Richer Poorer

Widening differences in wealth generation between and within urban and rural communities extends the gap between rich and poor, and the have and have-nots – but they need each other

According to the UN, in recent years the gap between richer and poorer households has widened in most areas of the world despite strong economic growth that has created millions of jobs. This has applied not only in the gaps between some rich countries and some poor ones, but also within many nations: The rich / poor gap in the US has increased just as it has in Brazil. This has been driven by a number of factors, many of which are increasing rather than decreasing going forward. Urbanisation is perhaps the most significant issue. The ways in which governments use taxation and spending on social activities to redistribute wealth show little sign of changing; nor do the effects of access to education as a catalyst for greater differentiation of opportunity. Over the next decade, many experts across the world see that the gap between the haves and the have-nots will grow, even though there will be ever more inter-dependency, in some areas, between wealth-generation across the social spectrum. Read more

Popularity: 2% [?]

Mobile Money

Proven systems built on mobile connectivity and increasingly flexible means of financial exchange provide a tipping point in the shift towards the cashless society

The ability to replace cash with digital money transferred by mobile phone has been one of the big ‘next big things’ for well over a decade now. Proponents have been predicting widespread use of mobile payments for a range of activities from transportation ticketing and buying a can of Coke for years and have seen that this would all take off in the technology savvy European markets, probably led by partnerships between banks, IT firms and mobile operators. What few recognised was that regulation and willingness by consumers to make the shift would be such a barrier and what even fewer saw was that serving the unbanked in Africa would be the catalyst for change. Today, with more money flowing around Africa by mobile phone, the adoption of micro-payment systems spreading globally and associated regular coverage of the impacts in the FT, WSJ and the Economist, many now believe that we really are at a point of change. Read more

Popularity: 3% [?]

Local Currency

The revitalisation of bartering, decreased trust in banks and increasing avoidance of higher taxation broadens the adoption of alternative stores of value for trade in regional and virtual communities

Allied to the changing role of money globally, several commentators see a rise in the wider adoption of what have been labelled as local currencies. Over the next decade, more people will probably prefer to use more regional, local or even personal currencies. Local currencies have been attracting a lot of attention and there is history in this space ranging from Local Exchange Trading Systems, frequently derided as ‘babysitting tokens’, to Time Banks and so on. However, the next generation of money may be more about so called ‘alternative currency’ rather than a return to the approaches of the past.

There have been many variants of local currencies within specific areas for some time but most of these have been limited in terms of scalability. For example, Disney Dollar banknotes are issued and accepted in Disney theme parks and carry pictures of characters including Mickey Mouse, Pluto and Goofy. In South Korea, Samsung employees have also been partially paid in the form of company currency which can be spent in Samsung owned stores. Equally but less officially, within prisons cigarettes have been a long standing form of currency. Read more

Popularity: 2% [?]

Third Global Currency

A great event in Delhi on Monday focused in deep on the issue of the future of currency and built on the initial view. Here is where we are after this discussion:

With the rise of Asia, a decline of the Euro and greater debt, an alternative to the US dollar as the world’s reserve currency will emerge – most likely is a parallel broad basket ACU currency Read more

Popularity: 6% [?]

Future of the Village – Part One

Much of what has been discussed in the Future Programme so far has focused on many of the macro drivers of change and their impact within large centres of population. Given trends such as imbalanced population growth, increasing urbanisation and pervasive connectivity, it is worth asking what the key changes will be outside the cities? To address this question, three workshops are taking place in villages around the world to bring together a different perspective on the emerging future – one in Ghana, one in India and one in the UK. The first of these took place on Saturday in the Red Lion pub in Brightwell-cum-Sotwell – a typical Oxfordshire village around an hour from London. Using a number of key topics from the initial perspectives as stimulus, we discussed the probable impacts and implications of the changes the next decade will bring. Read more

Popularity: 11% [?]

End of Chimerica

Linking across numerous topics from a future influence perspective, but also with specific influence to the future of currency, a new working paper from HBS is well worth a look. It compares the current US / China relationship with the previous export led rise of Germany and Japan. As one would expect, Niall Ferguson and Moritz Schularisk have some useful comments to add to the mix.

Some key points include the following:

“Like many another marriage between a saver and a spender, Chimerica was not destined to last. We believe that the financial and economic crisis of 2007-9 has put the marriage on the rocks. The reduction in the imbalance between the United States and China – in short the dissolution of Chimerica – is now indispensable if equilibrium is to be restored to the world economy.”

“The financial crisis of 2007-2009 marks the beginning of the end of the Chimerican relationship. First, the Chinese authorities understand that heavily indebted American consumers cannot be relied upon to return as buyers of Chinese goods on the scale of the period up to 2007. Second, the Chinese dislike their exposure to the U.S. dollar in the form of close to two trillions of USD-denominated reserve assets.”

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Popularity: 17% [?]

The Next Decade of Monetary Union

The future of currency discussion has focused on the benefits to be gained from an Asian version of the Euro as a parallel system that could become the world’s third global reserve currency and, in so doing, help balance economic influence to reflect the new global order. In its leader editorial today the Financial Times has looked at the next decade of monetary union and argues that the eurozone itself needs further substantial reforms to prosper. Although in recent years “the eurozone has been a beacon of stability, it must now cope with fiscal, credit and competitiveness crises” and these are increasingly evident.

  Read more

Popularity: 10% [?]

Currency – Global Challenges

I see that greatest challenge for the next decade to be a fundamental one – what should the world’s currencies be? Over the last century we have seen the rise of the US dollar as the primary unit of global currency which we use to measure and value much of our relative individual, organisational and national wealth and investments, and through which we exchange, trade and price commodities, businesses, goods and services. The status of the US dollar as the global reserve currency is however under enormous pressure and, with the rise of new currency blocs in the world, many have been asking whether the Euro will emerge as an alternative reserve currency. The 2008-9 financial crisis put enough pressure on the US currency to such an extent that many now see that we need an alternative, but the question is what? Will the US remain as the pre-eminent financial power or will its influence secularly decline stimulated by the recent crisis and its inability to achieve a major technological breakthrough or exercise the necessary conditions for it to remain a reserve currency? And, if we go for an alternative, why would this be the Euro? Read more

Popularity: 7% [?]

Currency – Options and Possibilities

It is certain that for the next decade the US dollar will remain as one of the reserve currencies. As such it will still be a key currency for foreign exchange and a transaction currency for international trade and investments in 2020. The US dollar will continue to be integrated into, and influential upon, the world economy. Read more

Popularity: 5% [?]

Currency – Proposed Way Forward

Over the next decade, we will move unmistakably towards a multi-polar world which will be characterized by a much broader consultative process that extends to a larger number of jurisdictions. Greater coordination amongst major economies on financial sector regulation will be needed, and this can be facilitated by the newly enlarged Financial Stability Board based in Basle. At its core, the coordination will have to be aimed at achieving greater trust in the transparent and universally applicable working of the financial system. This will especially need to dispel the fear that the global financial system has a bias in favour of any one country or group of countries or group of dominant institutions. As the G20 has superseded the G7, financial management of the global system must become more equable: Within this it is possible that a more prominent role is given to Special Drawing Rights – the international reserve assets managed by the IMF that currently amount to over $300 billion. It was used to boost global liquidity in 2009, but additional ongoing and arguably more proactive applications should be made more practical. Read more

Popularity: 5% [?]

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