By Clifford Hwang
After
targeting almost a billion dollars, hackers stole $81
million dollars from the Bangladesh Bank, in one of the largest cyber
heists in history. The money trail disappears in the Philippines. Although the
Philippine government enacted anti-money laundering schemes, the Philippines
remain conducive to money laundering mainly due to two
laws: the bank deposit secrecy laws and the anti-money laundering laws. The
bank deposit secrecy laws, one of the strictest in the world, allows bank
deposits to remain confidential, and the anti-money laundering laws, which
require disclosures to prevent such crimes, do not cover casinos. Mix in a
variety of other factors such as corruption, trafficking in persons, narcotics
trade, and high volume of remittances from Filipinos living abroad, the
Philippines remains one of the easiest places to launder money.
By Clifford Hwang
Often considered a new method of
fundraising for small businesses and entrepreneurs, crowdfunding has great
potential because it fills the financing gap that bank will not fill. On the other hand, crowdfunding and other
internet based financing is susceptible
to fraud, especially if the majority of investors are not financially
savvy. Cognizant of this potential, many countries around the world have
enacted legislation to regulate crowdfunding and give opportunities to
investors to buy shares in smaller companies.
For example, in the United States, under the SEC’s final
crowdfunding rules that will take effect on May 19, 2016, investors will
have the ability to buy equity through crowdfunding. In Asia, China
will also be regulating crowdfunding platforms. In a few days, Belgium will be one of the
first countries to allow crowdfunded securities to trade.
By Clifford Hwang
Beijing has promoted internet finance in the past few years
as a way to make affordable credit available to more businesses. With the explosion
in internet financing, the development of regulation has been slow. Since its founding in 2014, Ezubao defrauded
more than 900,000
people out of the equivalent of $7.6 billion. Ezubao promised investors with returns as
high as 15 percent, but nearly all of the investment products were fake. Some of the most worrying aspects of the
scheme was that Ezubao was able to grow this big in China and with what seems
like government support, which raises corruption concerns. Read more about Ezubao here.
By Clifford Hwang
On January 29, 2016, the Bank of Japan set negative
interest rates, cutting the interest rate to -0.1%. The European Central Bank along with central
banks in Denmark, Sweden, and Switzerland have previously cut interest rates to
below zero. Negative interest rates in
effect make it costly to
save money and encourage spending, and may be considered a
useful short-term tool for central banks.
It will be interesting to see how low interest rates can go, and what
effects they will have on banking industry.
In a world of negative interest rates, one must also wonder what effects
these interest rates will have on lending and how those deals will be
structured. Read more about negative interest rates at BBC.
By Clifford Hwang
For quite some time, China’s economic presence was mainly
found in international trade. More recently, China has become a major player in
international finance. China
invests aggressively to promote its currency and secure resources, and
soon, the renminbi is expected to be anointed as a global reserve currency.
Amongst the many reasons for the rise of China’s financial prowess, one may be
due to the international
sanctions the United States and the European Union have placed on countries
such as Russia and Iran. China is never the target of sanctions, and it
usually reluctantly follows the U.S. and the EU sanctions; it benefits when the
targets of the country must turn to China for an economic lifeline. That is
when China is able to benefit handsomely by negotiating very favorable terms. More
on this perspective can be read here.
By
Clifford Hwang
Chinese President Xi
Jinping first proposed the launch of a China-led investment in 2013, and after
two years of development, the AIIB is now expected to launch at the end of the
year. The AIIB, in addition to institutions like the World Bank and the Asian
Development Bank, is expected to provide funding for various infrastructure
projects in Asia with its capital of $100 billion. With the growing need of
infrastructure investment coupled with previous inadequate funding levels, the
AIIB is expected to partially fill the investment gap in Asia, which is
estimated to be around $800 billion a year.
By Clifford Hwang
Over the past year, the heirs of Lotte, South Korea’s
fifth-largest conglomerate, have been embroiled in a winner-takes-all battle
for control of the company. When the elder heir was first kicked out of
management, he enlisted the help of the chairman and other family members to
regain power. Over the summer, the younger heir dethroned their father and, for
now, has consolidated control of the conglomerate. Such stories are all too
commonplace for South Korea’s family-run conglomerates, known as chaebol, and such problems may pose
serious problems for the South Korean economy. The volatility created by family
feuds and complex business structures can be alarming to investors, who are
calling for better corporate governance. To learn more about the feud, read the
full
article online at the New York Times.
By Clifford Hwang
On his first visit to the United States, President Xi
Jinping of China broached a variety of topics including cybercrime,
U.S.-China
relations, and NGOs.
At his first stop in Seattle, the Chinese President noted that foreign
organizations must comply with the law when carrying out activities. This comes
amidst the background of fears of crackdown on foreign non-governmental
organizations. Recently, more than 130 lawyers have been hauled in for
questioning, and there is an expectation that a law covering operation of
foreign charities and business associations will be passed this year. Drafts of
this law have elicited concern that references to “security” will give broad
discretion to the government. For more information see the full article here.
By Clifford Hwang
The slump in the Chinese stock market and the slowdown in
the growth of emerging market economies are worrying
leaders across the world. Trade
figures show international trade is slowing and even shrinking. Amidst this
backdrop, various economies continue to engage in quantitative easing to
control inflation. However, an article from BBC suggests
that perhaps the slowdown in trade and the problems in various emerging markets
will lead to or is currently leading to a contraction in globalization.
Globalization once led to controlled inflation; in a less open global economy,
it could lead to higher inflation rates in the long run. Read more about the
story on BBC.
