IMF's Christine Lagarde: How We Regulate Tech Needs To Be Reinvented

IMF Director Christine Lagarde: How We Regulate Tech Needs To Be Reinvented

CNBC video above published Oct 6, 2017: IMF Managing Director Christine Lagarde talks about regulating big tech, and bitcoin, with CNBC.com's Sara Eisen.

Big Tech's power remains unchallenged

Financial Times (ft.com) video above published Sep 19, 2017: Rana Foroohar, the FT's global business columnist, examines the implications of the dominance of Big Tech groups like Google, Amazon and Facebook for competition ( antitrust, monopoly), for innovation and for the health of democracy. Slide:

source: S&P Global

Transcript of Lagarde interview (YouTube.com auto-generated):
00:00  IMF Managing Director Christine
00:01  Lagarde laying out her policy agenda in
00:04  a speech ahead of the IMF annual
00:05  meetings next week I got a chance to sit
00:07  down with her for an exclusive interview
00:08  yesterday asked about the increasing
00:10  regulatory and political pressure on big
00:13  tech everything from taxes to fake news
00:16  under the microscope I asked her whether
00:17  companies like Google and Facebook
00:18  actually deserve more regulatory
00:21  scrutiny I think the way in which they
00:25  operate and the value that they generate
00:29  the activity from needs to be looked at
00:32  and I would hope that this can be done
00:34  in cooperation with them you know value
00:38  that is driven by data by information by
00:41  pattern of consumption that we volunteer
00:44  in a way without really us knowing about
00:46  it
00:47  determines the value of what they can
00:50  offer in terms of service services and
00:52  clearly revenue needs to be contributed
00:55  by those companies where it is
00:58  contributed how it is defined
01:00  how intellectual property is going to be
01:02  used as a basis to allocate revenues and
01:06  base taxation on all these things are
01:10  being need to be reinvented and I hope
01:14  that dialogue takes place rather than
01:16  you know harsh adversarial debates have
01:21  they become too powerful competition law
01:25  is there to actually deal with it why
01:27  don't you also ask you about your
01:28  comments which made a lot of waves last
01:30  week on Bitcoin you said could
01:32  ultimately give central bank's a run for
01:33  their money
01:34  mm-hmm so with countries like China and
01:37  Korea this week cracking down is that a
01:40  mistake not to embrace it you know what
01:43  what the Chinese authorities have
01:44  decided is to just ban the initial
01:49  offering of bitcoins and I think that
01:52  they've done that on the basis of the
01:53  analysis that it was at least strongly
01:55  dominated by you know speculation and
01:58  Ponzi like schemes which is certainly
02:02  showing that they are paying attention
02:04  you know when you look at a country like
02:06  like Kenya for instance where transfers
02:08  where taxes being paid totally digitally
02:11  when you look at the way in which
02:13  you know some civil servants are paid
02:15  also totally electronically and and and
02:18  without leakages in the system as is the
02:20  case in some of the developing countries
02:22  when I look at my own country where you
02:25  know of all transactions between you
02:29  know my compatriots and and and the the
02:32  Treasury Department is all now on
02:35  digital support I think there are
02:37  massive changes taking place at the
02:39  moment which everybody needs to be
02:41  attentive to would you ever buy any for
02:43  yourself
02:44  no I didn't and it's too expensive for
02:46  me at the moment we're seeing the guard
02:49  headline Bitcoin is too expensive at the
02:51  moment but seriously her comments about
02:53  the new digital economy and payment
02:55  system and and phrasing that off of the
02:58  question about whether central banks and
03:00  governments should embrace Bitcoin to me
03:03  is a very powerful statement from the
03:05  head of the International Monetary Fund
03:08  especially in light of some other recent
03:10  comments from big bankers completely
03:13  dismissing the idea as a fraud well look
03:14  JPMorgan thinks it's a fraud Bank of
03:17  America thinks it's a terrible idea we
03:18  talked to to see your professor there
03:20  and then Goldman Sachs on the other side
03:22  may be trying to either create a market
03:24  or mining it or who knows what the plan
03:26  is so it's there's everybody's coming on
03:28  in a different side she really raises an
03:30  important question though around how
03:33  taxation needs to change in this digital
03:36  era you've got huge companies like
03:37  Google Facebook they don't make stuff
03:39  like the old manufacturing companies
03:40  everybody knew how to tax those who has
03:42  the convening power to bring those
03:45  companies and others to the table so
03:46  they don't end up saying well whatever
03:48  proposal the EU has or the US has or
03:50  whomever it's unfair who's gonna bring
03:52  all these folks together at a table I
03:54  don't know and I think also that the
03:55  point on privacy is related and that it
03:58  has to be looked at and it has to be I
04:01  think her point was in conjunction with
04:02  the companies and not just regulators
04:05  starting to put all sorts of new rules
04:07  and and stricter sort of laws around
04:09  this right well let's try to figure this
04:11  out

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MacroView: Election in Germany (video), ECB, EU, Spain, IMF & Greece

Germany election 2017 UPDATE 24 Sep 2017: Far-right AfD stuns German establishment by finishing third with 13.5% and will enter parliament for the first time, but Merkel wins fourth term--"Of course we had hoped for a slightly better result." said Angela Merkel, who must now form a coalition government, a potentially difficult task that could take months trying to woo unwilling potential coalition partners.

