Daily Fintech Week ended on the 23rdrd. September 2022

Is the pound supposed to have sunk?

What surprises me here is how the British press reports on this event. The pound is weak against the dollar and a number of other currencies, but the real story is the strength of the dollar. Can Britain do anything about it. Well, not really. The euro is also weak against the almighty greenback, and the real story is that sterling has fallen, albeit marginally, against a single currency where fundamentals, including the once-mighty German powerhouse, are moving very quickly in the wrong direction. However, Germany now has a manageable GDP/total debt ratio. The ECB is awash in debt and markets are shrewdly assuming that when push comes to shove the inflation-sensitive Germans will simply sign the cheques. I’m not entirely sure. But the strength of the dollar, of course, does not depend on the economic strength or stability of the US government. It is rather a reflection of the fear that is haunting the Western markets in all directions.

How German banks are overexposed

Over the past few days, there have been several apocalyptic stories in British newspapers about the failure of politics to give up Putin’s gas. The German manufacturing industry is rightly recognized as the most technically advanced and competitive in the world. What worries me, however, is that the banks supporting this economy are forced to do so amid several existential threats. Huge increases in energy costs and shortages over the winter, huge slumps in orders and confidence, supply chain problems and soaring inflation. All this against the backdrop of a rather shaky-looking political alliance that seems to be trying to go both ways at once. German banks are not that strong from the start. God knows what the stress test analysis would look like now.

Digital Startup Revolut Hacked

Revolut was hacked in a phishing attack that affected about 50,000 customers. So the story goes that there’s really nothing to worry about, and on the face of it, that seems to be the case. Revolut’s banking license comes from Lithuania, but the bank sells its services worldwide. I wonder how much money has been invested in what would happen if one of these minnow banks, based in a fairly small economy, were to become involved in a truly massive fraud. In 2008, there was a lot of talk about banks being too big to fail. In Lithuania, I’m pretty sure Revolut will be too big to fail. No disrespect to the banking authorities of Lithuania, but it’s just a small country. I don’t see anyone coming to help.

Howard Tolman is a prominent banker, technologist and entrepreneur in London. We have a limit of 3 news items per week because we cater to busy senior Fintech executives who simply need short and relevant information. For context on Alt Lending, read the interview with Howard Tolman about the future of Alt Lending and articles tagged Alt Lending in our archives. Daily Fintech’s original content is available to you for $143 per year (that’s $2.75 per week). $2.75 buys you a coffee (maybe) or the price of a week’s subscription to the world’s Fintech blog – caffeine for the mind that could be worth millions of dollars.

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