Finance

The European Central Bank is now making the economic case for decarbonisation. Not as climate policy. As monetary policy. Frank Elderson, ECB board member, argues in the Financial Times that Europe's dependence on imported fossil fuels is a structural threat to price stability (👉 https://removebg.techtaleempakistan.pk/_rb_origin/lnkd.in/eKWWjKbh). The data is damning: energy price shocks pushed euro area inflation to 10.6% in October 2022. Every geopolitical tremor in the Middle East shows up in European energy bills. And the ECB is caught in an impossible bind: tighten to fight inflation and deepen the slowdown, ease to support growth and entrench inflation. The solution is not better forecasting models or finetuned monetary policy. It is cheaper energy. Spain shows what is possible. Wholesale electricity prices in early 2024 were approximately 40% lower than they would have been had wind and solar generation remained at 2019 levels ( 👉 https://removebg.techtaleempakistan.pk/_rb_origin/lnkd.in/edXgxh9q). Once the infrastructure is built, the energy itself is virtually free. Volatile global commodity markets simply become less relevant. Elderson is explicit: €660 billion per year in clean energy investment sounds large. But Europe already spends nearly €400 billion annually on fossil fuel imports, money that leaves the continent and buys geopolitical vulnerability. Analysis in the UK shows that for every pound invested in sustainable energy, benefits outweigh costs by a factor of 2.2 to 4.1 ( 👉 https://removebg.techtaleempakistan.pk/_rb_origin/lnkd.in/emEXVfiw). This is precisely what I argued in my piece for Triodos a few weeks ago: Europe's crisis response has been backwards. We keep treating energy dependence as a shock to manage rather than a structural problem to fix. (👉https://removebg.techtaleempakistan.pk/_rb_origin/lnkd.in/ehFqA6iY) The ECB cannot decarbonise Europe. What it can do is name the conditions: keep the ETS, mobilise capital toward renewable capacity, strip out fossil fuel subsidies, and stop confusing cheap fossil fuels with affordable energy. If people need help with energy costs, target it: don't suppress the price signal that drives the transition. The cheapest energy is the energy we no longer have to import.

It might not feel like it, but Britain is not unique in facing difficult budget choices. France and Germany have also seen governments destabilised or fall over attempts to pass budgets. Low growth, ageing populations and rising demands on the welfare state are putting pressure on public finances right across the continent. What is striking, however, is how some of the countries that were once held up as cautionary tales during the eurozone crisis (Portugal, Italy, Ireland, Greece and Spain) have responded. They undertook painful reforms: raising retirement ages, restructuring their welfare systems, making labour markets more flexible and, in some cases, linking pensions to life expectancy. As a result, they are now seeing stronger growth and lower borrowing costs than many of their northern neighbours. By contrast, there has been less urgency in the UK this past year. We are already on course to spend far more on benefits and debt interest in the next decade, even before additional pressures on the health and welfare systems are factored in. Simply opting for higher spending without confronting the underlying structure of the state is not a sustainable strategy. The lesson from Europe is not that reform is easy or popular. It rarely is. But it is better to confront these choices on your own terms than to wait for markets or external shocks to force them upon you. That is the debate we need to have in Britain: how to protect the most vulnerable while reshaping the welfare state and public spending so that our economy can grow and our finances remain credible. Read more in my column for today's Sunday Times here: https://removebg.techtaleempakistan.pk/_rb_origin/lnkd.in/eTuWcNBK

