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    Libra – a global challenger in payments and for central banks?overlay
    July 22, 2019
    EU Monitor
    Facebook’s Libra project aims to establish both a private digital currency backed by a basket of hard currencies and a global payment network. It is thus challenging many established players in the financial system, including central banks, credit institutions and payment providers. Facebook can integrate Libra services into its digital platforms and benefit from strong network effects. In Europe, Libra would enter a competitive but fragmented digital payments market. As a currency, Libra will carry a foreign exchange risk for Europeans. But if the ECB drove interest rates deeply below zero, Libra could offer an easy digital way out. The flipside, though, would be a loss of sovereignty for Europe.
    Cash empowers the individual through data protectionoverlay
    July 2, 2019
    Talking Point
    By providing a high degree of privacy in payments, cash helps to slow the growing information asymmetry between consumers and companies as well as between citizens and public authorities. As knowledge about your counterparty is power, privacy is crucial for individuals to safeguard their position when dealing with organisations which are more powerful than a single person.
    Video: Global digital leadership: A two-horse race?overlay
    March 26, 2019
    Videos
    In the competition for global leadership in technologies like artificial intelligence, most observers see a two-horse race – between China and the United States. But what about Europe? Can it ever catch up to the galloping favorites? It won’t be easy. The digital economy in the United States has big advantages: a large domestic market, a risk-taking investment culture, and plenty of innovative companies and world-class universities. US tech giants were first-movers out of the gates, and used the network effects of the platform economy to dominate not only the US, but many other markets worldwide.
    Europe
    Digital politics: AI, big data and the future of democracyoverlay
    August 22, 2019
    EU Monitor
    The digital transformation has enriched societal discourse through new forms of multilateral communication, but it has also amplified the spread of misinformation, echo chambers and propaganda, offering authoritarian states new means of surveillance and control. How democracies approach this challenge will be a key factor in their performance, given intensifying competition among political systems.
    Artificial intelligence in banking: A lever for profitability with limited implementation to dateoverlay
    June 4, 2019
    EU Monitor
    Artificial intelligence (AI) is a significant step forward in the digitalisation and transformation of modern businesses. Investors are lining up to be part of the imminent change. AI attracted USD 24 bn in investments globally in 2018, a twelvefold increase since 2013. Within Europe, Germany, France and the UK are the frontrunners in experimentation and in the implementation of AI. Similar to earlier examples of information technology (IT) implementation in financial services, AI promises great efficiency gains and potential revenue increases and its potential contribution to bank profitability should not be underestimated.
    Still on a diet: European banks continue to retreatoverlay
    May 23, 2019
    Talking Point
    Shrinkage – and no end in sight: in the first quarter of the year, the European banks once more saw revenues and costs alike decline compared to 12 months ago (-2% each). Non-interest income was particularly weak. As a result, profitability dipped, with loan loss provisions also rising, albeit from very low levels. Banks tried to make up for the revenue loss by taking more risk and expanding their balance sheets. Total assets and risk-weighted assets both increased by 4%. Consequently, the average CET1 capital ratio fell 0.4 pp yet remained in comfortable territory.
    Germany
    Only a technical recession? It is all about risks!overlay
    August 19, 2019
    Focus Germany
    We see Germany in a technical recession, as we expect another ¼% GDP drop in Q3. Our forecast for 2019 is now 0.3%. Given no indication for a rebound we lowered our 2020 forecast to 0.7%. We acknowledge these revisions do not properly account for the recent accumulation of risks. Given the increasingly fragile state of the global economy, the realization of one or more risks could easily push the economy into a completely different scenario, where growth revisions of a few tenths of a percentage point will not be sufficient. (Also in this issue: German automotive industry, chemical industry, house prices, corporate lending, the view from Berlin, digital politics.)
    A looming black-green coalition: Painful compromises neededoverlay
    July 8, 2019
    Focus Germany
    In case of a snap election in Germany, a CDU/CSU-Greens coalition could be an option. Given both camps' radically different political positions in many areas, such a coalition would require both to make significant compromises. A black-green government would need to direct its focus and its available financial resources to climate protection and the energy transition. Corporates and consumers would have to bear considerable costs. This also spells a dilemma for fiscal policy. A larger share of government spending would necessarily have to be allocated to providing subsidies and mitigating the social impact of a quicker energy transition. Citizens and corporates cannot hope for major tax relief. (Also included in this issue: German goods exports, German industry, labour market, automotive business cycle.)