The Latest: German election: Merkel vows to form stable govt | The Washington Post: "Center-left challenger Martin Schulz, whose Social Democrats were the junior partners in Merkel’s outgoing government, said shortly after exit polls showed his party headed for a historic election defeat Sunday that it would go into opposition. In a television discussion involving major party leaders, he accused Merkel of conducting a “scandalous” campaign that avoided debate and created “a vacuum” that the nationalist Alternative for Germany party filled."

The German Election Explained

Wall Street Journal (WSJ.com) video published Sep 18, 2017: German voters head to the polls this Sunday in an election that determines whether Chancellor Angela Merkel remains at the helm of Europe’s biggest economic power. WSJ.com's Niki Blasina explains how the election will be won and why the race for third place is all important. See also: German election polls 2017 | FT.com

Germany's AfD Tests Merkel's Leadership, Says Posen

Bloomberg.com video published Sep 19, 2017: Adam Posen, president at Peterson Institute for International Economics, previews the upcoming German election. He speaks with Bloomberg's Francine Lacqua on "Bloomberg Surveillance."

How German Elections Can Influence the ECB's (European Central Bank) Future:

Video above published Aug 18, 2017, by Bloomberg.com: Themis Themistocleous, head of European investments at UBS Wealth Management, explains how choices made by voters in the German election on 24 Sept 2017, can impact the European Central Bank (ECB). He speaks on "Bloomberg Markets: European Close." See also:

• Merkel quashes hopes of ambitious eurozone reform | POLITICO.eu Aug 29, 2017: "... the comments suggest Merkel will continue to push the current German strategy for the eurozone, placing emphasis on economic reforms in member countries rather than pooling financial risk through common debt issuance and other measures ..."
• Why 'More Europe' Won't Solve Europe's Fiscal Quandary | Bloomberg.com Aug 31, 2017.

• France's Debt Is Euro-Zone's Largest | Bloomberg.com Aug 30, 2017

• Greece hopes for debt relief as bailout program enters final 12 months | cnbc.com: "Greece's debt isn't manageable in the long-run without being either extended or forgiven, according to the IMF."
• Spain-Catalonia split: Here’s how bad economically it could really be | cnbc.com and Catalonia’s Defiance of Spanish Authority Turns into Rebellion--WolfStreet.com.

• ECB Tightens Noose Around Bank Accounts | WolfStreet.com: "Locking up the money of unsuspecting depositors to prop up collapsing banks. The European Central Bank (ECB), arguably the European Union’s most powerful and least accountable institution, apparently needs more power, according to Daniele Nouy, the ECB’s top supervisor. Chief among the fresh powers it seeks is the power to temporarily prevent people from withdrawing their money from their accounts at banks that are in distress, including by electronic fund transfers." and The Next Spanish Bank Teeters, at Worst Possible Time | WolfStreet.com.

"It's been a lost decade for investors in the world's banks. For Europe's lenders in particular, the wounds are far from healed."--Bloomberg.com

"The IMF remained upbeat about the soundness of the European banking system ... this lapse was largely due to the IMF’s readiness to take the reassurances of national and euro area authorities at face value"--IEO report, infra

IMF admits disastrous love affair with the euro and apologises for the immolation of Greece | telegraph.co.uk: "The three main bailouts for Greece, Portugal and Ireland were unprecedented in scale and character. The trio were each allowed to borrow over 2,000pc of their allocated quota – more than three times the normal limit – and accounted for 80pc of all lending by the fund between 2011 and 2014 ... “Before the launch of the euro, the IMF’s public statements tended to emphasise the advantages of the common currency," ... Some [IMF] staff members warned that the design of the euro was fundamentally flawed but they were overruled." (emphasis added)

The IMF and the Crises in Greece, Ireland, and Portugal | ieo-imf.org executive summary excerpt:

"The IMF’s handling of the euro area crisis raised issues of accountability and transparency, which helped create the perception that the IMF [International Monetary Fund] treated Europe differently. Conducting this evaluation proved challenging. Some documents on sensitive issues were prepared outside the regular, established channels; the IEO faced a lack of clarity in its terms of reference on what it could or could not evaluate; and there was no clear protocol on the modality of interactions between the IEO and IMF staff. The IMF did not complete internal reviews involving euro area programs on time, as mandated, which led to missed opportunities to draw timely lessons." (emphasis added)

Press release (highlighting added):

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TechReview | Digital Disruption: Next 10 Years, 40% of Businesses Vanish

Domain Mondo's weekly review of technology news:

Feature • Cisco System’s John Chambers tells IMF that 40% of businesses will disappear over the next decade: Technology will fuel an increase of up to 3% in the gross domestic product of every country over the next decade, John Chambers, Cisco Systems Executive Chairman told an International Monetary Fund panel: “If you look at what is in front of us, I think it will transform every person’s life. A digital world that we are now about to encompass will transform every country. Economically, my view is that the next decade, incrementally we’ll have $19 trillion in economic growth.” But Chambers raised some eyebrows when he said “more than 40% of businesses will disappear over the next decade,” explaining that the impact Uber, Lyft and Amazon have had on legacy industries will spread to every industry in the near future, including the automobile business. IMF Managing Director Christine Lagarde moderated a discussion on how technology could be used to bridge the global economic gap, and what role it will play in the future of developing markets across the globe. Lagarde said “there is still a huge technology divide,” adding “six billion people do not have access to broadband or fast internet.”--read more at MarketWatch.com

• Disrupted: Legacy (Traditional) Media, particularly newspapers:

Above courtesy of Visual Capitalist

Much of traditional media has finally reached the inflection point, particularly newspapers. Legacy media have to maintain their old business models based on subscription and print ad revenue, while successfully venturing into the digital world. Among other things, the cost structure of legacy media just doesn’t make sense in today’s digital world. Overhead is high, and revenue is harder to find due to the limited success of paywalls, rampant ad blocking, and the steady fall in display ad prices due to the emergence of programmatic bidding. In 2015, there was only one age demographic with more than half of its constituents reading a daily newspaper, and that was “65 years old and up.” Even the advertising industry itself ("Madison Avenue") has been notoriously slow at evolving to meet the needs of the "digital revolution." Digital will become the largest channel for ad revenue globally by 2019 (see chart above)--Editor's note: the chart above is misleading in respect to the category "Television" since that category is comprised of 1) broadcast TV, 2) cable TV, and 3) streaming video via an internet connection (another form of "digital media") just consumed via a TV screen or monitor. Both cable and broadcast TV (the legacy TV media) are declining, while "digital TV" (on-demand and live streaming) is increasing. See, e.g., NFL ratings plunge could spell doom for traditional TV | WashingtonPost.com.

More on Digital Disruption:

•  Most "news" is misinformation and establishment media (MSM) are no longer trusted "gatekeepers." We’re also drowning in content, from long-form writing on LinkedIn and Medium, to snackable content on Twitter and Instagram, to an explosion of self-published books. Eliot Peper said: 'Blogs made everyone a journalist. Self-publishing made everyone an author. YouTube made everyone a filmmaker. iTunes made everyone a musician. Publishing houses, record labels, and newsrooms have lost their long-held position as gatekeepers of taste' (emphasis added). See also: The Power and Limits of Curation | DigitalBookWorld.com.

•  Daily Mail owner warns of further cost cutting | FT.com: half of the layoffs come from the company’s media division, the "latest sign of cutbacks among traditional British newspapers groups battling against disruptive digital rivals." See also Daily Mail owner to slash 400 jobs amid pressure on print advertising | pressgazette.co.uk: "DMGT said the move comes in the face of “challenging market conditions” as underlying advertising revenues across its newspaper division have come under further pressure. It saw DMG Media underlying ad revenues fall by 4 per cent over the 11 months of its financial year so far, but worsen in the five weeks since 21 August, tumbling by 10 per cent as print advertising plunged by nearly a fifth."

Other Tech News:

•  Twitter’s Troubles and Snap’s Appeal: "... we have a case in which Silicon Valley’s over reliance on momentum creates an unrealistic proxy for valuation. Snap will reap billions as a result, while Twitter will struggle to salvage what it can from what was once a valuation of more than $40 billion. It is a story that will have real consequences."--NYTimes.com; see also Twitter suitors vanish as Salesforce rules out bid | FT.com.

•  Thanks Marissa! Ex-Yahoo Employee Says Government Spy Program Could Have Given a Hacker Access to All Email--TheIntercept.com. Verizon Communications Inc., might renegotiate its $4.8 billion offer to acquire certain Yahoo assets, as a result of Yahoo's disclosure of the data breach that impacted 500 million Yahoo customers.

•  Uber's #1 Problem: Nobody's Talking About The Biggest, Most Obvious Problem With Uber--SeekingAlpha.com: "I see the upfront pricing shift as part of a broader problem with Uber. Namely, the company's app is a mess." On the other hand, France's transportation department launches Le.Taxi, a "confusing platform" that hosts cab-hailing apps from taxi companies; most taxi apps compare poorly to Uber--France’s Government-Backed Uber Replacement Should Thrill Uber | Motherboard.vice.com.

•  AT&T, T-Mobile, and Verizon halt sales and replacements of Galaxy Note7 amid reports of newer models catching fire--Recode.net and Samsung ends production of Galaxy Note7 after global recall due to battery fires; shares drop 8% wiping out $17B of market value--Bloomberg.com  See also: Samsung expects to lose around $3 billion due to Note 7 recall | TheVerge.com.