Media is hiding red flags in boAt’s IPO papers, even stuff which its own auditors have highlighted 🚨🚨 See, when you go IPO, you clean the house. You make sure everything is PERFECT. You're asking for public money, after all. But digging into boAt's "Risk Factors" section reveals a …lot of disturbing things. Details below. .. Red Flag 1: The Books Don't Match. For THREE straight fiscal yrs (FY23, FY24, FY25), the auditors found a major problem. The "quarterly returns or statements filed with banks or financial institutions [were] not in agreement with the books of account of our Company." Let me translate that from accountant-speak. What they told their lenders... did not match what was in their own internal records. FUNDAMENTAL failure. .. Red Flag 2: Classic Asset-Liability Mismatch. For FY23 and FY24, the auditors flagged that the company used "funds raised on a short-term basis... for long-term purposes." Why is this bad? It's simple. You're using money you have to pay back soon (short-term loans) to fund things that only pay off later (long-term assets). This is exactly how a liquidity crisis starts. If your short-term lenders come calling, you don't have the cash to pay them. It shows a DEEP misunderstanding of basic financial management. Or worse, a reckless disregard for it. .. Red Flag 3: Paying Directors Too Much. As if that wasn't enough. For FY23, the auditors found the "remuneration paid to the directors... in excess of the limit laid down under Section 197 of the Companies Act, 2013." They literally broke the law on how much they could pay their own leadership (incl founders). And, we aren't looking at one mistake. We are looking at a clear, documented pattern of weak internal controls. A culture that seems to play fast and loose with financial rules. Plus, if the internal controls are this weak... If the auditors are repeatedly finding these kinds of "unfavourable remarks"... How can anyone be confident in the reliability of the very financials being presented to IPO investors? .. The entire IPO is built on a foundation that the company's own auditors have called out as shaky. How can you trust the numbers in an IPO if the company can't even keep its bank statements aligned with its own books? A total lack of discipline from a company wanting to join the big leagues. As a stakeholder, as a potential investor, you have to ask... Is this the kind of governance you want to bet on? Or so is my personal analysis - which is no recommendation or advisory. .. PS: I share several biz/economy deepdives daily, with 36k+ people on WhatsApp. Do check out here: https://removebg.techtaleempakistan.pk/_rb_origin/t.ly/h2jq1 Best, Jayant

The importance of a Cofounder Agreement Back in April 2017, I started my first startup with a close friend from college. We had known each other for about 4 years and started off on a positive note, incorporating a company with an equal 50/50 split. Soon after, we got incubated at SINE, IIT Bombay’s startup incubator. As part of the process, SINE made it mandatory for us to sign a Cofounder Agreement. At that time, we were just a few months out of college and didn’t fully appreciate its value. We googled a format, customised it, and signed. One of the clauses was about a lock-in period: "The Founders hereby agree that the shares held by them in the Company shall be locked in for a period of [] years ("Lock-in Period") from the Execution Date..." We decided to put 2 years as the lock-in period, without giving it much thought. This agreement was signed on 29th July 2017. Fast forward to 6th August 2018, barely a year later, my cofounder quit. At that time, he owned ~50% of the company. The only reason I could save the company was because of that lock-in clause. Without it, half the company would have gone to someone who had already exited. That experience taught me a few lessons: 1. Legal agreements can be lifesavers when things go wrong. 2. Not everyone thinks long-term. 3. People can quit abruptly without notice. Since then, I’ve always been very particular about legal agreements, especially termination and lock-in clauses. They protect not just you, but also your team, customers, and investors. If you’re running a startup and haven’t signed a Cofounder Agreement yet, please do it now. It’s one of the best favours you can do for your future self. #startups #business #entrepreneurship

