, a royal blue hat shielding her from the midday sun that baked Miami.
In its heyday, the theater, in the city’s Overtown neighborhood, was an important cultural hub for the Black community. James Brown, Sam Cooke, Ray Charles, Aretha Franklin and Ella Fitzgerald performed there, in the heart of “Little Broadway,” for esteemed audience members such as Jackie Robinson and Joe Louis. 

Now, on that day in mid-March, the towering shell of a future high-rise development and a pair of yellow construction cranes loomed over the cultural landmark. It’s a visual reminder of the changing face of the neighborhood — and rising costs for longtime residents.
Located inland, far from prized beachfront real estate, Overtown was once shunned by developers and wealthy homeowners, said Crooks, a community engagement manager at Catalyst Miami, a nonprofit focused on equity and justice. 

Nicole Crooks stands in the plaza of the Lyric Theater in Overtown, Miami.
Greg Iacurci

But as Miami has become ground zero for climate change, Overtown has also become a hot spot for developers fleeing rising seas and coastal flood risk, say climate experts and community advocates. 
That’s because Overtown — like districts such as Allapattah, Liberty City, Little Haiti and parts of Coconut Grove — sits along the Miami Rock Ridge. This elevated limestone spine is nine feet above sea level, on average — about three feet higher than Miami’s overall average. 
A development boom in these districts is changing the face of these historically Black neighborhoods and driving up prices, longtime residents tell CNBC. The dynamic is known as “climate gentrification.”

More from Personal Finance:Why your finances aren’t insulated from climate changePeople are moving to Miami and building there despite climate riskHere’s how to buy renewable energy from your electric utility
Gentrification due to climate change is also happening in other parts of the U.S. and is one way in which climate risks disproportionately fall on people of color.
“More than anything, it’s about economics,” Crooks said of the encroachment of luxury developments in Overtown, where she has lived since 2011. “We’re recognizing that what was once prime real estate [on the coast] is not really prime real estate anymore” due to rising seas.
If Miami is ground zero for climate change, then climate gentrification makes Overtown and other historically Black neighborhoods in the city “ground zero of ground zero,” Crooks said.

Why the wealthy ‘have an upper hand’

When a neighborhood gentrifies, residents’ average incomes and education levels, as well as rents, rise rapidly, said Carl Gershenson, director of the Princeton University Eviction Lab. 
Because of how those elements correlate, the outcome is generally that the white population increases and people of color are priced out, he said. 
Gentrification is “inevitable” in a place such as Miami because so many people are moving there, including many wealthy people, Gershenson said.
But climate change “molds the way gentrification is going to happen,” he added. 

Part of the building site of the Magic City development in Little Haiti.
Greg Iacurci

Indeed, climate gentrification has exacerbated a “pronounced housing affordability crisis” in Miami, particularly for immigrants and low-income residents, according to a recent analysis by real estate experts at Moody’s.
Asking rents have increased by 32.2% in the past four years to $2,224 per unit, on average — higher than the U.S. average of 19.3% growth and $1,825 per unit, according to Moody’s.
The typical renter in Miami spends about 43% of their income on rent, making the metro area the least affordable in the U.S., according to May data from Zillow.
Housing demand has soared due to Miami’s transition into a finance and technology hub, which has attracted businesses and young workers, pushing up prices, Moody’s said. 

But rising seas and more frequent and intense flooding have made neighborhoods such as Little Haiti, Overtown and Liberty City — historically occupied by lower-income households — more attractive to wealthy people, Moody’s said.
The rich “have an upper hand” since they have the financial means to relocate away from intensifying climate hazards, it said. 
“These areas, previously overlooked, are now valued for their higher elevation away from flood-prone zones, which leads to development pressure,” according to Moody’s. 
These shifts in migration patterns “accelerate the displacement of established residents and inflate property values and taxes, widening the socio-economic divide,” it wrote.
Indeed, real estate at higher elevations of Miami-Dade County has appreciated at a faster rate since 2000 than that in other areas of the county, according to a 2018 paper by Harvard University researchers. 
Many longtime residents rent and therefore don’t seem to be reaping the benefits of higher home values: Just 26% of homes occupied in Little Haiti are occupied by their owners, for example, according to a 2015 analysis by Florida International University.
In Little Haiti, the Magic City Innovation District, a 17-acre mixed-use development, is in the early stages of construction.
Robert Zangrillo, founder, chairman and CEO of Dragon Global, one of the Magic City investors, said the development will “empower” and “uplift” — rather than gentrify — the neighborhood.
He said the elevation was a factor in the location of Magic City, as were train and highway access, proximity to schools and views.
“We’re 17 to 20 feet above sea level, which eliminates flooding,” he said. “We’re the highest point in Miami.”

