BANK OF ENGLAND TO COLLABORATE WITH OTHER CENTRAL BANKS ON DIGITAL CURRENCIES

The Bank of England will collaborate with the central banks of Japan, Sweden, Switzerland and the Eurozone to research and assess the possibility of issuing central bank digital currencies (CBDCs). In a joint statement, the central banks outlined their intention to investigate ?cross-border interoperability and the sharing of knowledge on emerging technologies? (Reuters, online only). Sir John Cunliffe, BoE deputy governor, will co-chair the group. The move has come amidst increased uncertainty surrounding the regulatory, legal and operational challenges of private-sector crypto-currencies, such as Facebook's Libra (The Guardian, online only).

Additionally, the UK government will continue with plans to introduce a digital services tax, despite US threats to impose tariffs. A spokesperson for Boris Johnson stated that the UK will implement a digital services tax which is ?proportionate? (Financial Times, £, p1). Finally, large technology companies will be subject to new rules designed to protect children from harmful content (The Telegraph, £, p1).

SUSTAINABILITY AND CLIMATE CHANGE DOMINATE WORLD ECONOMIC FORUM AGENDA

At the 50th World Economic Forum (WEF) in Davos, discussion between investors, companies and public officials has been focused on the need to expedite action to achieve environmental goals. Mark Carney, Governor of the Bank of England, claimed that a ?fundamental reshaping of the system is underway?, with implications for corporate profits and entire industries becoming obsolete. Similarly, Andrew Liveris, a board member of Saudi Aramco, highlighted that the days of fossil fuels ?are numbered? and that the business world has a ten-year window to transition to green alternatives (The Times, £, p13). Major financial services spokespeople echoed the calls for a transition towards sustainable goals (The Financial Times, £, p7).

NEWS IN BRIEF

New figures released by the Office for National Statistics (ONS) show that unemployment rates have remained at their lowest since 1975, dampening expectations of an imminent interest-rate cut by the Bank of England (City A.M., print only, P1). 

Chancellor of the Exchequer Sajid Javid has reiterated his position that there will be British divergence from EU rules and regulation, creating further concerns among businesses looking for high levels of market access (The Telegraph, online only).

Valdis Dombrovskis, EU Commissioner for financial services, has stated that several EU member-states have failed to fully implement the Fifth Anti-Money Laundering Directive by the 10 January deadline, threatening them with ?infringement procedures? next month (Bloomberg, online only). 

Economists such as Carys Roberts, Philip Shaw and Kallum Pickering have challenged the UK government's ambitious new GDP growth targets of over 2.5 per cent, citing stagnant productivity, insufficient business investment and an ageing population (Financial Times, £, p3).

WHAT THE COMMENTATORS SAY

Adam Tooze, economic historian and author of ?Crashed: How a Decade of Financial Crises Changed the World?, writes in the Financial Times (£) that it is unsurprising climate change is among the top agenda items at the World Economic Forum this  year, and that many of the world's leading central banks have come out in favour of a ?greening of finance?.

Tooze highlights that asset managers are increasingly loading portfolios with sustainable investments, and in Europe not having a climate agenda marks you as belonging to the political fringe.

However, there has been a powerful current on politicised climate denial. Tooze says enthusiasm for sustainable assets is not just a matter of responsible investing, for activists it offers a way past the political gridlock.

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