Thursday, 31 May 2018

Vox/Umair Irfan: Europe is building more wind and solar — without any subsidies


Europe is building more wind and solar — without any subsidies
New renewable energy projects are expected to be profitable with little government support.
By Umair Irfan Updated May 31, 2018, 8:25am EDT
Wind energy installations are increasingly going up in Europe without subsidies. Florian Gaertner/Photothek/Getty Images

The French electric utility Engie announced last week that it’s going to develop 300 megawatts of wind energy across nine wind farms in Spain, backed by $350 million (€300 million) in investment.

Here’s the key: It’s doing all this without government support. And it’s far from the only European energy company willing to make a bet like this.

In March, the Swedish power company Vattenfall announced it won its bid to build a 700 MW offshore wind farm in the Netherlands, which would make it the first nonsubsidized wind energy project in the land of windmills.

Over in Germany, in the country’s first competitive power auction last spring, the federal grid regulator accepted four bids for a total of 1,490 MW of offshore wind capacity in the North Sea, with an average subsidy rate of €0.44 per kilowatt-hour. That’s low. And why so low? Because one of the bidders, the Danish wind energy firm Dong (now Ørsted A/S), submitted a bid with a subsidy rate of zero.

It’s happening with solar too. There are now at least a dozen unsubsidized solar projects that have broken ground in Europe, as this chart shows:
Solar energy projects without subsidies underway in Europe
The sun is rising. Bloomberg New Energy Finance

All of this is evidence that major renewable energy projects can take off without a financial boost from governments. It’s great timing because the European Union is looking to phase out subsidies for renewable energy as these policies have become expensive with an explosion of wind and solar installations across the continent.

It’s also a sign that these technologies have drastically dropped in cost and are increasingly safe investments for the notoriously stodgy utility sector. As such, we’re going to see more subsidy-free solar arrays and wind farms cropping up in Europe, driving a larger share of the growth.
There are some big caveats to Europe’s “subsidy free” renewables boom

Now this doesn’t mean the training wheels are off, nor that renewables are now on the “level playing field” that every energy company claims to want but can never agree on.

For starters, “subsidy free” is a squishy term that doesn’t have a standard definition. What these projects in Europe have in common is that they aren’t getting governments to pick up a chunk of the retail cost of the power they produce. However, countries are still providing some of these projects support in the form of research and development, renewable energy mandates, manufacturing tax breaks, and so on.

So the recent project announcements don’t quite refute the claim that renewables can’t survive without subsidies. (It should be noted that fossil fuels have long received and continue to benefit from subsidies around the world.)

There’s also the question of integrating these generators on the grid and compensating for them when the sun sets or the wind stops blowing, a service that comes with a cost. Renewable power providers pay for some of this, but the remainder is passed on to utilities or is picked up by the government.

It’s also not clear whether having solar panels go toe to toe with coal power plants in an open market is necessarily a worthwhile outcome on its own. One of the key reasons governments subsidized renewables in the first place was for their environmental benefits. Getting rid of this support altogether would make it harder to finance projects and could undermine progress in bringing down greenhouse gas emissions from the energy sector. Renewable energy’s market share would still grow but perhaps not as fast as necessary to fight climate change.

At the same time, every place in the world without a price on carbon dioxide emissions is effectively giving a subsidy to fossil fuels.

“Overcoming the higher cost of financing subsidy-free schemes is one hurdle; managing variable renewables on the grid is another,” wrote Simon Evans at Carbon Brief. “Meanwhile, governments must weigh the appeal of hoping the market delivers zero-carbon electricity without policy support, against the risks of failing to meet other priorities.”
European utilities are applying the US’s playbook

In the United States, the energy market dynamics are quite different. There is less top-down pressure to deploy renewables in the US, and the main support comes in the form of tax credits on the back end rather than feed-in tariffs or other subsidies on the customer-facing side. These subsidies are applied across the industry and not through a competitive bidding process. As a result, there isn’t as strong a push to get the industry off the incentives that are available.

But one element of the American renewable energy experience is gaining ground in Europe, namely the use of power purchasing agreements (PPAs) with utilities to buy electricity at a fixed price for years at a time.

PPAs are far less common in Europe than in the United States, but some of these new unsubsidized renewable energy projects are counting on them.

“In Europe you have unsubsidized [photovoltaic solar] developers who are desperate to lock into longer-term contracts. In some countries, however, (Spain, Italy) you are not allowed to lock into corporate PPA unless you are a registered distributor. Hence developers are signing short-term contracts with energy traders,” Pietro Radoia, a solar analyst at Bloomberg New Energy Finance, told me in an email. “In the US market, long-term PPAs are the norm, also thanks to the renewable portfolio standards which mandate utilities to increase their production of energy from renewable energy sources.”

Still, the fact that renewable energy project developers aren’t counting on subsidies is a notable new development, a manifestation of the staggering global price drop we’ve seen in wind and solar generation. The technology is changing, and soon the markets will change with it.

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Recode/Rani Molla: Nearly half of American teens are online ‘almost constantly’


Nearly half of American teens are online ‘almost constantly’
That’s about double what it was three years ago.
By Rani Molla@ranimolla May 31, 2018, 10:00am EDT
Drew Angerer/Getty Images

If it seems like young people are always online, it’s because they are — well, at least that’s the case for about half of them.

Some 45 percent of American teens say they are online “almost constantly,” according to a new survey from Pew Research. That number has nearly doubled from the 24 percent who said they were always online in Pew’s 2014-2015 study.

The results varied by gender. Fifty percent of girls said they were always online compared with 39 percent of boys.

Teens’ internet presence has been enabled by near-universal adoption of smartphones, with 95 percent having access to a smartphone, according to the survey.

What are they doing with all that time online? Mostly using Snapchat and YouTube. Thirty-five percent of teens said they use Snapchat most often out of any internet platform, while 32 percent used YouTube most often. At 15 percent, Instagram was the third-most popular online platform among teens. Snapchat has remained popular with younger people, even as more users overall have flocked to Instagram.

The jury is out on whether all that time online is good for them. About 30 percent of teens said that social media has had a mostly positive impact on people their age while 24 percent said the effect has been mostly negative. The biggest group — 45 percent of teens surveyed — said it has had neither a positive nor a negative effect.

For this survey, Pew interviewed 1,058 parents who have a teen aged 13 to 17, as well as 743 teens online and by telephone from March 7 to April 10, 2018.
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United Cities and Local Governments of Africa (UCLG Africa): Regional Strategic Meeting

West Africa Commits to Mobilizing for Massive Participation in the Upcoming Africities Summit in Marrakesh, Morocco, November 20-24, 2018

RABAT, Morocco, May 31, 2018/ -- The United Cities and Local Governments of Africa (UCLG Africa) ( held its regional strategic meeting for West Africa at the Tang Palace Hotel in Accra, Ghana, May 28-29, 2018. The meeting was organized in collaboration with the National Association of Local Authorities of Ghana (NALAG).

This gathering was the fourth UCLG Africa strategic meeting. Previous strategic meetings were held in Nairobi, Kenya, April 10-11, 2018 for the East Africa region; Libreville, Gabon, April 16-17 for the Central Africa region; and Walvis-Bay, Namibia, May 7-8 for the Southern Africa region.

All fifteen countries in the West Africa region participated in the meeting: Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.  Delegates included presidents from the national associations of local governments, leaders from the Network of Locally Elected Women of Africa (REFELA) and permanent secretaries of the national associations of local governments.

The meeting was officially opened by the Honourable Hajia Alima Maham, Minister of Local Government and Rural Development, Ghana, in the presence of the Honourable Ishmael Ashitey, Regional Minister of Greater Accra; Honourable Nii Felix Anang, Mayor of the Tema Metropolitan Assembly and President of NALAG; and Mr. Jean Pierre Elong Mbassi, Secretary General of UCLG Africa. Other participants included key stakeholders from local governments in Ghana such as Dr Frederic Varenne, the Representative of the European Union Delegation in Ghana; Executive Secretary from the Inter-Ministerial Coordinating Committee on Decentralization, Ing. Salifu Mahama; the head of the Local Government Service Secretariat, Dr. Nana Ato Arthur; the Coordinator of the Ghana Urban Management Project, Mr. Aloysius Bongwa; the Director of the Ghana Urban Institute, Prosper Dzansi; and the President of the Ghana Association for Public Administration and Management, Dr. Gifty Oforiwa Gyamera.

The Honourable Hajia Alima Mahama expressed her pleasure that the Accra meeting was scheduled to discuss the progress of decentralization in the West Africa Region and would strategize on ways to enhance the effective implementation of decentralization policies and good governance in local government as well as address the emerging challenges encountered in the day to day management of communities. She then declared the meeting officially open.

Proceedings were chaired by the Honourable Nii Felix Anang, President of NALAG and moderated by Mr Jean Pierre Elong Mbassi, Secretary General of UCLG Africa.