Effects of high costs ‘simply heartbreaking’

Comprehensive real estate data broken down according to neighborhood boundaries is hard to come by. Data at the ZIP-code level offers a rough approximation, though it may encompass multiple neighborhoods, according to analysts.
For example, residents of northwest Miami ZIP code 33127 have seen their average annual property tax bills jump 60% between 2019 and 2023, to $3,636, according to ATTOM, a company that tracks real estate data. The ZIP code encompasses parts of Allapattah, Liberty City and Little Haiti and borders Overtown.
That figure exceeds the 37.4% average growth for all of Miami-Dade County and 14.1% average for the U.S., according to ATTOM.
Higher property taxes often go hand in hand with higher property values, as developers build nicer properties and homes sell for higher prices. Wealthier homeowners may also demand more city services, pushing up prices.

A high-rise development in Overtown, Miami.
Greg Iacurci

Average rents in that same ZIP code have also exceeded those of the broader region, according to CoreLogic data.
Rents for one- and two-bedroom apartments jumped 50% and 52%, respectively, since the first quarter of 2021, according to CoreLogic.
By comparison, the broader Miami metro area saw one-bedroom rents grow by roughly 37% to 39%, and about 45% to 46% for two-bedroom units. CoreLogic breaks out data for two Miami metro divisions: Miami-Miami Beach-Kendall and West Palm Beach-Boca Raton-Delray Beach.
“To see how the elders are being pushed out, single mothers having to resort to living in their cars with their children in order to live within their means … is simply heartbreaking for me,” Crooks said.

‘Canaries in the coal mine’ 

Climate gentrification isn’t just a Miami phenomenon: It’s happening in “high-risk, high-amenity areas” across the U.S., said Princeton’s Gershenson.
Honolulu is another prominent example of development capital creeping inland to previously less desirable areas, said Andrew Rumbach, senior fellow at the Urban Institute. It’s a trend likely to expand to other parts of the nation as the fallout from climate change worsens.
Miami and Honolulu are the “canaries in the coal mine,” he said.
But climate gentrification can take many forms. For example, it also occurs when climate disasters reduce the supply of housing, fueling higher prices. 

Smoke from the Marshall Fire in Louisville, Colorado.
Chris Rogers | Photodisc | Getty Images

In the year following the 2021 Marshall Fire in Colorado — the costliest fire in the state’s history — a quarter of renters in the communities affected by the fire saw their rents swell by more than 10%, according to survey data collected by Rumbach and other researchers. That was more than double the region-wide average of 4%, he said.
The supply that’s repaired and rebuilt generally costs more, too — favoring wealthier homeowners, the researchers found.
Across the U.S., high-climate-risk areas where disasters serially occur experience 12% higher rents, on average, according to recent research by the Georgia Institute of Technology and the Brookings Institution.
“It’s basic supply and demand: After disasters, housing costs tend to increase,” said Rumbach.

‘My whole neighborhood is changing’

Fredericka Brown, 92, has lived in Coconut Grove all her life.
Recent development has irreparably altered her neighborhood, both in character and beauty, she said.
“My whole neighborhood is changing,” said Brown, seated at a long table in the basement of the Macedonia Missionary Baptist Church. Founded in 1895, it’s the oldest African-American church in Coconut Grove Village West.
The West Grove district, as it’s often called, is where some Black settlers from the Bahamas put down roots in the 1870s. 
“They’re not building single-family [houses] here anymore,” Brown said. The height of buildings is “going up,” she said. 

Fredericka Brown (L) and Carolyn Donaldson (R) at the Macedonia Missionary Baptist Church in Coconut Grove.
Greg Iacurci

Carolyn Donaldson, sitting next to her, agreed. West Grove is located at the highest elevation in the broader Coconut Grove area, said Donaldson, a resident and vice chair of Grove Rights and Community Equity.  
The area may well become “waterfront property” decades from now if rising seas swallow up surrounding lower-lying areas, Donaldson said. It’s part of a developer’s job to be “forward-thinking,” she said.
Development has contributed to financial woes for longtime residents, she added, pointing to rising property taxes as an example.
“All of a sudden, the house you paid for years ago and you were expecting to leave it to your family for generations, you now may or may not be able to afford it,” Donaldson said.