•  Apple's iPhone 6 and 6 Plus Problem Not Going Away: "Apple’s potential design flaw (touch disease error) in the iPhone 6 and iPhone 6 Plus continues to attract attention."--Forbes.com

•  How 5G Technology Will Impact Your Portfolio--SeekingAlpha.com (audio)--featuring John Miley, Associate Editor with The Kiplinger Letter with a special focus on technology--Topics: A history of the progression from 2G to 5G; What 5G is expected to "look like" (ex: speeds, latency, reliability, connectivity); What the biggest fears are for AT&T, Verizon, T-Mobile, and Sprint regarding 5G; Which underlying wireless tech companies are likely to benefit most from 5G; What 5G will mean for smartphones and smartphone makers.

•   Nokia sets new record for submarine cable capacity as demand jumps--Reuters.com

•   Google's response deadline to EU charges extended again: a new deadline has now been set for November 7 on shopping charges, while responses to two separate cases involving Android and online search advertising are due October 31 and October 26, respectively. European Commission has warned penalties in the shopping and Android cases may be significant.

•  Google reportedly aims to start on London mega office by end of 2017--BusinessInsider.com

•  Alibaba's Jack Ma and Daniel Zhang issue annual letters to shareholders | Alibaba Group Holding Limited (NYSE:BABA)--SeekingAlpha.com: Jack Ma letter; Daniel Zhang letter. Jack Ma Yun has ambitious plans to create a group trading platform for small businesses and farmers, an open e-commerce system that would include cross-nation agricultural trading. Ma says the long-term goal for Alibaba is to quintuple its user base to 2 billion by 2036."--SeekingAlpha.com

•  Google in China: Amazon's (NASDAQ:AMZN) Echo home speaker is a non-entity in China, it does not understand spoken Chinese. Google, on the other hand, is quite adept at Chinese. While Google Maps, Gmail, Drive are all blocked in China, Google Translate is not. The Chinese government quietly stopped blocking it about a year ago. It is the only major Google online service that can be readily accessed in China. The reason: Google Translate is an essential tool for Chinese companies active internationally, as well as for many of the 150 million middle class Chinese now vacationing abroad each year. Sundar Pichai, Google's CEO, says the world, including China, is moving from a "mobile-first to an AI-first world." Google is already miles ahead of any Chinese company in translation and therefore it may not need to reestablish its search engine business in China to be a major force there says Peter Fuhrman, Chairman & CEO of China First Capital [ChinaFirstCapital.com], a boutique investment bank, in SeekingAlpha.com.

•  Major RAM Management Improvements Coming To Chrome: "developers have just announced that Chrome 54 will utilize a brand new JavaScript engine which will cut JavaScript-related memory usage in half."--Androidheadlines.com

•  Facebook, Google, TE SubCom, and Pacific Light Data Communication Co.,  are co-builders of Los Angeles-Hong Kong submarine cable network, launch date summer of 2018. Named the Pacific Light Cable Network, it will span nearly 8,000 miles and be the highest-capacity transpacific route to date.--SeekingAlpha.com. As Facebook and Google drive ever-increasing amounts of global internet traffic, a greater stake in the infrastructure facilitating delivery could yield competitive advantages.

•  Google outlines Asia cloud plans, four upcoming regions: Singapore, Sydney, Mumbai, and Tokyo will be added as new Google Cloud regions over the next year, as it looks to ramp up its rollout in Asia where it is seeing "triple-digit" growth rates.--ZDNet.com

•  Amazon plans to hire 120,000 temporary workers in the U.S. this holiday season--Fortune.com

•  Foreign investors sue Toshiba over accounting scandal--Reuters.com

•  Google Noto, an open source font family for more than 800 languages: Monotype and Google have developed and released a font family called Noto, for people living all around the world. Monotype is the same typeface company that developed Times New Roman and Arial. The fonts are available here, and are released under the SIL Open Font License, an open source license used for type faces.--Tech2 | tech.firstpost.com

•  Indian call center employees posing as the IRS may have bilked Americans out of millions | WashingtonPost.com: "The call centers were making more than $150,000 a day through scams that took place for a little over a year, police said.--

"It was not the first time that fraudulent call centers targeting U.S. citizens have been raided in India. As more and more American businesses outsourced their back-end operations to India in the past two decades, a thriving IT industry arose here, employing millions of English-speaking software professionals. But some have also taken advantage of the trend and found ways to access data of U.S. customers and defraud them. Call center crimes targeting Indian customers have also become a big “nuisance” for Indians, said Raj Kumar Mishra, deputy superintendent of police in Noida’s special task force. In the neighboring state of Uttar Pradesh, for example, such crimes have increased 4,300 percent in the last five years. Most of the complaints are about online bank frauds and callers who try to access customers’ ATM identification numbers, he said. Nearly 300 people involved in such crimes were arrested in the state last year. “There are leakages from unscrupulous bank staff who are selling the customer data illegally. That is a hole we have to plug,” Mishra said."