At the opening session, members were presented with the main agendas that local and regional authorities of Africa would discuss. These included Agenda 2063 of the African Union; the African charter on democracy and elections; the African charter on the values and principles of public service; the African charter on the values and principles of decentralization, local governance and local development; the African Union protocol on women’s equality; and the creation of the high council of local authorities as a consultative body of the African Union.

- At the Africa level, participants were called upon to consider the urgency of having their respective countries sign and ratify the African charter on the values and principles of decentralization, local governance and local development. Since its adoption by the heads of state and government of the African Union in Malabo, Equatorial Guinea in 2014, the charter has been signed by 13 countries but ratified by only 3 countries (Madagascar, Burundi and Namibia) with none from West Africa. The Charter will become a legal instrument of the African Union when it is signed and ratified by 15 countries and filed with the African Union Commission. Participants resolved to set up a special committee that will visit the different countries of the region to speed up the signing and ratification of the charter.

- At the global level consideration was given to the Addis Ababa Action Agenda; the Sendai Protocol on disaster management; the 2030 Agenda on sustainable development goals; the Paris agreement on climate change and the New Urban Agenda.

It was advised that local and regional governments should intervene on these agendas to localize the goals and objectives; plan the way forward for their implementation; and to conduct a process of measuring, reporting and verifying what they were doing regarding their implementation.

Participants were then introduced to the New Urban Agenda adopted by the UN in Quito in October 2016, taking into consideration the fact that like other regions of the world, Africa is urbanizing at a rapid pace and that its urban population would be 1.2 billion people within 30 years. Decision makers were challenged to change their attitudes and to accept urbanization as a fact and address the issues of urban growth in Africa, which would translate into the growth of slums and informal settlements. It would be essential that employment was addressed and that jobs were provided for the 300 million young people who would enter the labour market in the ensuing years, given the fact that the majority of city dwellers are young people under 20 years old, hence the insistence that local and regional government leaders take bold steps now. The time has come for local authorities to take the lead in managing the urban challenge.

Dr Alioune Badiane, former Director of the Programme Division of UN-HABITAT emphasized the need for:

- Advocating for the advancement of decentralization and the setting up of an enabling environment for local and regional governments actions and initiatives.

- Reforming the legislative framework of urbanization with a special focus on land regulation to boost land supply and to contribute to the densification of the urban fabric

- City planning involving all urban dwellers, including informal settlement urban dwellers

- Radically revitalizing the financing mechanisms of local and regional governments with new arrangements for enhanced mobilization of resources, access to loans and the financial market and innovative partnerships, including that with the private sector; the 3Ps (Public Private Partnership or Public People Partnership); or 4Ps (Public, Private, People Partnership).

The meeting then reviewed the status of UCLG Africa’s membership in West Africa. Membership declarations were expected from UCLG Africa in the region, but of the 15 members only 8 had complied. 7 were yet to complete the survey and promised to send the required information to the West Africa Regional Office of UCLG Africa.

This was followed by a session in which participants exchanged information on the state of decentralization in the West Africa Region and the need to lobby national governments to ‘walk the talk’ by effectively implementing the transfer of financial and human resources to local governments; enhance the representation of women in local government; and to recognize the role of local authorities in the fight against climate change and corruption, pointing out the need for capacity building of local authorities and citizen participation in local governance. In West Africa, women were still under represented in local government and the financial transfer of resources was still low. On the issue of gender, Senegal had made the most progress with regards to total parity. Local government budgets represented on average, between 3 -7% of the national government budgets across the region. 

During the second day of the meeting, participants were informed about UCLG Africa’s programs and network. Among the highlights were: the African Cities Development Fund whose launch is expected to take place at the coming Africities Summit in Marrakesh, Morocco; the UCLG Africa Climate Task Force that was launched during COP 23 in November 2017 in Bonn, Germany; and the launch of the African Local Government Academy, ALGA.

ALGA, which is intended to boost the capacities, professionalism and ethical behaviour of local and regional government administrations across the continent, offers an Executive Masters course for senior staff of African local governments and a series of specialized courses delivered through the ALGA colleges. ALGA’s courses, as well as its Executive Masters, are delivered by its anchor institutions across Africa; with two based in Ghana. ALGA has also concluded a series of agreements to form part of the most important networks of training and research institutions in the world. It provides training and capacity building courses for all of UCLG Africa’s networks. These include: the Network of Locally Elected Women of Africa (REFELA); the network of City Managers (Africa MAGNET); the network of City Chief Finance Officers (Africa FINET); the network of City Chief Technical Officers (Africa TECHNET) and the network of Human Resource Managers of African Local and Regional Governments (Local Africa HR-Net).

Also discussed was the setting up of a local authority transparency and integrity index. To achieve this, municipalities were invited to create a website to disseminate key information to their citizens. Participants also received information on UCLG Africa’s Pan Africa Peer Review.   

Participants were informed about the launch of three main campaigns from the three-year action plan of REFELA (2018-2020) namely: African Cities without Street Children; African Cities Zero Tolerance to Violence Against Women; and African Cities Promoting Women's Leadership and Economic Empowerment. Participants committed to support these campaigns across the region and promised to encourage as many cities as possible to subscribe. 

This was followed by a presentation of the 8th edition of the Africities Summit to be held in Marrakesh, Morocco, from November 20-24, 2018 on the theme, ‘The transition to sustainable cities and territories: The role of local and regional governments of Africa’: This theme was proposed by leaders from local Africa to address the implementation of Agenda 2063 and Agenda 2030 at city and territorial level.

Over 5,000 people are expected to participate in the Africities Summit. Online registration for the conference is now open on the Africities website, and for the Africities Exhibition at  Members from West Africa were encouraged to start the mobilization for the summit. They were also informed that the general assembly of UCLG Africa will take place on November 23, 2018 as part of the summit and that each region should start caucusing in order to designate its candidates to a seat on UCLG Africa bodies. Candidatures will be received by the UCLG Africa secretariat on November 22, 2018, by 17:00 hours.

Africities: The most important democratic gathering in Africa.

Africities is the United Cities and Local Governments of Africa’s flagship pan-African event that is held every three years in one of the five regions of Africa.

The meeting discussed the issue of UCLG Africa's relationship with the European Union. In 2013, the EU adopted a communication, which for the first time recognized local authorities as fully-fledged public authorities. Following this recognition, the European Union has entered into a framework partnership agreement with international and continental associations of local governments, including UCLG Africa. Participants were informed that, in accordance with the provisions of the 2013 EU Communication on Local Authorities, national associations can be considered as having a monopoly position in their respective countries and as such, can access EU cooperation funds allocated to local authorities without going through a call for proposals, provided they present and discuss with the EU delegation an implementation program agreed with the members of the said national association.

Participants were also informed of the negotiations on the post-Cotonou Agreement that will govern the cooperation relationship between the African Union and the European Union for the next 20 years, starting in September 2018. They were asked to advocate for their respective countries to back the position of the African Union and that negotiations take place between the European Union and the African Union and not between the European Union and the ACP countries, which results in splitting Africa, with Sub-Saharan Africa separated from the African countries bordering the Mediterranean, which are included in the European neighbouring countries cooperation.

The last UCLG Africa regional strategic meeting for the North Africa Region will take place in Rabat (Morocco), June 18-19, 2018.

Distributed by APO Group on behalf of United Cities and Local Governments of Africa (UCLG Africa).

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For further information, please contact:
Gaëlle Yomi: Tel: +212 610 56 71 45
Em Ekong: Tel: +44 7801 701 675

United Cities and Local Governments of Africa (UCLG Africa)

The Guardian/Samuel Gibbs: Mobile web browsing overtakes desktop for the first time

The Guardian
Mobile web browsing overtakes desktop for the first time

Smartphones and tablets become king as the share of desktop web browsing traffic shrinks to 48.7%, according to data

Samuel Gibbs

Wed 2 Nov 2016 11.20 GMT
Last modified on Tue 21 Feb 2017 17.11 GMT

This article is over 1 year old
Mobile web has now overtaken desktop browsing worldwide.
Mobile web has now overtaken desktop browsing worldwide. Photograph: Sean Anderson for the Guardian

Mobile devices are used more than traditional computers for web browsing, as smartphone and tablet use overtook desktop for the first time, October figures show.

Mobile web browsing has been steadily growing since 2009, while the desktop’s share of web traffic has steadily decreased. In October, the two crossed over, with global mobile and tablet browsing accounting for 51.3% versus the desktop’s 48.7%, according to the latest data from web analytics firm StatCounter.

Aodhan Cullen, chief executive of StatCounter, said: “This should be a wake up call especially for small businesses, sole traders and professionals to make sure that their websites are mobile friendly. Many older websites are not.

“Mobile compatibility is increasingly important not just because of growing traffic but because Google favours mobile-friendly websites for its mobile search results.”

Despite following a similar downward trend, the desktop is still king in some parts of the world. In the UK, the desktop accounts for 55.6% of browsing, 58% in the US and 55.1% in Australia, according to StatCounter, but it seems only a matter of time before they follow the global trend, with mobile taking the majority of web browsing.