    Marked decline in the German labour force despite substantial immigrationoverlay
    July 5, 2019
    Chart in Focus
    In Germany, a decline in the labour force is inevitable. This can be seen from the recently published official 14th population projection. In this projection, the Federal Statistical Office took into account the past years‘ massive immigration. The impact is impressive. In the next few years, the number of inhabitants will increase by about 1 million to approx. 84 million – a new record high. Under plausible assumptions regarding future immigration (i.e. in the volume close to the past 20-year average – 268.000 p.a.) this number will decrease only slightly in the next two decades.
    Thematic
    What are you having for dinner?overlay
    July 4, 2019
    Thematic Research
    From click & collect to at-home delivery to meal kits to other nascent options like autonomous vehicles, there’s an explosion of more convenient ways by which your supermarket is trying to sell you bananas.
    The 12 'Fed Listens'overlay
    June 25, 2019
    Thematic Research
    For the first time ever the Fed is undertaking a thorough academic review of its policy strategy, tools, and communication practices. The reviewers are some 30 academic experts on monetary policy and macroeconomics. Listen to Peter Hooper, Global Head of Economic Research, discussing the background to the review, the low-rate monetary policy and what a downturn could mean for financial stability.
    Monthly Chart Book: June Economic Chart Book (Snapshot)overlay
    June 7, 2019
    Thematic Research
    Key highlights from Torsten Slok’s, Chief Economist, Monthly Chart Book detailing macro and economic drivers impacting markets today.
    The House View
    Global monetary medicine on the wayoverlay
    July 23, 2019
    The House View - Snapshot
    Read on for our discussion of the recent shift in central bank policy and the implications for the global economy. We also outline key recent/upcoming political developments (new European leadership, Brexit, trade war, etc.), major risks in 2019, and update our cross asset market views.
    Surveying slower growthoverlay
    June 21, 2019
    The House View - Snapshot
    Read on for our recap of the evolving macro outlook and the shifting trends in monetary policy. We also outline key recent/upcoming political developments (Brexit, trade war, etc.), major risks in 2019, and update our cross asset market views.
    Trade war heat is onoverlay
    May 17, 2019
    The House View - Snapshot
    Read on for our recap of the global macro outlook, key recent/upcoming political developments (Brexit, trade war, EU politics, etc.) and major risks in 2019. Also, find our views on the Fed, the ECB, and all major asset classes.
    Konzept
    How 5G will change your lifeoverlay
    July 10, 2019
    Konzept (Engl.)
    The global 5G rollout has just begun, but behind the hype lies uncertainty and the potential for unintended consequences. This edition of Konzept seeks to answer many unresolved questions. First and foremost, we explain the tangible ways in which 5G will affect you, including the smartphone impact, the future of television, predictive maintenance, autonomous cars, smart cities and more. We also examine the geo-political disagreements, emerging market economics, and argue that the financial cost of distraction is greater than expected.
    Politics, populism and poweroverlay
    January 17, 2019
    Konzept (Engl.)
    Many investors think of themselves as apolitical, however, recent market turbulence has reinforced just how much politics can affect business and finance. This issue of Konzept offers incisive opinion on some pressing political issues, including the trade war between China and the US, next year’s US presidential election, European populism, technology regulation, Brexit, and more. We also examine how the latest developments in artificial intelligence and machine learning are helping investors forecast the market impact of political events.
    Big data shakes up ESG investingoverlay
    October 4, 2018
    Konzept (Engl.)
    Investors have long attempted to incorporate ESG information into their stockpicking decisions, however, ESG funds have underperformed the market. This issue shows how the latest developments in artificial intelligence and machine learning are finally giving investors the upper hand. Big data catches out ‘greenwashing’ and provides forward-looking market signals that outperform the market. This is a boon for investors who want to determine how ESG issues affect the fair value of stocks.
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