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Young People Predict Revival Of High Street Banks In The Cashless Age 

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Young People Predict Revival Of High Street Banks In The Cashless Age 

It wasn’t so long ago that bank branches were leaving the high street – some even became wine bars. New research reveals that today’s youth predict a bright future for banks on the high street – although the vast majority (79%) believe that their relationship with banks will be fundamentally different in ten-year’s time. Instead of looking after our cash and sending us statements, Britain’s student population thinks that banks will be primarily responsible for looking after our personal data (27%), supporting money education (23%) and validating instant payments in an online world where consumers have just one password and ID.

It is a time of year when another generation of students prepares to graduate from university life and start the world of work. Most of them have had their first experience of living away from home, managing their own finances and they will each graduate with an average debt of £50,000.  Given the extent of student exposure to debt and money matters at a young age, ThoughtWorks asked young people to imagine what Britain would be like by 2030 and to consider how banking would change during their working lives.

Aside from the belief that banks will look after a customer’s data rather than their cash (27%), students also believed that they will no longer receive financial statements by 2030 (35%). Instead, they predict that by 2030 they will access all their financial information from a single online hub (35%) – and that they will have just one password and ID for all their online purchases and payments (19%). Students also believe that AI will play a major role in ordering things as and when they are needed – and some believed drones and robots would have a role to play in the bank of the future (16%).

In the age of the sharing economy, young people are also significantly more likely to predict a big future for peer-to-peer financial services, where people lend and borrow from one another. Students were more than twice as likely than today’s workforce to believe this would be widespread in Britain by 2030 (31% versus 15%).

Given the view of a digitised world in 2030, it would be natural to presume that high street banks may disappear. One of the most surprising findings from the ThoughtWorks study was that young people believed banks would stay on the high street – in fact, they believed this much more strongly than the older generation that has grown up through an era of bank consolidation and ongoing branch closure programmes. Whereas people over 45 predict bank branches will leave the high street by 2030 (47%), only 18% of today’s students share such a bleak view. Young people are far more likely to say that banks have an important future on the high street but they will play a different role. Overall, 23% of students say bank branches will transition to become community hubs for financial education, data safety and will also have a social role to play as a place for community groups to meet.

Phil Hingley, Director of Financial Services at ThoughtWorks UK commented: “For young people, mobile devices shape the way they live their lives, not just as a communication tool but for all types of social and professional interactions from travel and tax to bookings, banking and beyond. Young Brits like the allure and convenience of using products and services from cool tech brands but they also recognise there is a place for solid, safe brands – like banks – that can be the junction that stores their data they use, validates their ID and the enables the payments they make to a wide range of online brands and retailers.

“In the new cashless age of Britain in 2030, there will be a greater need for data security and safety. The future will call for banks to revisit those concrete pillars and solid doors that characterise many of its traditional branches. There will be an intensified need for reassurance and safety. Consumers won’t want to give their security information to multiple brands. They will want a single hub – a single, solid and trusted brand that can verify the consumer’s identity to online retailers, look after their salary, handle their payments and in doing so take cost out of the supply chain. The values that underpin the bank of the future could look remarkably similar to the bank of the past – the difference is that data will replace physical currency as the commodity they are trusted with and move around.”

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Carbon offsets gird for lift-off as big money gets close to nature

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Carbon offsets gird for lift-off as big money gets close to nature 1

By Susanna Twidale and Shadia Nasralla

LONDON (Reuters) – An expected dash by big corporations for offsets to meet their climate targets has prompted financial exchanges to launch carbon futures contracts to capitalise on what could be a multi-billion dollar market.

It’s a step change. Carbon offsets, generated by emissions reduction projects, such as tree planting or shifts to less polluting fuels, have struggled for years to gain credibility, but as climate action has become urgent, their market is expected to grow to as much as $50 billion by 2030.

Among the major corporations that say they expect to use them to compensate for any emissions they cannot cut from their operations and products are Unilever, EasyJet, Royal Dutch Shell and BP, which all have climate targets.

Singapore-based digital exchange AirCarbon told Reuters it planned to launch an offset futures contract by the second quarter.

“The entire concept behind carbon trading and offsets is to employ the profit motive in order to push decisions towards climate change mitigating activities. (We ensure) that you find the most efficiently priced offsets,” William Pazos, co-founder of AirCarbon, said.