The Guardian’s data indicates that an on an average weekday, just over 40% of visitors to the site are reading on a desktop, while that number drops to just under 30% on a weekend. The rest are using a combination of mobile browsers on a tablet and smartphone, or the Guardian mobile app.

Google identified the trend towards mobile browsing several years ago and has since accelerated the shift with changes to its search favouring mobile. It began ranking sites within its search index by mobile accessibility in 2015 and recently made a change making mobile search potentially more up to date than desktop.

At the same time, PC sales have been in decline for years, while smartphones have reached at least 80% saturation within most developed markets and have become the sole point of access to the internet for many in developing nations.

    Google hides URLs in mobile web search results



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[NASA HQ News] Media Invited to See Latest NASA Drone Traffic Management Technologies

May 31, 2018
Media Invited to See Latest NASA Drone Traffic Management Technologies

A Phantom 3 multi-copter is flown during a Technology Capability Level mission at Reno-Stead Airport in Reno, Nevada.

Credits: NASA/Dominic Hart

NASA invites media to learn the latest about its national campaign to test and refine its Unmanned Aircraft Systems (UAS) Traffic Management (UTM) technologies at 10 a.m. PDT Wednesday, June 6, at the agency’s Ames Research Center in Silicon Valley, California.

The most recent effort in this campaign, known as the Technology Capability Level-3 flight demonstration, began March 5 and focuses on testing technologies that maintain safe spacing between cooperative (responsive) and non-cooperative (non-responsive) UAS’s, more commonly known as drones, beyond visual line-of-sight and over moderately populated areas. TCL-3 includes initial drone testing for suburban applications, such as package deliveries, and public safety applications, such as disaster response.

The event will be held at Ames’ UTM Airspace Operations Laboratory, the control center used to support research, testing and coordination during the flight tests, which are conducted at six Federal Aviation Administration (FAA) test sites across the country.

Media will be able to talk with engineers and ask questions, and representatives from NASA, the FAA and industry partners will explain UTM technologies in front of a UTM master display wall. Several UAS models also will be on display.

To attend, media must contact Darryl Waller at 650-604-2675 or by 5 p.m. Tuesday, June 5, and arrive by 9:30 a.m. June 6 at the NASA visitor control office at Moffett Field, California.

Ames also will host a Facebook Live event at 5 p.m. EDT (2 p.m. PDT) June 6 with UTM researchers. To watch the event, visit:

For information about NASA’s aeronautics research, visit:


24/7Wall St./Paul Ausick: Walmart Offers Employees Financial Help to Attend College

24/7Wall St.

Walmart Offers Employees Financial Help to Attend College

By Paul Ausick    May 30, 2018 11:00 am EDT

In advance of its annual shareholders meeting later Wednesday, mega-retailer Walmart Inc. (NYSE: WMT) announced a new employee benefit: financial assistance for employees seeking an associate’s or bachelor’s degree in business or supply chain management.

Walmart will subsidize the cost of tuition, books and fees for U.S. associates (hourly employees) who will contribute $1 a day ($365 a year) toward the cost of their education. The company said the program eliminates the need for students to take out a student loan and “address[es] one of the biggest hurdles that keep people from returning to college.

The company has teamed up with three nonprofit institutions — the University of Florida, Brandman University and Bellevue University — that were selected for their focus on and solid outcomes for working adult learners. Walmart employees may take classes online, in the evening or on weekends.

Greg Foran, CEO of Walmart U.S., said:

    Investing in the personal and professional success of our associates is vital to Walmart’s future success. We know training and learning opportunities empower associates to deliver for customers while growing and advancing in their careers.

Walmart also has partnered with Guild Education, an education benefits platform, to provide students with services to help with applications and enrollment.

Walmart employees who have received or will receive company-sponsored training at Walmart Academies will be able to apply those courses to their degree programs.

Other retailer operators like Starbucks and Chipotle Mexican Grill already make similar offers. Like Walmart, these companies want a more educated workforce, and they want those educated workers to stick around.

Also like other retailers, Walmart is raising its starting pay (up to $11 an hour this year) and expanding other benefits like maternity and parental leave. The company estimates that about 68,000 of its 1.5 million U.S. associates may initially sign up for the program.
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24/7WallSt./Paul Ausick: Chinese Aircraft Maker Comac Gets Bids for Wide-Body Engines

24/7Wall St.   
    Special Report

Chinese Aircraft Maker Comac Gets Bids for Wide-Body Engines

By Paul Ausick    May 30, 2018 1:55 pm EDT

Commercial Aircraft Corporation of China (Comac) is a homegrown Chinese airplane builder that recently began test flights on its new C919 single-aisle passenger jet. The company has joined up with Russian firm United Aircraft Corporation to design and build another passenger jet, the CR929, a dual-aisle, wide-body plane that, unlike the C919, is intended to be a new design from the ground up.

According to a Wednesday report from Reuters, the China-Russia partnership has now received bids from seven aircraft engine makers to provide the engines for the CR929. That number seems to be a little high.

First, the usual suspects: General Electric Co. (NYSE: GE); the Pratt & Whitney division of United Technologies Corp. (NYSE: UTX); and Britain’s Rolls-Royce. Airline industry journalist Jon Ostrower adds Russia’s Aviadvigatel and China’s own ACAE. But that’s only five.

A couple of others that might be on the bidder list are Engine Alliance, a joint venture of General Electric and Pratt & Whitney, and French aircraft engine maker Snecma. One more outside possibility is CFM International, a joint venture between GE and Snecma’s parent company Safran.

According to Reuters, Comac and its Russian partner will create a team to analyze the proposals with a goal of completing an evaluation by the end of this year.

There are a few political hurdles here, as well as the usual assortment of technical ones. China will want the engines to be designed and built in the country and almost certainly will demand a transfer of the technology in exchange for the contract. This sort of arrangement has worked well with automakers and consumer electronic products, but giving away the design of a state-of-the-art aircraft engine that will take years and billions of dollars to build is likely to raise concerns with all but the Russian and Chinese governments.

At one time the CR929 was once expected to use engines from GE or Rolls-Royce, but China has since announced its intention to design and build its own engines and has consolidated several state-owned entities into a single company, Aero Engine Corp. of China (AECC), to do the work. The government announced last September that a domestically built engine is expected for the C919 but gave no estimated delivery date.

The larger CR929 remains a long way from entry into service. Preliminary design work is expected to be approved next year and design documentation is due in 2021, with the first test flight coming in 2023 and entry into service in 2026.
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The Atlantic/Conor Friedersdorf: Roseanne's Wake-Up Call for the Populist Right

 The Atlantic   
Roseanne’s Wake-Up Call for the Populist Right

Her outburst of racist invective provided a lesson for the populist right that too few of its members are heeding.
Phil McCartence Reuters

    Conor Friedersdorf 8:47 AM ET Politics

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When ABC rebooted Roseanne, the half-hour comedy’s eponymous star had an opportunity to reinvigorate her career, to earn a pile of money, and to help her country.

Like All in the Family a generation before, the hit sitcom offered families divided by the polarized politics of their era a comedic vehicle to confront and defuse at least some of the tensions that threatened to tear them apart. And the mass audience Roseanne was drawing meant that Donald Trump supporters, like Roseanne Conner, and Hillary Clinton supporters, like Aunt Jackie, were spending at least 30 minutes a week laughing with someone from the other side.

The best version of the show could’ve been good for the country.

But its constructive potential was lost Tuesday when Roseanne Barr, its creator and star, published a vile outburst of flagrantly racist invective on Twitter, where she wrote that Valerie Jarrett, a senior adviser to President Obama, was equal to the baby of the Muslim Brotherhood and Planet of the Apes.

Just what America needed: another celebrity TV star with no bigotry filter.

ABC quickly canceled Roseanne. And who can blame the network? Within the space of hours, the show’s lead cast member, whose identity is inseparable from that of its lead character, engaged in virulent racism against a prominent African American and falsely accused a prominent Jew who survived the Nazis of collaborating with them.

Many people find it hard to know what might get a person fired today. Either of Barr’s comments would’ve been considered well beyond the pale yesterday, 10 years ago, before the September 11 terrorist attacks, or during the Reagan administration. That’s as far back as my memory goes. I grew up in as conservative a county as existed at the time, surrounded by political-correctness disdaining adults. All of them knew better than to liken a black person to an ape, a line as clear-cut as refraining from epithets like the n-word. If the phrasing of Barr’s bigoted tweet can even be considered a joke, it was one communicating little but maximally dehumanizing contempt for black people.

Barr issued an official apology:

    I deeply regret my comments from late last night on Twitter. Above all, I want to apologize to Valerie Jarrett, as well as to ABC and the cast and crew of the Roseanne show. I am sorry for making a thoughtless joke that does not reflect my values—I love all people and am very sorry. Today my words caused hundreds of hardworking people to lose their jobs. I also sincerely apologize to the audience that has embraced my work for decades. I apologize from the bottom of my heart and hope you can find it in your hearts to forgive me.