If long-end bond yields spiral out of control, the Fed could start injecting liquidity again: a step-by-step guide of how it works. When a few weeks ago 30-year bond yields briefly flirted with the 5% level, the Fed's Collins released an interview stating that ''the Fed is absolutely ready to stabilize markets''. To stabilize the bond market, they would ''inject liquidity'' through operations like the LSAP - Large Scale Asset Purchase or QE. Central Banks create bank reserves when they perform such operations. Bank reserves are often referred to as ''Liquidity''. When Central Banks engage in liquidity creation, they do that in the hope that it activates the so-called Portfolio Rebalancing Effect. To understand this, let’s start from what QE does to the balance sheet of a commercial bank - take a look at the chart below. Following the GFC, regulators forced banks to own more HQLA (high quality liquid assets) to meet depositor outflows. Bank reserves and bonds qualify as ''HQLA'' as they are liquid enough to be converted in cash to meet potential outflows quickly. But banks are not indifferent between owning bank reserves and bonds, and especially if the amount of reserves grows dramatically as a result of QE. Bank reserves are a zero-duration and low-yielding instrument which can be suboptimal to own in big sizes especially if compared with bonds which offer higher returns and duration hedging properties. And this is when the Portfolio Rebalancing Effect kicks in. Once QE starts, Central Banks take away bonds and inject new reserves in the banking system. Loaded with suboptimal reserves, banks will try to switch back the composition of their portfolios towards more bonds. They will bid up safer bonds first, and bid up riskier bonds later when the hunt for returns intensifies. This will kick in a virtuous cycle of low volatility and a hunt for riskier assets: the Portfolio Rebalancing Effect in action. Summarizing: 1️⃣Central Banks expand their balance sheet and purchase bonds 2️⃣Commercial Banks are on the receiving end of QE, and hence their portfolio composition tilts towards more reserves, and less bonds; 3️⃣But reserves are sub-optimal to own compared to regulatory-friendly bonds, and hence they look to rebalance their portfolios; 4️⃣They start buying the very same bonds QE is buying, hence suppressing volatility further and compressing credit spreads; 5️⃣Asset allocators and investors across the world are more and more encouraged to take additional risks in their portfolio, supporting the flow of credit and capital. Does the Portfolio Rebalancing Effect make sense to you? 👉 If you enjoyed this post, follow me (Alfonso Peccatiello) to make sure you don't miss my daily dose of macro analysis.

The Irish Government has just announced plans to introduce the Regulation of Artificial Intelligence Bill in its Spring 2025 legislative programme, a pivotal piece of legislation aimed at giving full effect to the European Union’s Artificial Intelligence Act (EU Regulation 2024/1689). Even though the AI Act as a regulation has direct effect, this move is set to shape the national regulatory framework for AI governance in Ireland and establish national enforcement mechanisms in line with the EU’s approach. At the heart of the bill is the designation of Ireland’s National Competent Authorities: the entities that will be responsible for enforcing compliance with the AI Act. These authorities will oversee risk classification, conduct market surveillance, and impose penalties for violations. Given Ireland’s role as the EU base for major technology firms including Google, Anthropic, Meta, and TikTok, the effectiveness of its enforcement regime will be closely scrutinised across the EU and beyond. The Irish Government’s approach will be particularly significant due to the country’s track record in regulating the digital sector. Ireland’s Data Protection Commission (DPC) has wielded considerable influence over EU-wide enforcement of the GDPR, given the presence of multinational tech firms within the state. The DPC was designated as one of ireland’s nine fundamental rights authorities under the AI Act in November 2024. The bill will include provisions for penalties, though details remain unspecified. Under the EU AI Act, non-compliance can result in fines of up to €35 million or 7% of a company’s global annual turnover, whichever is higher. For Ireland, the challenge will be ensuring its enforcement framework has sufficient resources and expertise to oversee AI systems deployed within its jurisdiction. Tech industry leaders and legal experts will be closely monitoring how Ireland structures its national framework. The AI Act imposes strict obligations on high-risk AI applications, including those used in healthcare, banking, and recruitment. Companies will be required to maintain transparency, conduct impact assessments, and ensure that their AI systems do not lead to unlawful discrimination or harm. Ireland’s legislative initiative comes at a time of growing regulatory scrutiny over AI’s impact on society, innovation, and human rights. The AI Act represents the world’s most comprehensive attempt to regulate artificial intelligence, at a time other jurisdictions such as the USA are moving in the opposite regulatory direction. The Regulation of Artificial Intelligence Bill is still in its early stages, at the “Heads in Preparation” point. In the Irish legislative process, the Heads of a Bill serve as a blueprint for the eventual legislation. As Ireland moves toward full implementation of the AI Act, the government’s decisions on AI oversight will have significant implications for businesses, consumers, and the broader EU regulatory landscape.