The futures market would allow companies to buy a simple credit, effectively a promise to reduce a tonne of emissions but not specifying where that would take place, in contrast to the existing market that offers direct access to particular offset projects.

Advocates, such as AirCarbon, say the resulting liquidity and transparency are positive.

Critics, including some environmental groups and some project developers, say making the market bigger may just make it cheaper for emitters without providing any guarantee it will support the projects most effective in reducing emissions.

“There is a risk in a … switch from something which has a large proportion of over-the-counter buyers at least taking some interest in what they are buying and its quality to large wholesale transactions that aren’t so easily unpacked,” said Owen Hewlett, chief technical officer at Gold Standard, one of the biggest carbon offset registries.

SMALL AND OPAQUE

Carbon offset credits are currently traded in small, bilateral and typically project-specific deals.

An emitter can buy a credit awarded to a forestry or clean cooking stove project for a tonne of carbon dioxide emissions the project has prevented.

The buyer uses these credits to offset past or future emissions and the credit is “retired”, or removed from the system.

The retail price of an offset can vary from 50 cents for a renewable energy project in Asia to $15 for a clean cook stoves project in Africa to $50 for a plastic recycling project in eastern Europe.

These voluntary deals are distinct from compliance cap-and-trade markets, such as the European Union’s Emissions Trading System, based on lawmakers setting a carbon budget and allocating a finite number of allowances, which can be traded by emitters or market players.

The underlying principle echoes the carbon offset market in that those that have emitted too much carbon can buy pollution permits from those with allowances to spare.

As demand to limit carbon emissions grows, carbon prices in the EU ETS have soared to a record high of over 40 euros a tonne this year.

In the off-exchange, bilateral market for carbon offsets, some say they are struggling to navigate the proliferation of standard setters, registries, verifiers and criteria.

“The market today is very small. It’s difficult to be confident that the product you are investing in is credible,” said Bill Winters, CEO of Standard Chartered bank and Chair of a private sector task force seeking to create a multi-billion dollar offset market in the coming months.

DECISIVE YEAR?

This year in theory should mark the coming of age of carbon markets as decades of U.N. talks on tackling climate change reach a decisive stage.

Delegates at the United Nations climate conference in November in Glasgow, Scotland, are expected to work on designing a market to channel money into offset and emissions removal projects to prevent global temperatures from rising more than 1.5 degrees Celsius (2.7 degrees Fahrenheit) above the preindustrial average.

Some players, such as AirCarbon, are eager to launch their financial products sooner.

Global exchange CME, home of the main U.S. crude oil benchmark contract, will launch an offset futures contract in March.

“It is a brand new market for many players,” CME Chief Executive Peter Keavey told Reuters. “We can help provide standardised pricing benchmarks and improve price discovery in the voluntary offset market. That’s our goal.”

Ahead of the talks later this year on market design, both CME and AirCarbon plan to use standards set under the aviation CORSIA offset scheme, which many environmental campaigners have said are not rigorous enough as they allow the aviation sector to use most types of project to reach its emissions targets.

They say they fear a repeat of problems that beset the offset market of the Kyoto Protocol, the Clean Development Mechanism (CDM).

The market under Kyoto, a precursor of the Paris climate deal, was flooded with cheap credits from industrial gas projects, mainly from Asia. That led to price crashes and made it harder for other projects to attract funding.

“CORSIA allows a lot of project types and does not have particularly stringent criteria, such as forestry projects with permanence issues and old CDM (Kyoto) credits with little environmental benefit,” Gilles Dufrasne, policy officer at the non-governmental organisation Carbon Market Watch, said.

Asked about criticisms of CORSIA, the International Civil Aviation Organization (ICAO), which developed the scheme, said in an email CORSIA had been agreed by a consensus of member states and was “under constant review”.

Some project developers, brokers and environmental groups also question the wisdom of decoupling carbon units from their underlying project.

They say combining emissions-focused projects with those that might prioritise other issues, such as community engagement, education or biodiversity, could lead to a race to the bottom in terms of price.

This might make it harder for more capital intensive projects to attract buyers.

More broadly, green groups are concerned companies may place too much emphasis on offsets which, if priced too cheaply, could lead them to focus less on cutting their own emissions.