Later, she took to Twitter to concur with her critics and to rein in her defenders. “Hey guys, don’t defend me, it’s sweet of you 2 try, but … losing my show is 0 compared 2 being labelled a racist over one tweet-that I regret even more,” she wrote. In a separate tweet, she added, “guys I did something unforgiveable so do not defend me. It was 2 in the morning and I was ambien tweeting-it was memorial day too-i went 2 far & do not want it defended-it was egregious Indefensible. I made a mistake I wish I hadn’t but … don’t defend it please.”

She retweeted critics debunking the false conspiracy theory that Valerie Jarrett is a secret Muslim who said she wanted to “change America to be a more Islamic country.” She tweeted, “viacom pulled all the old Roseanne shows too.” Then she questioned whether Michelle Obama played any role in ABC’s decision to cancel her show, fueling conspiratorial resentment against another black woman and illustrating what ABC had to fear had it continued the relationship.

Still later, she added, “I’m sorry 4 my tweet, AND I will also defend myself as well as talk to my followers. so, go away if u don’t like it. I will handle my sadness the way I want to. I’m tired of being attacked & belittled more than other comedians who have said worse.” She then retweeted another Twitter user who said, “I hope and pray that when you people make a self admitted mistake and apologize and ask for forgiveness that u won’t go thru half as much hatred and vitriol that @therealroseanne has had to take. Even on my worst enemy.”

On many occasions, I’ve defended people on the left and the right in the midst of social-media pile-ons; argued against needless terminations; recommended articles and books, like Jon Ronson’s So You’ve Been Publicly Shamed, that thoughtfully caution against the overzealous application of stigma; and lamented that censorious sorts on the authoritarian left and the authoritarian right are trying to coercively attack ever more words and behaviors.

Still, I’ve favored public censure in some circumstances—and this is among them.

Without question, Barr’s excretion was protected speech under the First Amendment. But as surely as anti-Semitism is among the most odious social transgressions in Germany, dehumanizing black people ought to be among the most socially stigmatized in America, where African Americans were enslaved then subject to repression and domestic terrorism.

Stigmatizing such hateful, racist words is a social good that protects a clear, longstanding, vital norm. Its absence abetted horrific atrocities in living memory.

And Barr knew all that!

Failing to enforce the norm against a prominent celebrity, especially one working in the highly censored realm of network television, where all sorts of lesser taboos are adhered to, would threaten to undermine it.

And Barr lacks nearly all the mitigating factors imaginable in these cases. She is a 65-year-old woman, not an immature kid or a foreigner unfamiliar with the history of the taboo that she violated. At issue is something she just said, not a years-old comment needlessly dredged up. Her words seemed to carry animus. No truth proposition was at stake. She wasn’t in the heat of argument, or lashing out at a target who attacked her, or delivering a comedy roast, where transgressive insults are all but demanded, or invoking a pernicious stereotype to undercut it.

Finally, this was not an anomalous misjudgment in a career of mostly upstanding behavior—it is something like strike 3,000. Barr’s oeuvre is rife with flagrantly irresponsible conspiracy theories, some drawing on pernicious racial stereotypes. She even appears to have likened a different black woman to an ape. If social censure is ever warranted for non-crimes, it is here. And Trump supporters who bristle at the notion that their coalition is half “deplorables” ought to be furious at Barr for embodying that stereotype.

Of course, as I’ve previously noted, they ought to have been furious at Donald Trump, too:

    The most dangerous thing a leader can do in an ethnically diverse country is stoke ethnic tensions in order to gain power. One needn’t invoke the Nazis to see that truth. Look to the former Yugoslavia, or Rwanda, or Iraq and Syria today. America isn’t on the verge of civil war, but that’s in large part because, while the exploitation of ethnic grievances has always been part of our politics, our leaders have at least held themselves to a certain standard in their public statements.

    In contrast, Donald Trump kicked off his campaign by encouraging his followers to think of Mexican migrants as mostly rapists, attacked an American-born judge of Hispanic ancestry, repeatedly savaged Muslims, inspired multiple hate crimes against minorities, used his Twitter platform, with an audience of millions, to retweet and elevate anti-Semites, and inspired more energy and assertiveness from the white supremacist movement than I can ever recall seeing.

Trump’s behavior has been much worse than Barr’s behavior.

His mere words as a candidate and as president have been something like a three-alarm fire for bigoted demagoguery, so Barr’s outburst seems unlikely to serve as a wake-up call to the populist right that its coalition has a serious racism problem.

Still, it is worth noting that the social-injustice warriors of the populist right are as frequently determined to treat absolutely nothing as beyond the pale as the left’s most catastrophizing fringe is to declare that most everything is problematic.

Here’s Bill Mitchell, the Trump-aligned talk-radio host:

    Today’s Lesson? NEVER apologize to Liberals … I’m not sure how saying someone looks like a child of “Muslim Brotherhood and Planet of the Apes” is racist. I thought “Muslim Brotherhood” was supposed to be a “good” thing and Liberals say we are descended from apes?

    What am I missing here?

Like so many on the populist right, he is missing a big reason the right does so poorly with African Americans, the way in which the Trump era’s flagrant bigotry is going to deservedly cost the Republican Party for a generation, and the way in which every good idea the populists have will be tarnished by such bigotry.

The Guardian rounds up more nonsense apologias. Erick Erickson stakes out the appropriate reaction to them. And at National Review, where many appreciate the catastrophe that Trump and the bigoted populists among his followers represent to the right as a whole, Katherine Timpf, a commentator who frequently scoffs at overzealous political correctness in her columns, writes:

    This wasn’t some kind of innocent joke that has been misinterpreted and blown out of proportion. It was a clear-cut, textbook example of racism, and 65-year-old Barr is absolutely adult enough to have known this when she tweeted it. Although she happens to support Donald Trump, conservatives absolutely should not feel compelled to defend Roseanne—and I say this as someone who really enjoyed the show.

    Her tweet was racist, and she’s also made plenty of crazy statements in the past. For example: She’s a 9/11 truther. She accused the Obama administration of contriving “false-flag terror attacks,” such as the Boston Marathon bombing, in an attempt to interfere with our Second Amendment rights. She’s tweeted YouTube videos that defended the Pizzagate conspiracy theory. Truly, she’s not even really “conservative” so much as she is nuts. Is someone like that really someone that conservatives should want as a representative of their side, anyway?

    I suppose I can understand how the dearth of conservatives in Hollywood might make conservatives feel compelled to just support whomever they can get, but anyone with a shred of respect or intelligence should think twice before defending a racist tweet from an unhinged conspiracy theorist. Principles should always come before party—and an opposition to racism should always be among your principles.

At least Barr’s apologies acknowledge that opposition to racism should always be among one’s principles, unlike some of the people defending her. The influence she retains in populist circles is perhaps the best resource available to her if she resolves to repair the harm that she has done by aggressively fighting bigotry and conspiracy theories. I sincerely hope that she one day achieves redemption. Fighting for it would be more courageous than going on as before or melting away.

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About the Author

    Conor Friedersdorf
    Conor Friedersdorf is a staff writer at The Atlantic, where he focuses on politics and national affairs. He lives in Venice, California, and is the founding editor of The Best of Journalism, a newsletter devoted to exceptional nonfiction.
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Wednesday, 30 May 2018

The Week UK: ‘Murdered’ journalist Arkady Babchenko turns up alive

The Week UK

World News
Arkady Babchenko: ‘murdered’ journalist who fled Russia appears on Ukrainian TV
May 30, 2018
Kremlin critic’s death had been faked in an attempt to flush out people who were trying to kill him


Wikimedia Commons

Arkady Babchenko in August 2008

Arkady Babchenko, the Russian journalist and Kremlin critic who was reported this morning to have been shot dead in Ukraine, has appeared alive at a news conference.

Babchenko was earlier reported to have been shot three times in the back outside his apartment building in the Ukrainian capital Kiev, but in an unexpected turn of events he appeared on live TV this afternoon, flanked by Ukrainian security officials.

At the news conference, the head of the Ukrainian security service, Vasily Gritsak, said that Babchenko’s death had been faked in an attempt to flush out an unidentified group of people who were trying to kill him.

According to CNN, it not known whether Babchenko's wife and friend were aware of the operation.
See related
Will EU sanctions force Putin to change tactics in Ukraine?
Skripal poisoning: doctors feared ‘all-consuming’ nerve attack
What happened to Alexander Litvinenko?

Babchenko fled his homeland in 2017, saying it was “a country I no longer feel safe in”. He said that senior politicians had called for his deportation, and that his home address was published online, after he publicly criticising Russia’s military actions in Syria.

After he was reported dead this morning, the Russian Foreign Ministry blamed Ukraine for Babchenko’s killing, and demanded an independent investigation.

However, Ayder Muzhdabaev, a friend of the journalist, pointed out to Ukrainian state news agency Ukrinform that Babchenko has never written about Ukrainian affairs, but rather “about the Russian government, about their actions, about their criminal activities, that’s all”.