What happens when companies break their climate promises? Almost nothing. A new study has uncovered troubling truths about corporate climate commitments. Out of 1,041 companies with emissions reduction targets set for 2020: -9% (88 firms) openly failed to meet their goals. -31% (320 firms) stopped reporting on their targets without explanation. What happens when companies miss these targets? Practically no consequences: -Only three failed companies faced media scrutiny. -No significant market backlash, media sentiment shifts, or ESG rating downgrades. In contrast, companies were rewarded with positive press and improved ESG ratings simply for announcing these targets. The bigger issue: This accountability gap threatens the credibility of ambitious 2030 and 2050 climate pledges. Unlike financial targets, which are rigorously monitored, emissions goals often exist in a vacuum—without oversight or real consequences for failure. Interestingly, the study found that: -Firms in common-law countries and those with stronger media accountability had better success rates. -High-emitting sectors like energy and materials struggled the most, with the highest rates of "disappeared" targets. With more companies backing away from climate action, we cannot afford to let this cycle continue. It’s time for corporate sustainability leadership to move beyond announcements and deliver measurable, transparent results. Accountability mechanisms—demanded by both regulators and stakeholders are urgently needed. A great piece of work by Xiaoyan Jiang, Shawn Kim, and Shirley Simiao Lu! Let’s learn from these insights to ensure that corporate climate pledges actually deliver. #climatechange #netzero #esg

Amid rising tariffs and shifting geopolitics, the foundations of the rules-based global economy are being redefined. With the US policy shifts, the uncertainty is real. In fact, I just got back from New York, where I met with a number of CEOs – and for the first time, all of them said the same three words: “I don’t know.” It’s clear we’re not going back to “business as usual”. That’s why we felt it was crucial to bring our clients together today to hear from Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong at a closed-door conversation. He’s just been appointed Chairman of the new Singapore Economic Resilience Taskforce, and his perspectives were insightful, as he also listened to the concerns and questions our clients brought to the table. Looking ahead, I believe we’re in for more short-term volatility and uncertainty. My advice to clients: lock in good rates, manage your FX exposure, and address any supply chain constraints. Longer term, we need to think about the new world order more strategically. There are four key areas businesses need to focus on: • Supply Chain – Diversify sources and build in resilience • Logistics – Plan for the possibility of longer routes and ensure continuity • Financial and Payments – Prepare for alternatives beyond USD • Technology – Be ready for dual tech ecosystems and interoperability costs The silver lining is that we are in Singapore. While Asia does bear the brunt of tariffs, it is also home to 18 of the 20 fastest-growing trade corridors. Also, even though we have had slowdowns in our neighbourhood, we are still surrounded by big economies – China, India and Indonesia. Over the years, we’ve walked alongside our clients through many turning points, and we’ll keep showing up, especially when things get tough. Whether it’s navigating treasury decisions, managing volatility, or adapting supply chains. Storms may come, but like Singapore, we’ll stay steady – anchored, open, and here for the long haul.

This time Is different We don't often say that about the Fed, but after yesterday's FOMC meeting, we think it may actually be true. In fact, we believe yesterday's meeting ushered in a new era of monetary policy in the United States.    For the better part of two decades, monetary policy has followed a familiar playbook: extensive forward guidance, frequent communication, data dependence and the  Federal Funds rate as the primary policy tool. While leadership has changed, the broader framework has remained remarkably consistent.   What we heard yesterday suggests the possibility of a meaningful evolution.   We believe the Fed may be moving toward a framework that places less emphasis on signaling every move in advance and more emphasis on assessing where inflation, employment and broader economic conditions are heading. In a world of real-time data and increasingly sophisticated analytics, that could prove to be a healthier and more effective approach.   We also continue to hear indications that the policy toolkit could broaden beyond the overnight policy rate, with greater consideration of balance sheet policy, liquidity conditions, money supply dynamics and longer-term interest rates.   Importantly, change does not automatically mean more volatility. A broader set of tools and a more forward-looking approach could ultimately increase confidence in policy outcomes rather than diminish it.   For investors, the near-term message remains straightforward: inflation is still above target and remains the Fed's primary focus. While rate hikes are far from certain, they remain a possibility that markets need to respect.   That's one reason we continue to favor income-oriented fixed income opportunities over pure interest-rate expressions. And when markets overreact to uncertainty around policy change, we think there may be opportunities to sell volatility rather than buy it.   This time may indeed be different, and it will be fascinating to watch how this evolution in monetary policy unfolds. The real question is whether less signaling creates more uncertainty, or ultimately more confidence in the Fed's ability to achieve its objectives.

