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BUSINESS TODAY 6 October 2022

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4 NEWS 6.10.2022 NSO figures show that, in the first half of 2022, the total expenditure on contributory and noncontributory social benefits rose by €32.6m over the same period in 2021 and by €60.1m over the half of 2020. The increased expenditure on social benefits in the first half of 2022 pushed the total social protection expenditure in the same period to €987.6 million, putting its overall share of GDP at an estimated 14.7 per cent. social benefits PLANS to create a global central bank digital currency (CBDC) network are on the horizon following eight months of testing by SWIFT. e Society for Worldwide Interbank Financial Telecommunication, better known as SWIFT, has been looking at ways to make CBDCs work globally, making them compatible with regular currencies. Belgium-based SWIFT, which oper- ates a global financial messaging sys- tem, said it would be experimenting with different technologies and cur- rencies for cross-border payments ear- lier this year. Both Germany and France's central banks took part in the tests, along with banks like HSBC, Standard Chartered and UBS. As the race to stay competitive steps up a gear, almost 90% of the world's central banks are looking at how they can introduce CBDCs – and keep ahead of privately issued tokens. Many are in direct competition with the global central bank umbrella group, the Bank for International Set- tlements, which has also been running cross-border trials. SWIFT as a central hub SWIFT's head of innovation, Nick Kerigan, described the framework as like a bicycle wheel, in which 14 central and commercial banks would connect like spokes to its central hub. At scale, a single point of contact would more efficiently facilitate global transactions than thousands of dispa- rate connections. "We believe that the number of con- nections needed is much fewer," Keri- gan said. "erefore, you are likely to have fewer breaks (in the chain) and you are likely to achieve greater effi- ciency." According to Kerigan, the trials, which also tested various distribut- ed ledger technologies, another term for blockchain technology, will be fol- lowed by more advanced testing over the next year. Countries such as China and the Ba- hamas, have led the way in CBDCs, but accessing SWIFT's network could open the door to 11,500 banks across 200 countries. "Ultimately what most central banks are looking to do is to provide us with a CBDC for the people, the businesses, and the organizations in their jurisdic- tion," Kerigan said. "So a solution that's fast and efficient and that gains access to as many other countries as possible would seem to be an attractive one." EU seeks global crypto consensus Meanwhile, as SWIFT hopes to cre- ate a global network for digital curren- cy payments, the European Union is hoping to do the same with a regulato- ry framework. e Markets in Cryptoassets (MiCA) legislation wants to bring consistency across the 27-member bloc by creating common rules. And the EU is hoping to win over U.S. officials during next week's International Monetary Fund- World Bank annual meetings. "e message I will be bringing to Washington is that here in the EU we have a piece of legislation, we are a front-runner in this," said Mairead McGuinness, EU Commissioner for fi- nancial services. But "a little bit like climate change, addressing crypto alone in the EU is not enough, we need to have global en- gagement and sharing of experience." SWIFT trial demonstrates how global CDBC network could become reality Truss speech fails to lift Pound, bonds THE pound and UK government bonds fell on Wednesday as UK Prime Minister Liz Truss failed to dispel doubts about her ability to safeguard the country's finances in a key- note speech. e pound slumped 1.2% against the dollar to $1.1326, from an intraday high of nearly $1.15 earlier. At the same time, the yield on the benchmark 10-year government bond, or gilt, rose back above 4%, after Truss stuck to her previously-announced policies with- out offering any detail on how she intends to keep borrowing under control. e tax cuts and energy subsidies an- nounced by Truss's Treasury chief Kwasi Kwarteng are still set to cost the UK over £60 billion over the next year, even after Truss abandoned her plan to scrap the 45% income tax bracket for the UK's top 2% of earners. Economists have criticised the plans as like- ly to fuel inflation, which is currently running at nearly 10%, while her income tax plans went down badly with her own party's law- makers, many of whom criticised them for doling out tax cuts to the wealthy at a time of general hardship. In a TV interview earlier in the day, Truss had pointedly declined to an- swer a question on whether she still trusted her finance chief, Kwasi Kwarteng, to make the right decisions. Truss tried hard in her speech to stress that she won't let inflation get out of hand. She also clearly backtracked from the threats to end the Bank of England's control over mon- etary policy, which she had made during her campaign to become Party Leader over the summer. "I believe in sound money," she said, adding that her government "will always be fiscally responsible." As such, she promised to bring Britain's debt-to-GDP ratio down "over the medium term." However, she offered no detail on how she intends to achieve that, other than through economic growth. Kwarteng, for his part, has said he won't publish his spending plans until 23 November, leaving a long period of uncer- tainty at a time when global financial markets are unusually volatile. Rory Stewart, a former Conservative Party minister under David Cameron, tweeted that while the speech was confidently delivered and had clear policy lines, it failed to an- swer the internal contradictions in its logic, such as scrapping legacy EU regulation while keeping access to the EU's markets, or fund- ing big improvements in the areas of health and defense without sharply increasing the budget deficit. Key moments from chaos-hit Liz Truss's speech to Tory conference In a speech just shy of 35 minutes the Prime Minister was interrupted by protesters, warned of "stormy days" ahead, made a nod to her humiliating U-turn, and rallied against what she described as an "anti- growth coalition" Stormy days The PM vowed to get the country "through the tempest", but faced "stormy days" amid the cost-of-living crisis, the war in Ukraine and the recent death of Queen Elizabeth II. "In these tough times, we need to step up," she added. "I'm determined to get Britain moving, to get us through the tempest and put us on a stronger footing as a nation". "I have listened" In a nod to the humiliating U-turn that overshadowed the beginning of the Tories' annual conference, the Prime Minister told delegates her plan to cut tax for the richest Brits "became a distraction". She told members: "The fact is the abolition of the 45p tax rate became a distraction from the major parts of our growth plan. That is why we are no longer proceeding it. I get it and I have listened". But her U-turn may have come too late. Just before she took to the stage YouGov released a poll suggesting Ms Truss is already more unpopular than her predecessor Boris Johnson or former Labour leader Jeremy Corbyn ever were. 'European judges' Fresh laws to sideline European judges will be brought forward, Liz Truss announced to delighted activists. The Prime Minister said: "Our brilliant new Home Secretary will be bringing forward legislation to make sure that no European judge can overrule us." The revelation comes amid growing anger among Conservatives grassroots over a decision by the European Court of Human Rights which blocked the deportation of Channel migrants to Rwanda. Housing The PM drew battle lines with backbench Conservative MPs and shire Tories as she vowed to build more homes. Successive Tory PMs have tried and failed to railroad through plans to increase the number of houses constructed on greenfields, but she insisted: "We will make it easier to build homes."

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