Anton Gerashchenko, a Ukrainian lawmaker who serves as adviser to the interior minister, said investigators have intended to examine “the actions of Russian intelligence agencies to get rid of those who are trying to tell the truth”.

The intriguing case of Arkady Babchenko comes after a “series of attacks, many of them fatal, on outspoken foes of President Vladimir V. Putin, both inside Russia and beyond”, says The New York Times.
Skripals and Litvinenko

The UK government blamed Russia for the nerve agent attack on double agent Sergei Skripal and his daughter Yulia in Salisbury earlier this year. The Foreign Office said it had taken Russia’s “record of conducting state-sponsored assassinations” into account when making that assessment.

The Salisbury attack has drawn comparison to the 2006 murder of former FSB officer Alexander Litvinenko using radioactive polonium-210, thought to have been administered in a cup of tea during a meeting at a London hotel. The UK public inquiry into Litvinenko’s death said there was a “strong probability” that his killers, two Russian agents, were acting on behalf of their country’s FSB secret service.

In 2017, BuzzFeed News identified 14 deaths of Russians or Russian-linked individuals in Britain, and pointed to several further unsolved deaths in the US. Ukraine has also recorded multiple suspected assassinations in the past few years.
Russia’s ‘wetwork’

The Kremlin vehemently denies such attacks, although in 2010 Putin chillingly warned that “traitors will kick the bucket”.

Targeted killings have often been used to “undermine foreign countries and send important psychological messages to opponents and ‘traitors’”, says Dan Lomas, programme leader for the MA in intelligence and security studies at the University of Salford.

Writing on The Conversation, Lomas says: “Russia’s use of ‘wetwork’ (from the Russian mokroye delo, literally ‘wet affairs’, referring to the spilling of blood) has long been a part of Russian intelligence history.

“What began with the Cheka, the first Soviet security agency, continued to the NKVD, SMERSH (drawn from the phrase smert shpionam, meaning ‘death to spies’), the KGB, and its successors in the modern day FSB and SVR (the Russian foreign intelligence service).”

Unearthing the truth about the long list of suspicious deaths is “difficult in the extreme”, says Reuters, and it “might be simplistic to suggest Putin ordered all of the killings”.

The news site notes, however, that “despite Russia’s denials, it is unquestionably true that Kremlin enemies often end up dead”.

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IMF F&D/Damgaard, Elkjaer, & Johannesen: Piercing the Veil: Paradise Papers: How tax havens work

International Monetary Fund
F&D Article
Finance & Development, June 2018, Vol. 55, No. 2 PDF version
Piercing the Veil

    Tax Havens 101
    Paradise Papers: How tax havens work

Some $12 trillion worldwide is just phantom corporate investment

Jannick Damgaard, Thomas Elkjaer, and Niels Johannesen

New research reveals that multinational firms have invested $12 trillion globally in empty corporate shells, and citizens of some financially unstable and oil-producing countries hold a disproportionately large share of the $7 trillion personal wealth stashed in tax havens.

Although Swiss Leaks, the Panama Papers, and recent disclosures from the offshore industry have revealed some of the intricate ways multinational firms and wealthy individuals use tax havens to escape paying their fair share, the offshore financial world remains highly opaque. Because of the secrecy that lies at the heart of the services offered by offshore banks, lawyers, and domiciliation companies, it is hard to know exactly how much money is funneled through tax havens, where the money is coming from, and where it is going.

These questions are particularly important today in countries where policy initiatives aiming to curb the harmful use of tax havens abound. The policies, with acronyms such as FATCA (Foreign Account Tax Compliance Act), CRS (Common Reporting Standard), and BEPS (base erosion and profit shifting), introduce a variety of new reporting requirements: multinational firms must report country-by-country information about their economic activity; banks must conduct thorough background checks of customers to identify foreign-owned accounts and report detailed account information to the tax authorities; and the tax authorities must share tax-relevant information with their foreign counterparts through comprehensive information exchange agreements.

This new wave of tax enforcement policies is controversial. Some welcome the ambitious attempts to fix what is perceived as a broken international tax system that allows global elites to get away with low effective tax rates. Others argue that the cost of enforcement could dwarf the benefits. Determining which view is closer to the truth is impossible without reliable measures of the scale of this offshore challenge. Fortunately, recently released statistics from the Organisation for Economic Co-operation and Development (OECD) and the Bank for International Settlements (BIS) on cross-border financial positions have allowed researchers to begin to pierce the veil of offshore secrecy.
Offshore shell games

Foreign direct investment is usually perceived as long-term strategic and stable investment reflecting fundamental location decisions of multinational firms. Such investment is often thought to bring job creation, production, construction of new factories, and transfer of technology. However, a new study (Damgaard and Elkjaer 2017) combines detailed statistics on foreign direct investment published by the OECD with the broad coverage of the IMF’s Coordinated Direct Investment Survey and finds that a stunning $12 trillion—almost 40 percent of all foreign direct investment positions globally—is completely artificial: it consists of financial investment passing through empty corporate shells with no real activity.

These investments in empty corporate shells almost always pass through well-known tax havens. The eight major pass-through economies—the Netherlands, Luxembourg, Hong Kong SAR, the British Virgin Islands, Bermuda, the Cayman Islands, Ireland, and Singapore—host more than 85 percent of the world’s investment in special purpose entities, which are often set up for tax reasons. The characteristics of these entities include legal registration subject to national law, ultimate ownership by foreigners, few or no employees, little or no production in the host economy, little or no physical presence, mostly foreign assets and liabilities, and group financing or holding activities as their core business. The significance of such offshore investment is growing. Foreign direct investment, unlike portfolio and other investment, has continued to expand in the aftermath of the financial crisis, driven primarily by its positions vis-à-vis financial centers as a result of the growing complexity of the corporate structures of large multinationals (Lane and Milesi-Ferretti 2018).

The use of pass-through entities in tax havens does not in itself imply tax avoidance, but it certainly implies more opportunities for tax avoidance and even tax evasion. Many of the most aggressive tax minimization strategies require that investments be structured in precisely this way, and it is well documented that multinational firms with a nominal presence in tax havens effectively pay lower taxes on their global profits.

This type of financial tax engineering is a worldwide phenomenon that cuts across advanced and emerging market economies. In emerging market economies such as India, China, and Brazil, 50 to 90 percent of outward foreign direct investment goes through a foreign entity with no economic substance; the share is 50 to 60 percent in advanced economies such as the United Kingdom and the United States (see Chart 1). Globally, the average is close to 40 percent.
Even though the special purpose entity share is relatively low in some OECD countries, the tax challenge can still be significant, given developed economies’ generally relatively high outward foreign direct investment relative to their economic size.
Hidden wealth

In many parts of the world, private individuals also use tax havens on a grand scale, as evidenced in a new study by Alstadsæter, Johannesen, and Zucman (forthcoming). Analyzing recently released statistics from the BIS on cross-border bank deposits, the study documents distinct differences across countries in the amount of wealth held in personal offshore accounts. Globally, individuals hold about $7 trillion—
corresponding to roughly 10 percent of world GDP—in tax havens. However, the stock of offshore wealth ranges from about 4 percent of GDP in Scandinavia to about 50 percent in some oil-producing countries, such as Russia and Saudi Arabia, and in countries that have suffered instances of major financial instability, such as Argentina and Greece (see Chart 2).

These patterns suggest that high taxes are not necessarily associated with high levels of offshore tax evasion: the Scandinavian countries have some of the highest income tax rates in the world, but at the same time have relatively little offshore personal wealth. The findings also suggest that individuals sometimes stash money in offshore accounts for reasons entirely unrelated to tax evasion, particularly in the context of emerging market economies. For instance, tax haven banks may serve to circumvent capital controls during a currency crisis, as suggested by the exceptionally high levels of offshore personal wealth in Argentina, and to launder the proceeds from corruption in resource-
extraction industries, as suggested by the statistics for countries such as Russia and Venezuela.

The study also highlights dramatic changes in tax havens’ share in the global wealth management market: the proportion of the world’s hidden wealth managed by Swiss banks has dropped from almost 50 percent on the eve of the financial crisis to about 25 percent today with the expansion of Asian tax havens such as Hong Kong SAR, Macao SAR, and Singapore. This development may indicate that international cooperation on tax matters by Switzerland and other European tax havens is deterring tax evaders. Alternatively, it may be a sign that a larger share of the world’s superrich are Asians who do offshore banking in nearby tax havens.
Out of the shadows

The international tax challenge will grow in the coming years because of increased digitalization and mobility of assets (think Facebook, Google, Tencent). New studies shed light on the money passing through tax havens and reveal striking cross-country differences in exposure to the offshore challenge, but these analyses are based on incomplete evidence, since multinational firms and private individuals can also use other methods to shelter wealth abroad. For this reason, even more data are needed to fully pierce the veil of offshore financial secrecy.