Every card payment involves three core fees - yet most merchants don’t know where their money goes. Here is a break-down. 𝗧𝗵𝗲 𝟯 𝗳𝗲𝗲 𝘁𝘆𝗽𝗲𝘀: 1. Interchange – Paid from the acquirer to the issuer (the cardholder’s bank). Set by card networks, often regulated, and meant to cover fraud, credit risk, and infrastructure. 2. Scheme Fee – Charged by the card networks (Visa, Mastercard, etc.) for operating the rails. 3. Acquirer Markup – What the acquiring bank or PSP charges the merchant to process the transaction, handle risk, and settle funds. Together, these form the Merchant Service Charge. 𝗧𝗵𝗲 𝟯 𝗽𝗿𝗶𝗰𝗶𝗻𝗴 𝗺𝗼𝗱𝗲𝗹𝘀: 1. Bundled: All three fees are merged into one opaque rate. Common among smaller merchants. Simple, but lacks visibility. 2. Interchange+: Interchange and acquirer fee shown; scheme fee included in the markup. Partial transparency. 3. Interchange++: All three fees itemized. Full transparency. Preferred by larger or multi-market merchants. 𝗪𝗵𝗼 𝗱𝗲𝗰𝗶𝗱𝗲𝘀 𝘁𝗵𝗲 𝗺𝗼𝗱𝗲𝗹? - The acquirer or PSP typically offers the pricing model, and unless a merchant has the volume or experience to negotiate, they’re often placed on bundled pricing by default. - Larger merchants or platforms - who understand the mechanics and can estimate true costs - usually push for Interchange++ for its transparency and fairness. - Smaller businesses rarely ask, either because they don’t know the models exist, can’t easily compare offers, or assume it’s not worth the effort. 𝗜𝗻𝘁𝗲𝗿𝗰𝗵𝗮𝗻𝗴𝗲 𝗳𝗲𝗲𝘀' 𝗰𝗼𝗺𝗽𝗮𝗿𝗶𝘀𝗼𝗻: Some jurisdictions cap interchange fees (EU, UK, China, Brazil) to reduce merchant costs and promote competition. Others (US) regulate only parts of the system - e.g., debit under Durbin for large banks - while leaving credit cards uncapped. Why? It’s a mix of politics, lobbying, market structure, and regulatory philosophy: - In Europe, regulators treat interchange as  as insufficiently competitive and have imposed caps to bring more balance and transparency. - In the US, the market relies more on competition, resulting in higher fees. - Emerging markets like India and Brazil regulate interchange as part of broader financial inclusion efforts. - In regulated markets, lower and more predictable fees help merchants manage costs and often support broader payment acceptance. In unregulated markets, higher interchange allows issuers to fund consumer perks like cashback and rewards - but merchants may face higher costs, which can influence pricing or acceptance choices. Each model shifts value differently across the ecosystem, affecting how costs and benefits are distributed between banks, merchants, and consumers. What's your experience? Opinions: my own, Graphic sources: Paypr.work [ˈpeɪpəwəːk], Truevo, Panagiotis Kriaris 𝐒𝐮𝐛𝐬𝐜𝐫𝐢𝐛𝐞 𝐭𝐨 𝐦𝐲 𝐧𝐞𝐰𝐬𝐥𝐞𝐭𝐭𝐞𝐫: https://removebg.techtaleempakistan.pk/_rb_origin/lnkd.in/dkqhnxdg