Why elevation matters for developers

Developers have been active in the City of Miami.
The number of newly constructed apartment units in multifamily buildings has grown by 155% over the past decade, versus 44% in the broader Miami metro area and 25% in the U.S., according to Moody’s data. Data for the City of Miami counts growth in overall apartment inventory in buildings with 40 or more units. The geographical area includes aforementioned gentrifying neighborhoods and others such as the downtown area.
While elevation isn’t generally “driving [developers’] investment thesis in Miami, it’s “definitely a consideration,” said David Arditi, a founding partner of Aria Development Group. Aria, a residential real estate developer, generally focuses on the downtown and Brickell neighborhoods of Miami and not the ones being discussed in this article.

Greg Iacurci

Flood risk is generally why elevation matters: Lower-lying areas at higher flood risk can negatively affect a project’s finances via higher insurance rates, which are “already exorbitant,” Arditi said. Aria analyzes flood maps published by the Federal Emergency Management Agency and aims to build in areas that have lower relative risk, for example, he said.
“If you’re in a more favorable flood zone versus not … there’s a real sort of economic impact to it,” he said. “The insurance market has, you know, quadrupled or quintupled in the past few years, as regards the premium,” he added.
A 2022 study by University of Miami researchers found that insurance rates — more so than the physical threat of rising seas — are the primary driver of homebuyers’ decision to move to higher ground.
“Presently, climate gentrification in Miami is more reflective of a rational economic investment motivation in response to expensive flood insurance rather than sea-level rise itself,” the authors, Han Li and Richard J. Grant, wrote.

Some development is likely needed to address Miami’s housing crunch, but there has to be a balance, Donaldson said.
“We’re trying to hold on to as much [of the neighborhood’s history] as we possibly can and … leave at least a legacy and history here in the community,” she added.  
Tearing down old homes and putting up new ones can benefit communities by making them more resilient to climate disasters, said Todd Crowl, director of the Florida International University Institute of Environment.
However, doing so can also destroy the “cultural mosaic” of majority South American and Caribbean neighborhoods as wealthier people move in and contribute to the areas’ “homogenization,” said Crowl, a science advisor for the mayor of Miami-Dade County.
“The social injustice part of climate is a really big deal,” said Crowl. “And it’s not something easy to wrap our heads around.”

It’s basic supply and demand: After disasters, housing costs tend to increase.

Andrew Rumbach
senior fellow at the Urban Institute

Paulette Richards has lived in Liberty City since 1977. She said she has friends whose family members are sleeping on their couches or air mattresses after being unable to afford fast-rising housing costs.
“The rent is so high,” said Richards, a community activist who’s credited with coining the term “climate gentrification.” “They cannot afford it.”
Richards, who founded the nonprofit Women in Leadership Miami and the Liberty City Climate & Me youth education program, said she began to notice more interest from “predatory” real estate developers in higher-elevation communities starting around 2010.
She said she doesn’t have a problem with development in Liberty City, in and of itself. “I want [the neighborhood] to look good,” she said. “But I don’t want it to look good for someone else.”

It’s ‘about fiscal opportunity’

Carl Juste at his photo studio in Little Haiti.
Greg Iacurci

Carl Juste’s roots in Little Haiti run deep. 
The photojournalist has lived in the neighborhood, north of downtown Miami, since the early 1970s. 
A mural of Juste’s parents — Viter and Maria Juste, known as the father and mother of Little Haiti — welcomes passersby outside Juste’s studio off Northeast 2nd Avenue, a thoroughfare known as an area of “great social and cultural significance to the Haitian Diaspora.”
“Anybody who comes to Little Haiti, they stop in front of that mural and take pictures,” Juste said. 