First, more countries should begin regularly reporting detailed financial data broken down by instrument, domestic sector, counterpart sector and country, currency, and maturity. Second, traditional macroeconomic statistics, which are based on the concept of a national economy as the only relevant boundary, are increasingly challenged by financial globalization. These statistics should be supplemented with data on global interconnection that look beyond holdings of financial wealth across borders to find their ultimate owners. Such data will make it possible to weigh the costs and benefits of various policy initiatives: informed decisions must be based on rich, detailed, and reliable evidence.

JANNICK DAMGAARD is a senior economist at the National Bank of Denmark, THOMAS ELKJAER is a senior economist in the IMF’s Statistics Department, and NIELS JOHANNESEN is professor of economics at the University of Copenhagen’s Center for Economic Behaviour and Inequality.
The views expressed here are those of the authors; they do not necessarily reflect the views of the institutions with which they are affiliated.

Alstadsæter, Annette, Niels Johannesen, and Gabriel Zucman. Forthcoming. “Who Owns the Wealth in Tax Havens? Macro Evidence and Implications for Global Inequality.” Journal of Public Economics.

Damgaard, Jannick, and Thomas Elkjaer. 2017. “The Global FDI Network: Searching for Ultimate Investors.” IMF Working Paper 17/258, International Monetary Fund, Washington, DC.

Lane, Philip R., and Gian Maria Milesi-Ferretti. 2018. “The External Wealth of Nations Revisited: International Financial Integration in the Aftermath of the Global Financial Crisis.” IMF Economic Review 66 (1): 189–222.

Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect IMF policy.
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IMF F&D/Dong He: Crypto assets may one day reduce demand for central bank money

International Monetary Fund   

F&D Article
Finance & Development, June 2018, Vol. 55, No. 2 PDF version
Monetary Policy in the Digital Age

    1) Future of money

Crypto assets may one day reduce demand for central bank money

Dong He

The global financial crisis and the bailouts of major financial institutions renewed skepticism in some quarters about central banks’ monopoly on the issuance of currency. Such skepticism fueled the creation of Bitcoin and other crypto assets, which challenged the paradigm of state-supported currencies and the dominant role of central banks and conventional institutions in the financial system (He and others, 2016).

Twenty years ago, when the Internet came of age, a group of prominent economists and central bankers wondered whether advances in information technology would render central banks obsolete (King 1999). While those predictions haven’t yet come to pass, the rise of crypto assets has rekindled the debate. These assets may one day serve as alternative means of payment and, possibly, units of account, which would reduce the demand for fiat currencies or central bank money. It’s time to revisit the question, will monetary policy remain effective in a world without central bank money (Woodford 2000)?

For the time being, crypto assets are too volatile and too risky to pose much of a threat to fiat currencies. What is more, they do not enjoy the same degree of trust that citizens have in fiat currencies: they have been afflicted by notorious cases of fraud, security breaches, and operational failures and have been associated with illicit activities.
Addressing deficiencies

But continued technological innovation may be able to address some of these deficiencies. To fend off potential competitive pressure from crypto assets, central banks must continue to carry out effective monetary policies. They can also learn from the properties of crypto assets and the underlying technology and make fiat currencies more attractive for the digital age.

What are crypto assets? They are digital representations of value, made possible by advances in cryptography and distributed ledger technology. They are denominated in their own units of account and can be transferred peer to peer without an intermediary.

Crypto assets derive market value from their potential to be exchanged for other currencies, to be used for payments, and to be used as a store of value. Unlike the value of fiat currencies, which is anchored by monetary policy and their status as legal tender, the value of crypto assets rests solely on the expectation that others will also value and use them. Since valuation is largely based on beliefs that are not well anchored, price volatility has been high.
Deflation risk

Some crypto assets, such as Bitcoin, in principle have limited inflation risk because supply is limited. However, they lack three critical functions that stable monetary regimes are expected to fulfill: protection against the risk of structural deflation, the ability to respond flexibly to temporary shocks to money demand and thus smooth the business cycle, and the capacity to function as a lender of last resort.

But will they be more widely used in the future? A longer track record may reduce volatility, boosting further adoption. And with better issuance rules— perhaps, “smart” rules based on artificial intelligence— their valuation could become more stable. “Stable” coins are already appearing: some are pegged to existing fiat currencies, while others attempt issuance rules that mimic inflation- or price-targeting policies (“algorithmic central banking”).

As a medium of exchange, crypto assets have certain advantages. They offer much of the anonymity of cash while also allowing transactions at long distances, and the unit of transaction can potentially be more divisible. These properties make crypto assets especially attractive for micro payments in the new sharing and service-based digital economy.

And unlike bank transfers, crypto asset transactions can be cleared and settled quickly without an intermediary. The advantages are especially apparent in cross-border payments, which are costly, cumbersome, and opaque. New services using distributed ledger technology and crypto assets have slashed the time it takes for cross-border payments to reach their destination from days to seconds by bypassing correspondent banking networks.

So we cannot rule out the possibility that some crypto assets will eventually be more widely adopted and fulfill more of the functions of money in some regions or private e-commerce networks.
Payment shift

More broadly, the rise of crypto assets and wider adoption of distributed ledger technologies may point to a shift from an account-based payment system to one that is value or token based (He and others 2017). In account-based systems the transfer of claims is recorded in an account with an intermediary, such as a bank. In contrast, value- or token-based systems involve simply the transfer of a payment object such as a commodity or paper currency. If the value or authenticity of the payment object can be verified, the transaction can go through, regardless of trust in the intermediary or the counterparty.

Such a shift could also portend a change in the way money is created in the digital age: from credit money to commodity money, we may move full circle back to where we were in the Renaissance! In the 20th century, money was based predominantly on credit relationships: central bank money, or base money, represents a credit relationship between the central bank and citizens (in the case of cash) and between the central bank and commercial banks (in the case of reserves). Commercial bank money (demand deposits) represents a credit relationship between the bank and its customers. Crypto assets, in contrast, are not based on any credit relationship, are not liabilities of any entities, and are more like commodity money in nature.

Economists continue to debate the origins of money, and why monetary systems seem to have alternated between commodity and credit money throughout history. If crypto assets indeed lead to a more prominent role for commodity money in the digital age, the demand for central bank money is likely to decline.
Monopoly supplier

But would this shift matter for monetary policy? Would diminished demand for central bank money reduce the ability of central banks to control short-term interest rates? Central banks typically conduct monetary policy by setting short-term interest rates in the interbank market for reserves (or clearing balances they keep with the central bank). According to King (1999), ceasing to be the monopoly supplier of such reserves would indeed deprive central banks of their ability to carry out monetary policy.

Economists disagree about whether massive adjustments in central bank balance sheets would be necessary to move interest rates in a world where central bank liabilities ceased to perform any settlement functions. Would the central bank need to buy and sell a lot of crypto assets to move interest rates in a crypto world?

Regardless of such disagreements, the ultimate concern is similar: “The only real question about such a future is how much the central banks’ monetary policies would matter” (Woodford 2000). To Benjamin Friedman, the real challenge is that “the interest rates that the central bank can set . . . become less closely—in the limit, not at all— connected to the interest rates and other asset prices that matter for ordinary economic transactions” (Friedman 2000).

In other words, if central bank money no longer defines the unit of account for most economic activities—and if those units of account are instead provided by crypto assets—then the central bank’s monetary policy becomes irrelevant. Dollarization in some developing economies provides an analogy. When a large part of the domestic financial system operates with a foreign currency, monetary policy for the local currency becomes disconnected from the local economy.
Competitive pressure

How should central banks respond? How can they forestall the competitive pressure crypto assets may exert on fiat currencies?

First, they should continue to strive to make fiat currencies better and more stable units of account. As IMF Managing Director Christine Lagarde noted in a speech at the Bank of England last year, “The best response by central banks is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve.” Modern monetary policy, based on the collective wisdom and knowledge of monetary policy committee members—and supported by central bank independence—offers the best hope for maintaining stable units of account. Monetary policymaking can also benefit from technology: central banks will likely be able to improve their economic forecasts by making use of big data, artificial intelligence, and machine learning.

Second, government authorities should regulate the use of crypto assets to prevent regulatory arbitrage and any unfair competitive advantage crypto assets may derive from lighter regulation. That means rigorously applying measures to prevent money laundering and the financing of terrorism, strengthening consumer protection, and effectively taxing crypto transactions.

Third, central banks should continue to make their money attractive for use as a settlement vehicle. For example, they could make central bank money user-friendly in the digital world by issuing digital tokens of their own to supplement physical cash and bank reserves. Such central bank digital currency could be exchanged, peer to peer in a decentralized manner, much as crypto assets are.
Safeguarding independence

Central bank digital currency could help counter the monopoly power that strong network externalities can confer on private payment networks. It could help reduce transaction costs for individuals and small businesses that have little or costly access to banking services, and enable long-distance transactions. Unlike cash, a digital currency wouldn’t be limited in its number of denominations.

From a monetary policy perspective, interest- carrying central bank digital currency would help transmit the policy interest rate to the rest of the economy when demand for reserves diminishes. The use of such currencies would also help central banks continue to earn income from currency issuance, which would allow them to continue to finance their operations and distribute profits to governments. For central banks in many emerging market and developing economies, seigniorage is the main source of revenue and an important safeguard of their independence.