There are no rules on how many tonnes of carbon a company is allowed to offset a year.

Emitters, such as Royal Dutch Shell, BP and Unilever and project developers, say the first priority must be to reduce emissions.

“We have always acknowledged that offsetting can only be an interim solution while zero-emissions technology is developed,” EasyJet said in an email.

The private sector task force, chaired by Winters and promoted by former central banker Mark Carney, wants to encourage a range of participants, such as bankers and trading houses, as well as emitters to join the market to boost liquidity.

“Markets work best when they are efficient, and that efficiency comes from greater rather than smaller liquidity. So it’s important to have as many participants as possible, from all different types of background,” said Abyd Karmali, Managing Director, Climate Finance at Bank of America, who is also a member of the private sector task force.

Others question the role of speculative trading in a climate context.

“There might be a place for a bunch of traders flipping margins on some futures contracts, but at the end of the day I don’t see how the volume of trading going through (exchanges) has any positive impact on climate change,” said Wayne Sharpe, CEO and founder of ecommerce site Carbon TradeXchange.

(Reporting By Susanna Twidale and Shadia Nasralla; Editing by Katy Daigle, Veronica Brown and Barbara Lewis)

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The school leader getting New Mexico’s tribes online

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The school leader getting New Mexico's tribes online 2

Indigenous language teachers prepare for a remote virtual lesson in Santa Clara Pueblo library in February 2021. Thomson Reuters Foundation/Handout by Santa Fe Indian School.

Indigenous language teachers prepare for a remote virtual lesson in Santa Clara Pueblo library in February 2021. Thomson Reuters Foundation/Handout by Santa Fe Indian School.

Kimball Sekaquaptewa (middle) with the consortium of six pueblo governors and family members, breaking ground on a fiber-optic internet construction project in December 2017. Thomson Reuters Foundation/Handout by Santa Fe Indian School.

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Bleak budget outlook leaves Merkel’s conservatives no choice on debt

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Bleak budget outlook leaves Merkel's conservatives no choice on debt 3

BERLIN (Reuters) – Germany’s bleak budget outlook is pushing Chancellor Angela Merkel’s conservatives towards supporting another suspension of national rules on debt next year, with the man in pole position to succeed her advocating another waiver.

The coalition is currently discussing when Berlin should end massive deficit-spending triggered by the COVID-19 pandemic, and return to the fiscal rules of the constitutionally enshrined debt brake. Parliament suspended those rules for 2020 and 2021 to allow combined new borrowing of up to 310 billion euros in both years.

Finance Minister Olaf Scholz, who is expected to present the draft budget for 2022 next month, has already hinted it could be difficult to keep new borrowing below the ceiling of 0.35% of gross domestic product as required by the rules.

“The numbers are just brutal. Everyone who has looked at the budget in detail can’t help but demand another exception from the debt brake again,” a coalition source told Reuters on Thursday on condition of anonymity.

The source said it was simply impossible to cut 60 billion to 80 billion euros in the budget just to get public finances in line with the rules again – especially with Germany heading towards a federal election in September.

Armin Laschet, the new leader of Merkel’s Christian Democratic Union (CDU), said in a newspaper interview that there was probably no other way than to suspend the debt brake again.

“Next year, we will surely have to use Article 115 of the Basic Law again for an exception to the debt brake”, Laschet told Stuttgarter Zeitung.

Laschet even suggested that it could be difficult to stick to the fiscal rules beyond next year.

“Nobody today can reliably predict how what the financial needs will look like after 2022. Whether we’ll still have to declare the fiscal emergency then depends on the further development of the pandemic,” Laschet said.

The comments increase the chances for Germany will continue its debt-financed fiscal splurge next year. This would set the tone for the wider debate in the euro zone on how much longer governments should keep spending to fight the crisis.

In January, Merkel’s chief of staff Helge Braun opened the door for continued deficit spending with a proposal to soften Germany’s debt issuance law, because Berlin would not be able to stick to the strict limits on borrowing for several more years.

But a reform of the rules would need a two-thirds majority in both chambers of parliament – a tricky task given Germany’s increasingly splintered political landscape with seven parties.

(Reporting by Michael Nienaber, editing by Larry King)

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