A mural of Viter and Maria Juste in Little Haiti.
Greg Iacurci

A few blocks north, construction has started on the Magic City Innovation District. 
The development is zoned for eight 25-story apartment buildings, six 20-story office towers, and a 420-room hotel, in addition to retail and public space, according to a webpage by Dragon Global, one of the Magic City investors. Among the properties is Sixty Uptown Magic City, billed as a collection of luxury residential units. 
“Now there’s this encroachment of developers,” Juste said.
“The only place you can go is up, because the water is coming,” he said, in reference to rising seas. Development is “about fiscal opportunity,” he said.
Plaza Equity Partners, a real estate developer and one of the Magic City partners, did not respond to CNBC’s requests for comment. Another partner, Lune Rouge Real Estate, declined to comment.

Magic City development site in Little Haiti.
Greg Iacurci

But company officials in public comments have said the development will benefit the area.
The Magic City project “will bring more jobs, create economic prosperity and preserve the thriving culture of Little Haiti,” Neil Fairman, founder and chairman of Plaza Equity Partners, said in 2021.
Magic City developers anticipate it will create more than 11,680 full-time jobs and infuse $188 million of extra annual spending into the local economy, for example, according to a 2018 economic impact assessment by an independent firm, Lambert Advisory. Likewise, Miami-Dade County estimated that a multimillion-dollar initiative launched in 2015 to “revitalize” part of Liberty City with new mixed-income developments would create 2,290 jobs.
Magic City investors also invested $31 million in the Little Haiti Revitalization Trust, created and administered by the City of Miami to support community revitalization in Little Haiti.

Affordable housing and homeownership, local small business development, local workforce participation and hiring programs, community beautification projects, and the creation and improvement of public parks are among their priorities, developers said.
Zangrillo, the Dragon Global founder, sees such investment as going “above and beyond” to ensure Little Haiti is benefited by the development rather than gentrified. He also helped fund a $100,000 donation to build a technology innovation center at the Notre Dame d’Haiti Catholic Church, he said.
Developers also didn’t force out residents, Zangrillo said, since they bought vacant land and abandoned warehouses to construct Magic City.
But development has already caused unsustainable inflation for many longtime Little Haiti residents, Juste said. Often, there are other, less quantifiable ills, too, such as the destruction of a neighborhood’s feel and identity, he said. 
“That’s what makes [gentrification] so perilous,” he said. “Exactly the very thing that brings [people] here, you’re destroying.” More

The initial public offering of Pershing Square USA Ltd., with the ticker PSUS, has been delayed until a date to be announced.
Pershing Square had $18.7 billion in assets under management at the end of June.

Bill Ackman, founder and CEO of Pershing Square Capital Management.
Adam Jeffery | CNBC

Billionaire investor Bill Ackman is postponing the highly scrutinized listing of Pershing Square’s U.S. closed-end fund, according to a notice on the New York Stock Exchange’s website.
The initial public offering of Pershing Square USA Ltd., with the ticker PSUS, has been delayed until a date to be announced, according to the website. Ackman is now looking to raise $2.5 billion to $4 billion for the fund, well short of the $25 billion target from a few weeks ago, according to a regulatory filing dated Thursday.

Pershing Square declined to comment further. The firm issued a statement “to clarify press reports,” saying that it is proceeding with its initial public offering “with the date of the pricing to be announced.”
Closed-end funds sell a set number of shares during their IPO, and they trade on market exchanges after their debut. The price of the fund does not necessarily match the shares’ net asset value, so the fund may trade at a premium or a discount.
“There is enormous sensitivity to the size of the transaction,” Ackman said in a July 24 letter to investors that was included in the filing. “Particularly in light of the novelty of the structure and closed end funds’ very negative trading history, it requires a significant leap of faith and ultimately careful analysis and judgment for investors to recognize that this closed end company will trade at a premium after the IPO when very few in history have done so.”
Pershing Square had $18.7 billion in assets under management at the end of June. Most of its capital is in Pershing Square Holdings, a $15 billion closed-end fund that trades in Europe. Ackman is seeking to offer a similar closed-end fund listed on the New York Stock Exchange, a move that could pave the way for an IPO of his management company.
The public listing of Ackman’s fund is seen as a move to leverage his following among Main Street investors after he accumulated more than one million followers on social media platform X, commenting on issues ranging from antisemitism to the presidential election. The publicly traded closed-end fund is expected to invest in 12 to 24 large-cap, investment-grade, “durable growth” companies in North America.