•  Finally, "A Brief History of Who Ruined Burning Man"--Journal.BurningMan.org

-- John Poole, Editor, Domain Mondo

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Brexit Impact On Tech Startups, Business & Global Economy (videos)

London Stock Exchange benchmark index FTSE 100, market close Friday, July 8, 2016:

London Stock Exchange benchmark index FTSE100 UP 4% since Brexit Vote (source: google.com)

Chart above: London Stock Exchange benchmark index FTSE100 Friday, July 8, 2016, UP 4% since Brexit Vote on June 23, 2016, while Germany's DAX and France's CAC40 are still DOWN (see charts at bottom of this post below).

Managing partner at GGV Capital (domain: ggvc.com) Glenn Solomon weighs in on Brexit's short term impact and what's moving in the tech industry, specifically startups. Published by CNBC.com July 8, 2016

See also: This Is What Brexit Means For You And Your Startup | Mattermark.com: "Given the volume of noise, I have some advice for the founders, engineers, retirees, marketers, and cab drivers on what they should do: Nothing. ... What should startup founders do? Focus on hiring great people, closing more deals, and making their customers happy. The rest is noise. When you get to the size of Oracle or IBM, growing at the global GDP rate—or worse—you can worry about shifting macro trends."

IMF's Christine Lagarde on Brexit uncertainty:

Shawn Donnan talks to the IMF.org's Managing Director, Christine Lagarde, about Brexit and how global growth has been impacted following the UK's referendum to leave the EU. Published by FT.com July 7, 2016.

See also: Heard in the Hutong: Beijingers on Brexit - China Real Time Report | WSJ.com: Do you think the European Union will become weaker if Britain leaves? Do you think Britain will be better off on its own? "The EU will become weaker. For the U.K., as I said before, it’s hard to tell..." Do you see any consequences for China of this? "No."

Since Brexit vote on June 23, 2016, 3 other nation's benchmarks (see chart below):

• Germany's DAX Down 6%
• France's CAC40 Down 6%
• USA's S&P500 Up 1%

Top to bottom: DAX, CAC40, and S&P500 (source: google.com)

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IMF Spring Meetings: Uncertainties, China, Brexit, Geopolitical Risks (video)

Lagarde Says Political Uncertainties Threaten Global Growth: 

International Monetary Fund (IMF) Managing Director Christine Lagarde talks about uncertainty surrounding "Brexit" debate in the U.K. and the top geopolitical risks she sees for 2016. She speaks with Francine Lacqua on "The Pulse." Published April 5, 2016

IMF Spring Meetings, Washington, D.C., April 15-17, 2016:

    Above video: 2016 Spring Meetings promo

G20 finance ministers gather in Washington to discuss world economy problems, earnings season begins for the troubled US banking sector, and GDP data will focus concern on China's cooling growth prospects. Seb Morton-Clark reports for FT.com (April 10, 2016).

International Monetary Fund, Washington, D.C., commonly referred to as the IMF, also known as the Fund, was conceived at a UN conference in Bretton Woods, New Hampshire, United States, in July 1944. The 44 countries at that conference sought to build a framework for economic cooperation to avoid a repetition of the competitive devaluations that had contributed to the Great Depression of the 1930s. The IMF's responsibilities: The IMF's primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund's mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.

IMF Governance structure: Board of Governors
Domain: imf.org
Official language: English
Membership: 188 countries
Parent organization: United Nations

IMF -- About: "The International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Created in 1945, the IMF is governed by and accountable to the 188 countries that make up its near-global membership."

Tweets by @IMFNews

See also on Domain Mondo: Will the UK Leave the EU? Brexit Is More Likely Than You Think (video)


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G20 Meeting in China, Mohamed El-Erian Interview, Twitter Feeds

G20 meeting in China, February 26-27, 2016, at Shanghai, where differences of opinion have broken out among the members, see Clashes over policy at Shanghai G20 meeting - FT.com and Laid Bare in Shanghai: G-20 Tensions Over How to Spur Growth - Bloomberg Business: "... Calls for increased government spending to lift demand, which have emanated from the U.S. and China, ran into opposition from German Finance Minister Wolfgang Schaeuble, who said using debt to fund growth just leads to “zombifying” economies. Bank of England Governor Mark Carney voiced skepticism over negative interest rates, which have now been adopted in continental Europe and Japan, and the head of the International Monetary Fund also warned about diminishing effectiveness of monetary policies...."
#G20 Tweets
About the G20:
G-20 major economies - (Wikipedia): "The Group of Twenty (also known as the G-20 or G20) is an international forum for the governments and central bank governors from 20 major economies. The members include 19 individual countries—Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States—along with the European Union (EU). The EU is represented by the European Commission and by the European Central Bank. The G-20 was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability."

Domain: g20.org



Interview With Mohamed El-Erian - Masters in Business (Audio) by Bloomberg View (45 minutes, published Feb 13, 2016): Mohammed El-Erian of Allianz (also former CEO and co-chief investment officer of Pimco, owned by Allianz), interviewed by Barry Ritholtz on Bloomberg View's Masters in Business series.