To be sure, there are choices and policy trade-offs that would require careful consideration when it comes to designing central bank digital currency, including how to avoid any additional risk of bank runs brought about by the convenience of digital cash. More broadly, views on the balance of benefits and risks are likely to differ from country to country, depending on circumstances such as the degree of financial and technological development.

There are both challenges and opportunities for central banks in the digital age. Central banks must maintain the public’s trust in fiat currencies and stay in the game in a digital, sharing, and decentralized service economy. They can remain relevant by providing more stable units of account than crypto assets and by making central bank money attractive as a medium of exchange in the digital economy.

DONG HE is deputy director of the IMF’s Monetary and Capital Markets Department.

This article draws on “Virtual Currencies and Beyond: Initial Considerations,” January 2016 IMF Staff Discussion Note 16/03, by Dong He, Ross Leckow, Vikram Haksar, Tommaso Mancini Griffoli, Nigel Jenkinson, Mikari Kashima, Tanai Khiaonarong, Céline Rochon, and Hervé Tourpe.

Friedman, Benjamin M. 2000. “Decoupling at the Margin: The Threat to Monetary Policy from the Electronic Revolution in Banking.” International Finance 3 (2): 261–72.

Goodhart, Charles. 2000. “Can Central Banking Survive the IT Revolution?” International Finance 3 (2): 189–209.

He, Dong, Ross Leckow, Vikram Haksar, Tommaso Mancini Griffoli, Nigel Jenkinson, Mikari Kashima, Tanai Khiaonarong, Céline Rochon, and Hervé Tourpe. 2017. “Fintech and Financial Services: Initial Considerations.” IMF Staff Discussion Note 17/05, International Monetary Fund, Washington, DC.

King, Mervyn. 1999. “Challenges for Monetary Policy: New and Old.” Speech delivered at a symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, WY, August 27.

Woodford, Michael. 2000. “Monetary Policy in a World without Money.” International Finance 3 (2): 229–60.

Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect IMF policy.
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IMF F&D/Stefan Ingves: The governor of the world’s oldest central bank discusses his country’s shift toward digital money

International Monetary Fund   

F&D Article
Finance & Development, March 2018, Vol. 55, No. 2 PDF version
Point of View
Going Cashless

The governor of the world’s oldest central bank discusses his country’s shift toward digital money

Stefan Ingves
Stefan Ingves

Sweden is rapidly moving away from cash. Demand for cash has dropped by more than 50 percent over the past decade as a growing number of people rely on debit cards or a mobile phone application, Swish, which enables real-time payments between individuals. More than half of all bank branches no longer handle cash. Seven out of ten consumers say they can manage without cash, while half of all merchants expect to stop accepting cash by 2025 (Arvidsson, Hedman, and Segendorf 2018). And cash now accounts for just 13 percent of payments in stores, according to a study of payment habits in Sweden (Riksbank 2018).

Digital solutions for large payments between banks have existed for some time; the novelty is that they have filtered down to individuals making small payments. And my country isn’t alone in this regard. In several Asian and African countries—for example, India, Pakistan, Kenya, and Tanzania—paying by mobile phone instead of cards or cash is commonplace.

Given that the role of a central bank is to manage the money supply, these developments potentially have wide-ranging consequences. Are central banks needed as issuers of a means of payment in a modern digital payments market? Are banknotes and coins the only means of payment for retail payments that should be supplied by a central bank? Is there a risk of future concentration in the payments market infrastructure that central banks should be monitoring?

In Sweden, clearing and transfers between accounts are concentrated in one system, Bankgirot. Once the payments market infrastructure is in place, the marginal costs for payments are low and positive externalities are present. What do we mean by “positive externalities”? A classic example is the telephone. Having the first telephone is not very valuable, as there would be no one to call. However, as more people eventually connect to the telephone network, the value of the phone increases.

The same is true for the payments market—the value of being connected to a payments system increases as more people join. Moreover, payments can also be regarded as collective utilities. Considering this, my view is that the state does indeed have a role to fill in the payments market—namely, to regulate or provide the infrastructure needed to ensure smooth functioning and robustness.

Citizens can expect a payments market to meet a few basic requirements. First, its services should be broadly available. Second, its infrastructure should be safe and secure. Sellers and buyers should be convinced that the payment order will be carried out—a necessary condition for people to be willing to use the system. Third, it should be efficient: payments should be settled fast, at the lowest possible cost, and the system should be perceived as simple and easy to use.

Do we fulfill these requirements? I am becoming increasingly uncertain whether we can respond with an unequivocal yes.

If banknotes and coins have had their day, then in the near future, the general public will no longer have access to a state-guaranteed means of payment, and the private sector will to a greater extent control accessibility, technological developments, and pricing of the available payment methods. It is difficult to say at present what consequences this might have, but it will likely further limit financial access for groups in society that currently lack any means of payment other than cash. Competition and redundancy in the payments infrastructure will likely be reduced if the state is no longer a participant. Today, cash has a natural place as the only legal tender. But in a cashless society, what would legal tender mean?

In this regard, one might ask whether central banks should start issuing digital currency to the public. This is a complex issue and one central banks will likely struggle with for years to come. I approach the question as a practical, not a hypothetical, matter. I am convinced that within 10 years we will almost exclusively be paying digitally, both in Sweden and in many parts of the world. Even today, young people, at least in Sweden, use practically no cash at all. This demographic dimension is also why I believe that cash’s decline can be neither stopped nor reversed. While the Nordic countries are at the forefront, we are not alone. It is interesting to see how quickly the Chinese payments market, for instance, is changing.

And then there is the emergence of crypto assets. I do not consider these so-called currencies to be money, as they do not fulfill the three essential functions of money—to serve as a means of payment, a unit of account, and a store of value. This view is shared by most of my colleagues. Crypto assets’ main contribution is to show that financial infrastructure can be built in a new way with blockchain technology, smart contracts, and crypto solutions. Although the new technology is interesting and can probably create value added in the long run, it is important that central banks make it clear that cryptocurrencies are generally not currencies but rather assets and high-risk investments. The clearer we are in communicating this, the greater the chance that we can prevent unnecessary bubbles from arising in the future. We may also want to review the need for regulatory frameworks and supervision for this relatively new phenomenon.

It is worth mentioning that digitalization, technical improvements, and globalization are positive developments that increase our collective economic welfare. We can only speculate on what new payments services may be developed in the future. But there are several challenges ahead. One key issue we face is whether central banks can stop supplying a state-guaranteed means of payment to the general public. Another is whether the infrastructure for retail payments should be transferred to a purely private market. The state cannot entirely withdraw from its social responsibility in these areas. But exactly what its new role will become remains to be seen.

STEFAN INGVES> is the governor of Sveriges Riksbank, the central bank of Sweden.


Arvidsson, Niklas, Jonas Hedman, and Björn Segendorf. 2018. ”När slutar svenska handlare acceptera kontanter?” (“When Will Swedish Retailers Stop Accepting Cash?”) Research Report 2018:1, Swedish Retail and Wholesale Council, Borås.

Gorton, Gary B. 2012. Misunderstanding Financial Crises: Why We Don’t See Them Coming. Oxford: Oxford University Press.

Schabel, Isabel, and Hyun Song Shin. 2018. ”Money and Trust: Lessons from the 1620s for Money in the Digital Age.” BIS Working Paper 698, Bank for International Settlements, Basel.

Sveriges Riksbank. 2018. “The Payment Behaviour of the Swedish Population.” Stockholm.

Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect IMF policy.
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IMF F& D/Martin Mühleisen: The Long and Short of The Digital Revolution

International Monetary Fund

Finance & Development, June 2018, Vol. 55, No. 2 PDF version
The Long and Short of The Digital Revolution

Smart policies can alleviate the short-term pain of technological disruption and pave the way for long-term gain

Martin Mühleisen

Digital platforms are recasting the relationships between customers, workers, and employers as the silicon chip’s reach permeates almost everything we do—from buying groceries online to finding a partner on a dating website. As computing power improves dramatically and more and more people around the world participate in the digital economy, we should think carefully about how to devise policies that will allow us to fully exploit the digital revolution’s benefits while minimizing job dislocation.

This digital transformation results from what economists who study scientific progress and technical change call a general-purpose technology—that is, one that has the power to continually transform itself, progressively branching out and boosting productivity across all sectors and industries. Such transformations are rare. Only three previous technologies earned this distinction: the steam engine, the electricity generator, and the printing press. These changes bring enormous long-term benefits. The steam engine, originally designed to pump water out of mines, gave rise to railroads and industry through the application of mechanical power. Benefits accrued as farmers and merchants delivered their goods from the interior of a country to the coasts, facilitating trade.
Adopt—but also adapt

By their very nature, general-purpose technological revolutions are also highly disruptive. The Luddites of the early 19th century resisted and tried to destroy machines that rendered their weaving skills obsolete, even though the machines ushered in new skills and jobs. Such disruption occurs precisely because the new technology is so flexible and pervasive. Consequently, many benefits come not simply from adopting the technology, but from adapting to the technology. The advent of electricity generation enabled power to be delivered precisely when and where needed, vastly improving manufacturing efficiency and paving the way for the modern production line. In the same vein, Uber is a taxi company using digital technology to deliver a better service.