In the roadshow presentation that he made public, Ackman highlighted the challenge in managing traditional hedge funds that investors can yank their money out of any time, which can result in constant fundraising and soothing of investors. The advantage of managing permanent capital is that it makes him more focused on the portfolio and gives him the ability to take a long-term approach in investments.
“If you want to be a long-term investor in businesses, the challenge of managing a portfolio where money can come and might go is significant. Action can have a significant negative impact on one’s returns,” Ackman said.
— CNBC’s Leslie Picker contributed reporting.

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It’s a historic week for the cryptocurrency markets with spot ether exchange-traded funds making their debut.
Franklin Templeton is one of the nine spot ether ETF applicants which got approval Tuesday from the Securities and Exchange commission.

The firm is behind the Franklin Ethereum ETF (EZET) — now down about 10% since its inception as of Thursday’s close. The losses sparked by the sell-off in cryptocurrencies.
“We think they’ll be a hit. Whether they’re going to get the same amount of assets is… probably unlikely,” said David Mann, the firm’s head of ETF product and capital markets, told CNBC’s “ETF Edge” on Tuesday. “But it’s still pretty awesome.” 
VanEck, a global investment manager, is behind the VanEck Ethereum ETF (ETHV) which also got approval.
CEO Jan Van Eck expects spot ether ETFs will help investors diversify, but he sees a different energy level for spot ether ETFs.
“I don’t think they’re going to be the same, same kind of hit [as spot bitcoin ETFs]” Van Eck said.

His new fund is also down sharply since Tuesday.
Long-term, Morningstar’s Ben Johnson considers the volumes for spot ether ETFs as normal because they’re roughly proportional to the relative market cap of ether versus bitcoin. 
“There’s healthy appetite. There’s healthy volume. There’s healthy demand there,” the research firm’s head of client solutions said.  “[The ETFs are] opening up access to new markets, new portions of the investment opportunity set for investors and putting that in a package that is cost effective. It’s convenient, and it’s compatible with the way that more investors are building their portfolios these days.”
Ether dropped sharply on Thursday. As of the market close, it’s down about 11% for the week. However, ether is still up 38% so far this year.

Disclaimer More

Warren Buffett speaks during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, May 4, 2024.

Berkshire Hathaway dumped more Bank of America shares this week, making it six straight trading days that Warren Buffett’s conglomerate has reduced its stake in the bank.
The Omaha, Nebraska-based holding company sold another 18.9 million shares via transactions on Monday, Tuesday and Wednesday at an average price of $42.46, raising $802.5 million, a new regulatory filing showed.

Over the last six trading sessions, Berkshire has unloaded 52.8 million Bank of America shares worth $2.3 billion, reducing the stake to 12.5%. Berkshire still owns 980.1 million Bank of America shares with a market value of $41.3 billion, a distant second to its $172.5 billion holding in Apple.
Berkshire is required to disclose its stock moves within two business days after they are made, when the stake in any company exceeds 10%.
Buffett could be trimming the bet on valuation concerns after Charlotte-based Bank of America outperformed the broader market this year. The bank stock is up more than 25% in 2024, compared to almost 14% for the S&P 500.
It marked the first time since the fourth quarter of 2019 that Berkshire cut its Bank of America stake. In 2011, the Oracle of Omaha bought $5 billion worth of the bank’s preferred stock and warrants to shore up confidence in the lender as it grappled with losses related to subprime mortgages in the aftermath of the financial crisis.
Just last year, Buffett spoke highly of the leadership at Bank of America, even as he offloaded other financial names. In 2022, Berkshire exited a handful of longtime bank positions, including JPMorgan, Goldman Sachs, Wells Fargo and U.S. Bancorp. 
“I invited myself in, many years earlier, and they made a very decent deal for us. And I like Brian Moynihan enormously, and I just don’t want to, I don’t want to sell it,” Buffett said in 2023 of holding Bank of America. More

A U.K. Treasury department spokesperson said the government will set out plans to regulate “buy now, pay later” plans “shortly.”
This echoed comments from Tulip Siddiq, the new economic secretary to the U.K. Treasury, to Parliament earlier in the week.
U.K. BNPL legislation has faced multiple setbacks, not least because of political instability in the country, plus lobbying from some of the biggest names in the industry.

