1 Obama says no way back from globalization (BBC) US President Barack Obama has made a strong defence of globalisation as he arrived in Germany on his final visit to Europe before leaving office. In a joint article, Mr Obama and German Chancellor Angela Merkel said that with the global economy developing faster than ever, co-operation was vital.
Mr Obama arrived in Germany from Athens where he had warned of threats to modern democracy. He is seeking to calm unease following the election of Donald Trump. The two leaders voiced support for the proposed Trans-Atlantic Trade and Investment Partnership (TTIP) between the US and the EU.
By contrast, Mr Trump is a fierce critic of global free trade agreements and welcomed the UK’s decision in June to leave the EU. In Athens, Mr Obama acknowledged that globalisation had created a “sense of injustice” and a “course correction” was needed to address growing inequality.
2 RBS may be fined $12bn for mis-selling (Jill Treanor in The Guardian) Royal Bank of Scotland could face a penalty of more than $12bn to settle a decades-old mis-selling scandal in the US, the body which controls the taxpayer stake in the bank has said.
The bailed-out bank has not set aside any money for a settlement with the US Department of Justice (DoJ) over the mis-selling of residential mortgage-backed securities (RMBS) before the 2008 banking crisis.
Uncertainty about the scale of the penalty is one of the reasons cited by the chancellor, Philip Hammond, for abandoning any hope of further reducing the taxpayer stake, which currently stands at 73%. However, the chairman of UK Financial Investments laid out the possible financial impact of the looming fine at a hearing of the Treasury select committee on Wednesday.
James Leigh-Pemberton pointed to negotiations under way between the DoJ and Deutsche Bank, which have started at $14bn. He said the RBS fine “might be $5bn, it might be $12bn”. He added: “Based on what happened to Deutsche Bank it could be more.”
3 Behind India’s rupee shake-up (Sarosh Bana in Straits Times) The decision by India’s Narendra Modi government to abruptly demonetise high-value currency aims to combat the twin menaces of a crippling shadow economy and terrorist financing that have been undermining the nation’s economy and security.
India’s parallel economy is estimated to be worth $445.8 billion, amounting to a fifth of the country’s $2.02 trillion gross domestic product and surpassing the economies of countries such as Thailand and Argentina.
Last week’s radical step, however, sucked 22 billion of the 500-rupee and 1,000-rupee denomination banknotes – worth over 14 trillion rupees – out of the economy, forcing those within the law to rush to banks to trade in the notes for limited exchanges.
The 7.85 trillion rupees’ worth of the scrapped 500-rupee notes and 6.33 trillion rupees’ worth of the 1,000-rupee notes constituted an overwhelming 86 per cent of the value of Indian currency in circulation. Their combined volumes also accounted for just over 24 per cent of the overall 90.3 billion banknotes of all denominations in circulation.
India’s “black economy” – economic activities outside formal banking channels – is generated significantly from bribery that is rampant in government. Much is routed through gold, real estate, the film industry, the informal sector and businesses that flourish on cash transactions.
Mr Modi also specified that the demonetisation would help clamp down on the use of hawala for terror funding. The demonetisation is also intended to flush out fake Indian currency, much of which is reportedly counterfeited and pushed into India by Pakistan to fund cross-border terrorism and also to undermine the Indian economy.
The Prime Minister now warns of further measures against black money, following demonetisation. In a public address, he asked his audience: “You tell me, whether money that has been stolen should be exposed or not?” There was a resounding “Yes”.