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Home > Blogs > QFINANCE Editor > QFINANCE: News Briefing (August 1–7, 2012)

QFINANCE: News Briefing (August 1–7, 2012)

Each week brings you some of the biggest news stories from the past five days in finance and business – essential reading to keep you up to date with latest topics.

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Wednesday August 1

In Europe, the Greek coalition finally reached an agreement on €11.5bn of spending cuts spread over the coming two years. This has happened despite former objections from socialist leader Evangelos Venizelos who was pleading for the cuts to be delayed to the following year, the FT reports. In Afghanistan, Finance Minister Hazarat Omar Zakhilwal has been accused of hiding away more than $1 million (643,900 pounds) in overseas banks. Anti-corruption chief has affirmed the minister’s affairs will be thoroughly investigated according to Reuters. In the US the Federal Reserve has reported a slight slowdown of the economy, but not enough to take steps according to The Independent.  The central bank will be sticking to the current existing program of bond purchases but will "closely monitor" developments.

Thursday August 2

The FT reported on Thursday that UK high government figures were considering the possibility of nationalizing the Royal Bank of Scotland and buying out private investors in the bank. Although Chancellor Osborne is opposed to this, it seems the cabinet has been discussing the eventuality of spending approximately £5bn to buy 18% of troubled RBS. In India, the Reserve Bank was reported by Reuters to have declared that non-banking financial companies (NBFCs) intending to convert to non-banking financial company-micro finance institutions (NBFC-MFI) will have to maintain net owned funds at 30 million rupees ($537,200)by March 31, 2013 and 50 million rupees by end-March 2014.

Friday August 3

Hopes for the eurozone were lowered on Friday as Mario Draghi said the European Central Bank won’t intervene before governments turn to existing rescue funds, as reported in the FT.  Draghi insisted that “the euro is irreversible (…) it is pointless to bet against the euro. It is pointless to go short on the euro.” In the US, official figures showed an increase of jobs with an extra 163,000 created in July, despite the rise of unemployment rate from 8.2% to 8.3% in the past month according to the BBC.  Investment bank Goldman Sachs has launched the first “social impact bond” in the US, in collaboration with New York City, a test for eventual financing method to support cash-strapped local governments fund public projects, according to the FT.

Monday August 6

India’s finance minister Palaniappan Chidambaram said he will review the tax law that landed Vodafone with $2bn bill. The new minister requested an evaluation of retrospective tax laws declaring that "since investment is an act of faith, we must remove any apprehension or distrust in the minds of investors," according to The Telegraph. In the US, President Obama has invited Spanish Prime Minister Rajoy on Monday to discuss the situation of the Spanish economy. It was reported by Reuters that "they had agreed to talk a few days ago, it was not a surprise and is not unusual," according to a government source. Meanwhile Wall Street is sending warnings to its investors about the possibility of an exit in the eurozone before too long. Using hedges and credit default swaps, American banks have reduced they exposures to troubled eurozone countries according to the FT.

Tuesday August 7

New York’s main financial watchdog accused Standard Chartered, of laundering nearly $250 billion in collaboration with the Iranian government and for the past decade. The published report by New York State’s Department of Financial Services on Monday came as a real shock to the bank reported the FT. Superintendent of the DFS Benjamin Lawsky described Standard Chartered in the report as a “rogue institution”, which “carefully planned its deception” of US authorities by financing Iranian operations, using “fraudulent” procedures and “forging business records” to stage a “staggering cover-up”, according to the FT.

Come back next week for another report on the world of business and finance.

Tags: banking , Ben Bernanke , central banks , China , economic recovery , emerging markets , EU , euro , European Central Bank , European Monetary Union , eurozone , Federal Reserve , financial crisis , fiscal stimulus , France , fund management , Greece , Greek debt , hedge funds , IMF , inflation , regulation , sovereign debt , Spain , stocks and shares , transparency , UK , US , US economy
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