Buy now, pay later firms like Klarna and Block’s Afterpay could be about to face tougher rules in the U.K.
Nikolas Kokovlis | Nurphoto | Getty Images

Britain’s new Labour government will soon set out updated plans to regulate the “buy now, pay later” industry, a government spokesperson told CNBC.
A Treasury department spokesperson said the government will do so “shortly,” echoing earlier comments from Tulip Siddiq, the new economic secretary to the U.K. Treasury, to Parliament on Wednesday.

“Regulating Buy Now Pay Later products is crucial to protect people and deliver certainty for the sector,” the Treasury spokesperson told CNBC via email Thursday.
Earlier this week, Siddiq, who was selected as the U.K.’s new city minister following the landslide election victory of Keir Starmer’s Labour Party, told lawmakers that the new government is “looking to work closely with all interested stakeholders and will set out its plans shortly.”
This follows multiple delays to the roadmap for BNPL legislation in Britain. The government first set out plans to regulate the sector in 2021. That followed a review from former Financial Conduct Authority boss Christopher Woolard, which found more than one in 10 BNPL customers were in arrears.
BNPL plans are flexible credit arrangements that enable a consumer to purchase an item and then pay off their debt at a later date. Most plans charge customers a third of the purchase value up front, then take the remaining payments the following two months.
Most BNPL companies make money by charging fees on a per-transaction basis to their merchant partners, as opposed charging interest or late payment fees. Some BNPL firms do charge missed payment fees. But the model isn’t standardized across the board.

This disparity in services among different BNPL lenders is partly why campaigners have been calling for regulation. A key reason, though, is that people — particularly younger consumers — are increasingly stacking up debt from these plans, sometimes from multiple providers, without being able to afford it.

Gerald Chappell, CEO of online lending firm Abound, which uses consumer bank account information to inform credit decisions, said he’s seen data processed through his firm’s platform showing customers racking up “thousands of pounds” from as many as three to four BNPL providers.
While BNPL can be considered a credit “innovation,” Chappel said, “there’s a bit of me that can’t help feeling that was a product of a zero-interest rate environment. And now you go into a higher interest rate environment: is that still sustainable?”
“You have a weaker economy, more credit defaults. You’ve got a massive accelerating adoption of buy now, pay later, which also increase debt burdens. So I think a lot of those firms are struggling and are going to continue to struggle.”
Chappell said he wouldn’t be surprised if the Financial Conduct Authority, which is responsible for financial regulation in the U.K., ends up regulating the BNPL industry within the next 24 months.

Multiple delays to BNPL rules

Executives from two major BNPL firms, Klarna and Block, pushed back on those proposed measures, saying they threatened to drive people toward more expensive credit options like credit cards and car financing plans.
A spokesperson for Clearpay, the U.K. arm of Afterpay, said the company welcomes the government’s update that it’s planning an announcement on BNPL regulation soon. Afterpay is the BNPL arm of Jack Dorsey-owned fintech Block.
“We have always called for fit-for-purpose regulation of the sector that prioritises customer protection and delivers much-needed innovation in consumer credit,” Clearpay’s spokesperson told CNBC via email.
“Clearpay already has safeguards in place to protect consumers but we recognise that not every provider has the same approach. This is why we continue to advocate for proportionate and appropriate regulation that sets high industry standards across the board,” this spokesperson added.
A Klarna spokesperson told CNBC via email that the firm has “supported BNPL regulation for a long time, ensuring clear info, protection from bad actors & access to zero-cost credit.” “We’re pleased the government has committed to introducing this so soon after taking office,” they said.
“Too many lenders are offering unregulated BNPL that in turn doesn’t impact the credit scores of their customers, meaning other responsible lenders don’t have the full picture, so consumers don’t get the safeguards they deserve,” said Philip Belamant, CEO of BNPL company Zilch. “It’s time we level the playing field and remove this exemption. Regulation of this important sector is long overdue.”
Rival BNPL firm PayPal was not immediately available for comment when contacted by CNBC Thursday.
BNPL loans are a largely unregulated part of the financial services ecosystem, not just in the U.K., but globally. In the United States, the Consumer Financial Protection Bureau said customers of BNPL companies should be offered the same protections as credit card users.
The regulator unveiled an “interpretive rule” for the industry, meaning BNPL lenders, like Klarna, Affirm and PayPal must make refunds for returned products or canceled services, must investigate merchant disputes and pause payments during those probes, and must provide bills with fee disclosures. More

China on Thursday announced its most targeted measures yet for boosting consumption, which has remained lackluster since the pandemic.
Authorities announced they would allocate 300 billion yuan ($41.5 billion) in ultra-long special government bonds to expand an existing trade-in and equipment upgrade policy.
The policy at least doubles the subsidies for new energy and traditional fuel-powered vehicle purchases to 20,000 yuan and 15,000 yuan per car, respectively.

