Facebook tests mobile payments; Fed futures signal flat rates

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Damage control
In an “unprecedented step,” the European Central Bank took control of Banca Carige, Italy’s 10th largest bank, a move that “spotlighted the risks to the eurozone’s financial system from political chaos in Rome and a sputtering economy. It was the first time the ECB has appointed new leadership for a commercial bank since it acquired expanded powers in 2014 to supervise lenders.”

“It’s not a bank large enough to cause systemic crisis, but we have seen that even small banks can cause huge problems,” said a former chief economist at Italy’s Treasury. Financial Times here and here, New York Times

Wall Street Journal

Doing a 180
Investors now believe the Federal Reserve won’t raise interest rates this year, “a dramatic shift in market sentiment” and “a sign of diminished confidence in the economy.” Fed funds futures Wednesday showed an 87% likelihood that interest rates will end this year at or below their current level. By contrast, two months ago futures prices showed a 90% probability that rates would move higher in 2019.

“The shift in investor sentiment has occurred even as data continues to suggest that the economy is growing at a robust pace,” the paper says. “This sets up a tension between the central bank and investors, many of whom would prefer looser monetary policy.”

Financial Times

WhatsApp, Facebook’s messaging app, is testing mobile payments in India. The WhatsApp Pay app, which transfers funds directly between users’ bank accounts in real time, "began testing its payments feature in February last year," the paper says, and processes around a million transactions each month. “For WhatsApp, and Facebook, the payments trial in India is the first step towards tapping a hugely valuable new channel of data: how people are spending their money.” And the economic opportunity is huge, with more than a billion mobile phone users in the country and the digital payments market expected to reach $1 trillion in five years.

Separately, American Banker says, "Banks need to stake out a presence on platforms that have nothing to do with banking."

Too close for comfort
Denmark’s government is looking to strengthen the country’s Financial Supervisory Authority to make sure the regulator doesn’t get too cozy with the banks it’s supposed to be overseeing, a problem that may have led to the massive money laundering scandal at Danske Bank, the country’s largest bank. Rasmus Jarlov, Denmark’s business minister, told the paper the government will be looking at “how we can ensure that we don’t have ties that are too close between the financial sector and the authorities.”

Hang in there
San Francisco-based Pantera Capital Fund, which specializes in cryptocurrencies and tokens, is urging investors not to give up despite last year’s massive losses. “We firmly believe that tokens will achieve real world usage. In fact, it’s already starting to happen in the depths of this bear market,” the fund’s managers say. But "it could take two to three years for blockchain networks to achieve scale, which would help digital tokens become more widely used.” Last year the fund predicted that bitcoin could reach $50,000 this year, “a far cry from its current level around $3,800.”


“I think it’s safe to say it’s pretty important for us to launch payments in India.” — A person close to WhatsApp about the Facebook unit’s testing of mobile payments in the Asian country.

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