Background of El-Erian:

• 15 years at the International Monetary Fund in Washington, D.C., where he served as deputy director. Chairman of the president’s Global Development Council; 
• Foreign Policy named him to their Top 100 Global Thinkers list, and called him one of the 500 most powerful people on the planet.
• His book, When Markets Collide: Investment Strategies for the Age of Global Economic Change, a New York Times and Wall Street Journal bestseller, and winner of the Financial Times and Goldman Sachs Business Book of the Year Award in 2008. 
• His new book: The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse. El-Erian also publishes regular commentary on Bloomberg View and the FT.

Mohamed A. El-Erian on Twitter: @elerianm
Tweets by @elerianm

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Global Financial & Market Distortions, China, Japan, Central Banks (video)

India's Central Bank Chief Warns on Market Risks - In a panel discussion hosted by the Wall Street Journal in Davos, Switzerland, Reserve Bank of India Governor Raghuram Rajan said central-bank policies are creating market distortions. Published Jan 29, 2016, WSJ.com.

See also:

Central Banks Intensify Campaign for Negative Rates - Bloomberg Business: "... negative interest rates ... the Bank of Japan on Friday joined a growing club taking the once-anathema step of pushing some borrowing costs beneath zero ...  about a quarter of the world economy now in negative-rate territory, the policy reflects pressure to do even more to ignite inflation at the risk of hurting banks. The lack of fallout so far sets the stage for the European Central Bank to cut rates even more and may fan speculation the Federal Reserve will follow if the U.S. slumps ..."

China by TBP_Think_Tank IMF Working Paper:

Hat tip: Barry Ritholtz

See also on Domain Mondo (all posted in January, 2016):

• Markets In Mainland China Slammed Shut, Global Markets Tumble (video)
• Global Pulse: China Markets Hit Circuit Breaker Again (videos)
• What Will China's Markets Do On Friday? Markets NOW Open (video)
• China: Yuan, Markets, Economy, 'Don't Worry, Everything Is Under Control'
• China's Slowdown, Stock Markets, Global Economy: What It Means (videos)
• Martin Wolf on China Capital Controls (videos)

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Disruption: Finance, Banking, Money, Trust, WEF Davos 2016 (video)

The Transformation of Finance, Davos 2016 WEF Video: What trends and uncertainties are shaping the future of financial services? Transformations to be addressed:

• Digitization and new business models
• Regulatory requirements and new client needs
• Data privacy and systemic connectedness

Speakers:
Dan Schulman - President and CEO of PayPal and Chairman of Symantec
Gillian R. Tett - author and journalist at the Financial Times
John Cryan - businessman and co-chief executive of Deutsche Bank AG in Frankfurt am Main
James P. Gorman - Chairman and Chief Executive Officer of Morgan Stanley
Tom de Swaan - Chairman, Interim Chief Executive Officer, Zurich Insurance Group AG
Christine Lagarde - Managing Director of the International Monetary Fund (IMF)

The parallels between the financial industry and the domain name industry are interesting--take note particularly (begins @37:00) the public role of banks and financial institutions as regulated utilities, with duties to act as extensions of law enforcement, required to collect and analyze data, report "suspicious" patterns and transactions, even closing customer accounts, etc.--if you want an insight into the future of the domain name industry and internet governance, watch this video.

Notes: What is the future of finance? What are the trends and uncertainties that are disrupting financial services, and how should we react? Panel member Christine Lagarde addressed this topic on the WEF website, Agenda. The Managing Director of the International Monetary Fund (IMF) looked ahead to what 2016 might hold for the global economy. She wrote:

“One reason that the global economy is so sluggish is that, seven years after the collapse of Lehman Brothers, financial stability is not yet assured. Financial-sector weaknesses linger in many countries – and financial risks are growing in emerging markets.”

“Putting all of this together, global growth in 2016 will be disappointing and uneven. The global economy’s medium-term growth prospects have weakened as well, because potential growth is being held back by low productivity, aging populations, and the legacies of the global financial crisis. High debt, low investment, and weak banks continue to burden some advanced economies, especially in Europe; and many emerging economies continue to face adjustments after their post-crisis credit and investment boom.

“This outlook is heavily affected by some major economic transitions that are creating global spillovers and spillbacks, particularly China’s transition to a new growth model and the normalization of US monetary policy. Both shifts are necessary and healthy. They are good for China, good for the US, and good for the world. The challenge is to manage them as efficiently and as smoothly as possible.”

The role of the Fourth Industrial Revolution, theme of this year’s Annual Meeting, in disrupting finance: is technological change creating a new global economy? The Forum’s Chief Economist, Jennifer Blanke:

“Our lives are being shaken to their very core by technological change, with the Fourth Industrial Revolution transforming economies as never before. The unprecedented speed of change, as well as the breadth and the depth of many radical changes unleashed by new digital, robotic and 3D technologies, is having major impacts on what we produce and do, how and where we do it and indeed how we earn a living. And while the transformation will proceed differently in advanced and developing parts of the world, no country or market will be spared from the tidal wave of change.”