An important component of a disruptive technology is that it must first be widely adopted before society adapts to it. Electricity delivery depended on generators. The current technological revolution depends on computers, the technical backbone of the Internet, search engines, and digital platforms. Because of the lags involved in adapting to new processes, such as replacing traditional printing with online publishing, it takes time before output growth accelerates. In the early stages of such revolutions, more and more resources are devoted to innovation and reorganization whose benefits are realized only much later.

For example, while James Watt marketed a relatively efficient engine in 1774, it took until 1812 for the first commercially successful steam locomotive to appear. And it wasn’t until the 1830s that British output per capita clearly accelerated. Perhaps it is no wonder that the digital revolution doesn’t show up in the productivity statistics quite yet—after all, the personal computer emerged only about 40 years ago.

But make no mistake—the digital revolution is well under way. In addition to transforming jobs and skills, it is also overhauling industries such as retailing and publishing and perhaps—in the not-too-distant future—trucking and banking. In the United Kingdom, Internet transactions already account for almost one-fifth of retail sales, excluding gasoline, up from just one-twentieth in 2008. And e-commerce sites are applying their data skills to finance. The Chinese e-commerce giant Alibaba already owns a bank and is using knowledge about its customers to provide small-scale loans to Chinese consumers., the American e-commerce site, is moving in the same direction.

Meanwhile, anonymous cryptocurrencies such as Bitcoin are posing challenges to efforts to combat money laundering and other illicit activities. But what makes these assets appealing also makes them potentially dangerous. Cryptocurrencies can be used to trade in illegal drugs, firearms, hacking tools, and toxic chemicals. On the other hand, the underlying technology behind these currencies (blockchain) will likely revolutionize finance by making transactions faster and more secure, while better information on potential clients can improve the pricing of loans through better assessment of the likelihood of repayment. Regulatory frameworks need to ensure financial integrity and protect consumers while still supporting efficiency and innovation.

Looking forward, we may see even more disruption from breakthroughs in quantum computing, which would facilitate calculations that are beyond the capabilities of traditional computers. While enabling exciting new products, these computers could undo even some new technologies. For example, they could render current standards in cryptology obsolete, potentially affecting communication and privacy on a global level. And this is just one aspect of threats to cyber security, an issue that is becoming increasingly important, given that almost all essential public services and private information are now online.
Accelerated pace

Digitalization will also transform people’s jobs. The jobs of up to one-third of the US workforce, or about 50 million people, could be transformed by 2020, according to a report published last year by the McKinsey Global Institute. The study also estimates that about half of all paid activities could be automated using existing robotics and artificial and machine learning technologies. For example, computers are learning not just to drive taxis but also to check for signs of cancer, a task currently performed by relatively well-paid radiologists. While views vary, it is clear that there will be major potential job losses and transformations across all sectors and salary levels, including groups previously considered safe from automation.

As the McKinsey study underscores, after a slow start, the pace of transformation continues to accelerate. The ubiquitous smartphone was inconceivable to the average person at the turn of the 21st century. Now, more than 4 billion people have access to handheld devices that possess more computing power than the US National Aeronautics and Space Administration used to send two people to the moon. And yet these tiny supercomputers are often used only as humble telephones, leaving vast computing resources idle.

One thing is certain: there’s no turning back now. Digital technology will spread further, and efforts to ignore it or legislate against it will likely fail. The question is “not whether you are ‘for’ or ‘against’ artificial intelligence—that’s like asking our ancestors if they were for or against fire,” said Max Tegmark, a professor at the Massachusetts Institute of Technology in a recent Washington Post interview. But economic disruption and uncertainty can fuel social anxiety about the future, with political consequences. Current fears about job automation parallel John Maynard Keynes’s worries in 1930 about increasing technological unemployment. We know, of course, that humanity eventually adapted to using steam power and electricity, and chances are we will do so again with the digital revolution.

The answer lies not in denial but in devising smart policies that maximize the benefits of the new technology while minimizing the inevitable short-term disruptions. The key is to focus on policies that respond to the organizational changes driven by the digital revolution. Electrification of US industry in the early 20th century benefited from a flexible educational system that gave people entering the labor force the skills needed to switch from farm work as well as training opportunities for existing workers to develop new skills. In the same way, education and training should give today’s workers the wherewithal to thrive in a new economy in which repetitive cognitive tasks—from driving a truck to analyzing a medical scan—are replaced by new skills such as web engineering and protecting cyber security. More generally, future jobs will probably emphasize human empathy and originality: the professionals deemed least likely to become obsolete include nursery school teachers, clergy, and artists.

One clear difference between the digital revolution and the steam and electricity revolutions is the speed at which the technology is being diffused across countries. While Germany and the United Kingdom followed the US take-up of electricity relatively quickly, the pace of diffusion across the globe was relatively slow. In 1920, the United States was still producing half of the world’s electricity. By contrast, the workhorses of the digital revolution—computers, the Internet, and artificial intelligence backed by electrical power and big data—are widely available. Indeed, it is striking that less-developed countries are leading technology in many areas, such as mobile payments (Kenya), digital land registration (India), and e-commerce (China). These countries facilitated the quick adoption of new technologies because, unlike many advanced economies, they weren’t bogged down in preexisting or antiquated infrastructure. This means tremendous opportunities for trial and error to find better policies, but also the risk of a competitive race to the bottom across countries.

While the digital revolution is global, the pace of adaptation and policy reactions will—rightly or wrongly—be largely national or regional, reflecting different economic structures and social preferences. The revolution will clearly affect economies that are financial hubs, such as Singapore and Hong Kong SAR, differently than, for example, specialized oil producers such as Kuwait, Qatar, and Saudi Arabia. Equally, the response to automated production technologies will reflect possibly different societal views on employment protection. Where preferences diverge, international cooperation will likely involve swapping experiences of which policies work best. Similar considerations apply to the policy response to rising inequality, which will probably continue to accompany the gradual discovery of the best way to organize firms around the new technology. Inequality rises with the widening of the gap in efficiency and market value between firms with new business models and those that have not reorganized. These gaps close only once old processes have been largely replaced.

Education and competition policy will also need to be adapted. Schools and universities should provide coming generations with the skills they need to work in the emerging economy. But societies also will need to put a premium on retraining workers whose skills have been degraded. Similarly, the reorganization of production puts new strains on competition policy to ensure that new techniques do not become the province of a few firms that come first in a winner-take-all lottery. In a sign that this is what is already happening, Oxfam International recently reported that eight individuals held more assets than the poorest 3.6 billion combined.

The railroad monopolies of the 19th century required trust busting. But competition policy is more difficult when future competitors are less likely to emerge from large existing firms than from small companies with innovative approaches that have the capacity for rapid growth. How can we ensure that the next Google or Facebook is not gobbled up by established firms?
Avoiding a race to the bottom

Given the global reach of digital technology, and the risk of a race to the bottom, there is a need for policy cooperation similar to that of global financial markets and sea and air traffic. In the digital arena, such cooperation could include regulating the treatment of personal data, which is hard to oversee in a country-specific way, given the international nature of the Internet, as well as intangible assets, whose somewhat amorphous nature and location can complicate the taxation of digital companies. And financial supervisory systems geared toward monitoring transactions between financial institutions will have trouble dealing with the growth of peer-to-peer payments, including when it comes to preventing the funding of crime.

The importance of cooperation also implies a role for global international organizations such as the World Bank and the International Monetary Fund. These institutions, with their broad membership, can provide a forum for addressing the challenges posed by the digital revolution, suggest effective policy solutions, and outline policy guidelines. To be successful, policymakers will need to respond nimbly to changing circumstances, integrate experiences across countries and issues, and tailor advice effectively to countries’ needs.

The digital revolution should be accepted and improved rather than ignored and repressed. The history of earlier general-purpose technologies demonstrates that even with short-term dislocations, reorganizing the economy around revolutionary technologies generates huge long-term benefits. This does not negate a role for public policies. On the contrary, it is precisely at times of great technological change that sensible policies are needed. The factories created by the age of steam also ushered in regulations on hours of work, juvenile labor, and factory conditions.

Similarly, the gig economy is causing a reconsideration of rules: for example, what does it mean to be self-employed in the age of Uber? To minimize disruptions and maximize benefits, we should adapt policies on digital data and international taxation, labor policies and inequality, and education and competition to emerging realities. With good policies and a willingness to cooperate across borders, we can and should harness these exciting technologies to improve well-being without diminishing the energy and enthusiasm of the digital age.

MARTIN MÜHLEISEN is director of the IMF’s Strategy, Policy, and Review Department.