China’s retail sales grew by 3.7% in the first half of the year from a year ago.
CNBC | Evelyn Cheng

SHANGHAI — China on Thursday announced its most targeted measures yet for boosting consumption, which has remained lackluster since the Covid-19 pandemic.
Authorities announced they would allocate 300 billion Chinese yuan ($41.5 billion) in ultra-long special government bonds to expand an existing trade-in and equipment upgrade policy. The document was jointly published by the National Development and Reform Commission — China’s economic planning agency — and the Ministry of Finance.

“There have never been such specific measures” aimed at consumption, Bank of China’s chief researcher Zong Liang said in a phone interview Thursday, according to a CNBC translation of his Mandarin-language remarks.
He noted how the new policy links Beijing’s ultra-long bond program — announced in March — with consumption.
“This is a very important measure for implementing the Third Plenum,” Zong said. He was referring to a high-level meeting of Chinese leaders last week that only occurs twice every 10 years, and which typically sets the tone for economic policy.

The latest Third Plenum concluded with the release of several major guiding documents over the past weekend that reaffirmed Beijing’s long-term interest in bolstering advanced tech. The official communique focused on “deepening reform.” It also said China would work to achieve its full-year national targets, but disappointed many analysts by not indicating major policy changes.
Policymakers have started to act in the last week. The People’s Bank of China unexpectedly cut interest rates on Monday, amid other changes, and on Thursday cut its medium term facility lending rate.

The National Development and Reform Commission on Thursday then announced the expanded policy to support consumption.
“The move is a three-birds-with-one-stone action: Spurring consumption, absorbing industrial output, and [solidifying] economic growth to meet the pledged target of 5%,” said Bruce Pang, chief economist and head of research for Greater China at JLL.
The policy at least doubles the subsidies for new energy and traditional fuel-powered vehicle purchases to 20,000 yuan and 15,000 yuan per car, respectively.
The measures subsidize a range of equipment upgrades, from those used in farming to apartment elevators. Officials noted Thursday that about 800,000 elevators in China have been used for more than 15 years, and that 170,000 of those had been used for more than 20 years.
The policy also laid out specific subsidies for home renovations and consumer purchases of refrigerators, washing machines, televisions, computers, air conditioners and other home appliances. The document said each consumer could get subsidies of up to 2,000 yuan for one purchase in each category.
In allocating the roughly 300 billion yuan in ultra long-term bonds for local government to use for the subsidies, the policy noted the central government would take back any unused funds by the end of 2024.
“This means they’re stressing the money must be spent,” Zong said. He noted that the 300 billion yuan designation also reflects “a new way of thinking” which can have impact at scale.

Sluggish retail sales

The measures are coming at a time in which China’s consumers have been unwilling to spend, partly due to uncertainty about future income and the real estate slump.
China’s retail sales grew at a slower 2% year-on-year pace in June, which Zong said “was not ideal.”
Concerns about China’s lackluster consumer spending have recently gained a higher profile in a country where public discussion can be tightly controlled.
Trip.com co-founder James Liang this month called for Beijing to issue consumption vouchers, according to “The East is Read” newsletter that cited Liang’s post on Chinese social media platform WeChat. The same publication pointed out that Li Yang, head of the National Institution for Finance & Development (NFID), in late May highlighted China’s declining consumption.
China reported retail sales growth of 3.7% in the first half of the year, slower than the 8.2% pace recorded in the year-ago period.
That means “the pressure on spurring consumption is rather large,” Liu Xiaoguang, a professor at the Academy of Development and Strategy at China’s Renmin University, said in a presentation to reporters Thursday, according to a copy seen by CNBC. That’s according to a CNBC translation of the Chinese.
Liu noted that the housing market has yet to reach a clear turning point, and it would take time for one to solidify.
But he said with China’s recently announced plans for “deepening reforms,” the economy could grow by 5.3% this year, versus 5.1% without such measures. More