The Future of the Global Financial System is a World Economic Forum Global Challenge. The challenge – how to create a resilient, accessible financial system that people trust.

It’s an interesting time for finance, says moderator Gillian R Tett. In 2007, bankers were on top of the world, holding their heads up high. Then, the crash, and since then many of the panels here in Davos have been dominated by what went wrong and what could be done to make things safer. Now, the discussions are forward looking, with less focus on regulation and more attention on fintech and the changes – both positive and negative – that are happening in the world of finance. The biggest challenge, argues Tett, isn’t a crisis in regulation, but the new players. Although regulation has moved out of the spotlight, there is still work to be done in this area, argues Christine Lagarde. There are issues between the US and Europe around over-the-counter derivatives and clearing systems which are not progressing at the speed at which they should. These areas need more regulation, says the IMF head. Basic retail banking is changing, Lagarde goes on to say. It’s being disrupted by innovations and there are people now who have never been – never had to – go into a bank. But this is merely another way of doing business. Virtual currencies and blockchains, on the other hand, can cause deeper disruptions. They may be relatively small (the current value of virtual currencies is around $7 billion), and may be nothing to worry about. They could also turn out to be beneficial – in reducing costs, providing better value and reaching the unbanked. But they could also a great instrument for crime. There is the potential for financing terrorism and the illicit economy, and they could disrupt monetary policy. The IMF has today released a report on this topic: Virtual Currencies and Beyond.

Will cash exist in the future?
The consensus is that, in 10 years, cash will no longer exist. Why? Because it’s inefficient, unnecessary and plays a key role in the illicit economy.

Tom de Swaan believes that insurance will be the most affected of all the finance industries. Life at the top of a financial group was not, is not and will not be easy, because it is disruptive. “You have to find alliances with disruptors,” he says. “I haven’t met one who wants the insurance liability on their balance sheet.”

Dan Schulman, who heads perhaps one of the biggest disruptors in the industy – PayPal – says the biggest impediment to future success, is past success. “A lot of big companies extrapolate from what was and don’t imagine what could be. And this is a big danger.” His  five key trends:

1. Money is definitely digitizing, cheques are disappearing. But let’s not forget that 85% of global transactions are still made with cash.
2. Mobile is exploding across the world. Soon everyone will have a smartphone and hold the power of a bank branch in one hand. This allows the industry to think about consumer transactions in an entirely different way, and it brings in billions of people.
3. The amount of data is exploding, and it’s not going to stop. Algorithms are the weapons of the digital company, and the ammunition is data. The better the quality of this data, the more value it is to the consumer. Security and privacy are genuine concerns, but data is going to change value propositions.
4. Industry lines are blurring, and product lines are blurring. Take digital payments – which involve tech companies, mobile carriers, handset manufacturers and merchants.
5. Security – something Schulman thinks about every day. There is so much data, and authentication is therefore very challenging.

Are regulators ready for this transformation? Tom de Swaan argues that regulators first need to define, what are they going to regulate? Privacy? The movement of data? The financial world is still rebuilding trust with consumers, and doing this while convincing them we need their data to create new products is a huge challenge. The regulatory environment also needs to be globally applicable.

Schulman: What are we trying to regulate, he asks? Let’s not look back at what happened, but what is likely to happen in the future. He thinks it’s likely a major hack could happen, but innovation needs to be responsible and we need to be able to try new things without worrying about over-regulation.

Lagarde supports Schulman’s idea of a “sandbox” to try new ideas, as this would help us to deal with trust and limit any damage to consumers. She doesn’t entirely agree, however, with John Cryan’s suggestion that regulation is made by policy-makers, rather than the regulators themselves. Governments do participate, she says, but the decisions are still being made by the likes of the Financial Stability Board and the Basel Committee, and then channelled into the regulatory system. For bad or for good, the profession still has a lot to do with how supervision is defined. Gorman believes that cyber-security issues need to be addressed. At the heart of the banking system, he says, is trust. When this goes, people want their money back, but the banks don’t have this money, they’ve given it to someone else, and this is what caused the 2008 crisis.

What about the future of blockchains? Cryan does not see this sector growing too quickly in the next 4-5 years. Banks are better prepared to manage cash flow of debt and are able to gain insights regarding the credit worthiness of debtors better than someone who can’t access this knowledge.

Source: weforum.org Jan 20, 2016 (emphasis and links added)

See also:
Domain Mondo: 2016 World Economic Forum LIVE, Twitter Feeds, Video Links and China's Slowdown, Stock Markets, Global Economy: What It Means (videos)

WEF 2016: The future of the European Union. The Prime Ministers of France, the Netherlands and Greece plus the German Finance Minister on Europe's many challenges.


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China's Slowdown, Stock Markets, Global Economy: What It Means (videos)

"Turmoil returned to financial markets as oil plunged past $27 a barrel, the Dow Jones Industrial Average sank as much as 565 points and global equities approached a bear market that is fueling a rush into haven assets." - U.S. Stocks Sink With Markets Around the World - Bloomberg

UPDATES: 2016 World Economic Forum LIVE UPDATE Jan 21 Davos 2016 - "Where Is the Chinese Economy Heading" (video) Speakers: Jiang Jianqing, Francine Lacqua, Ray Dalio, Zhang Xin, Christine Lagarde, Fang Xinghai, Gary D. Cohn (go to link for Video Replay)
Shanghai Composite Close Jan 21: 2,880.48 Price decrease -96.21 (-3.23%) ...
George Soros Says He Expects Hard Landing for China Economy - Bloomberg Business: "Billionaire investor George Soros said China’s economy is heading for a hard landing and will contribute to global deflation. "A hard landing is practically unavoidable," Soros said on Bloomberg Television from Davos. "I’m not expecting it, I’m observing it. China can manage it. It has resources and greater latitude in policies, with $3 trillion in reserves."..."
How Much Will Markets Fall? Top Investors See No Bottom Yet - Bloomberg Business: ""I expect a protracted decline in the S&P 500," Jeffrey Gundlach, co-founder of DoubleLine Capital, said in an e-mailed response to questions. "Investors should sell the bounce-back rally which could come at any time.""



What China's Mess Means for the World and US - It's been an ugly start to the year for China, with Chinese stocks in Hong Kong falling to global financial crisis lows. To make things worse, Chinese officials seem befuddled about how to respond to the financial turmoil. Bloomberg Businessweek's Peter Coy takes a look at how China's mess affects the world, and explains why the U.S. economy is still relatively insulated. Published Jan 20, 2016



IMF Global Forecast 'Largely Nonsensical': Paul Donovan - Paul Donovan, global economist at UBS, discusses the IMF's global growth forecast and explains why China's economic slowdown is set to continue for the next five years. He speaks on "Bloomberg Surveillance." Published Jan 19, 2016

See also:
• bloomberg.com/markets/stocks/world-indexes/asia-pacific and SP500 Index
• DomainMondo.com: What Will China's Markets Do ... (video)
• DomainMondo.com: Global Pulse: China Markets Hit Circuit Breaker Again (videos)
• DomainMondo.com: China: Yuan, Markets, Economy, 'Don't Worry...'
• World faces wave of epic debt defaults, fears central bank veteran - Telegraph
• 'WORSE THAN 2007': Top banker warns of looming,,, bankruptcies | Business Insider


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Downside of FED Rate Hike: Dollar Strength vs Global Growth (videos)

Dollar strength destroying global growth | FT Markets - The strong dollar is destroying global growth, says Michael Power, strategist with Investec Asset Management. He explains to EM Squared editor Jonathan Wheatley why the IMF's way of measuring growth using purchasing power parity is out of touch with the real economy. Published on Nov 18, 2015

Domain name: investecassetmanagement.com



Emerging currency pressures | Authers' Note - John Authers on emerging market currencies as everyone prepares for higher rates from the Federal Reserve. [Published Dec 10, 2015, by the Financial Times.]

US Federal Reserve FOMC is expected to announce its decision Wednesday, December 16, 2015. Last week traders were placing an 80 percent probability that the Federal Reserve will raise rates (which has not happened since June 2006, according to data compiled by Bloomberg). Even Jeffrey Gundlach, CEO of LA-based DoubleLine Capital (doubleline.com), which has about $80 billion under management, indicated during a webcast last Tuesday that the US Federal Reserve FOMC appears “hell-bent” on a rate hike despite weak economic signals such as gross domestic product.

#ratehike Tweets

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IMF World Bank Meetings, Christine Lagarde Press Briefing (videos)

Video above: IMF World Bank Meetings, Lima, Peru, October 9-11, 2015: What Results Can We Expect? Bloomberg's Francine Lacqua reports on the world’s finance chiefs and central bankers gathering in Lima to discuss a sluggish global economy. She reports on "Bloomberg ‹GO›, October 8, 2015.


Press Briefing: IMF Managing Director, Christine Lagarde - (53:12) October 8, 2015
Topics discussed include: TPP Trade Agreement, China, World Economy,
2015 Annual Meetings - World Bank Group - International Monetary Fund
Speakers:
Christine Lagarde, Managing Director, IMF
David Lipton, First Deputy Managing Director, IMF
Gerry Rice, Director, Communications Department

2015 Annual IMF World Bank Meetings website

International Monetary Fund: imf.org
World Bank: worldbank.org


Managing the Transition to a Healthier Global Economy
(01:01:05)  September 30, 2015
IMF Managing Director Christine Lagarde discussed the state of the global economy in a speech delivered at an event hosted by Council of the Americas (AS/COA). Video: Courtesy of Council of the Americas.

See also on Domain Mondo:

• Wall Street and the World Are Watching: Will the Fed Make Its Move Now? Sep 16, 2015
• Race to the Bottom: Chinese Stocks Crash, China Lowers Interest Rates Aug 25, 2015
• Wealthy Chinese Investors Flee China's Stock Markets Aug 19, 2015

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