JP Morgan Chase Announces its own Cryptocurrency

J.P. Morgan Chase CEO Jamie Dimon called bitcoin a fraud in September 2017 and said, “You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart,” By January 2018 he had walked the remarks back but said he still was “not interested that much in the subject at all.” In February 2018, J.P. Morgan called cryptocurrencies “risk factors” to its business, something it never previously said.

And now J.P. Morgan (JPM, +0.19%) has become the first bank to offer its own cryptocurrency, CNBC reported. But don’t expect it to become an investment vehicle—at least for now. The cryptocurrency, called “JPM Coin,” is intended for the bank’s wholesale payments business that moves $6 trillion around the world daily.

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Is Poland's Central Bank Running a Smear Campaign on Youtube Against Cryptocurrencies?

A bizarre battle is emerging in the world of cryptocurrencies after Poland's central bank was accused of hiring YouTubers to "start a smear campaign" against cryptocurrencies in the country.

According to Business Insider Poland, the Narodowy Bank Polski (NFB) spent around 91,000 zloty (£19,430; $27,300) on a marketing campaign designed to attack the legitimacy of cryptocurrencies. The money was spent on platforms including Google and Facebook, but was also used to pay a Polish Youtube partner network called Gamellon.

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British Banks are Banning Cryptocurrency Purchases

It's happened in the US and now it's happening in the UK. Lloyds Banking Group, which runs Halifax, Bank of Scotland, MBNA and, of course, Lloyds, has banned its customers from buying bitcoin with their credit cards. "We do not accept credit card transactions involving the purchase of cryptocurrencies," a Lloyds Banking Group spokesperson told the Guardian. It's thought to be the first UK bank — or rather, banking chain — to block its members from investing in the cryptocurrency. The worry, presumably, is that people will borrow cash and then be saddled with large amounts of debt they cannot pay back due to Bitcoin's fluctuating value.

Bitcoin had a stellar trajectory in 2017, rising from roughly $800 in January to $19,783 in late December. As the value grew, so did the attention of traditional investors and tech-savvy citizens who wanted to make a quick buck. The following month, however, Bitcoin's value cratered. The reasons are unclear, but it was a harsh reminder of the volatility of cryptocurrencies. Bitcoin now sits at just under $8,000 and understandably, banks are worried about its customers getting caught up in the craze. We've asked HSBC, Barclays, Santander and First Direct for their current position on credit card-funded Bitcoin transactions.

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US Banks are Banning Purchasing Cryptocurrencies With Credit Cards

If you use your Bank of America-, JP Morgan Chase- or Citigroup-issued credit card to buy cryptocurrency, then you'll have to find an alternative ASAP. According to Bloomberg, the banks have banned crypto purchase using their cards due to the virtual coins' volatile nature. BofA has already started declining credit transactions with known exchanges, though its debit cards aren't be affected by the ban. Citigroup also announced on Friday that it'll no longer process crypto purchases, while JP Morgan Chase's new rule will take effect today.

JPMorgan spokesperson Mary Jane Rogers said the bank has decided to impose a restriction on crypto purchases, because it doesn't want to deal with the risks associated with it. In addition to the difficulties of keeping an eye on purchases -- something they're required to do -- associated with crypto-coins, there's also always the risk of somebody buying more than they can afford to pay. In addition, identity thieves could use stolen credit cards to buy cryptocurrency, and banks have little chance (if any) to get that money back.

These banks aren't the only financial institutions backing away from anything associated with crypto. Capital One Financial and Discover also don't allow cryptocurrency purchases with their credit cards. Discover chief David Nelms even described people using virtual coins as "crooks... trying to get money out of China or wherever." A Coinbase staff member has also revealed in a Reddit post that major credit card networks and providers recently changed the terms of digital currency purchases. The new terms allow them to treat those purchases as a cash advance, which carries additional charges and have higher interest rates.

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How to rob a Bank From the Inside

Banks Looking to "Mine" Bitcoin Technology

While Jamie Dimon and Warren Buffett express doubts about bitcoin, executives running the financial industry's back offices are looking at mimicking the virtual currency's methods of moving money quickly and cheaply.

FIS, a provider of systems used by banks to handle payments, is examining whether a public ledger like bitcoin's could help securely move funds on existing networks, Fred Brothers, the firm's chief innovation officer, said. Fiserv, a provider of technology for payments and accounts, is examining bitcoin's use of encryption to ensure transfers are secure, said Marc West, a senior vice president.

Such interest shows how Wall Street could seek to reap benefits touted by bitcoin's backers without using the virtual currency itself. Bitcoin, devised by an anonymous programmer or programmers in 2008, has drawn entrepreneurs and retailers looking to popularize it as a low-cost alternative to established payment systems, supplanting credit cards and international wire transfers. Instead, a variety of financial firms might copy its underlying design to hone their own systems or services sold to clients.

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Low Inflation Woes in the Eurozone?

One thing that the European Central Bank (ECB) does not lack is advice on tackling low inflation. This week the OECD added its voice to that of the IMF in April in urging prompt action, calling for a cut in the bank’s main lending rate, from the already low 0.25% reached in November to zero. The ECB’s governing council, meeting on May 8th (after The Economist had gone to press), was not expected to respond to this plea any more than it did to the IMF’s.The difficulty facing the 24-strong council is highlighted by the euro zone’s differing labour-market trajectories over the past decade (a period during which it expanded from 12 to 18 countries). Whereas joblessness has fallen in Germany, from 10.1% to 5.1%, it has soared in Spain, from 11.1% to 25.3%.High unemployment has contributed to the onset of deflation in parts of southern Europe. But even in northern countries inflation is low, and though it has risen in the euro zone as a whole from 0.5% in March to 0.7%

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#1 Economic Threat to World? China's Lending Bubble

Just as the global economy has all but recovered from debt-fueled crises in the United States and Europe, economists have a new worry: China. They see a lending bubble there that threatens global growth unless Beijing defuses it.

That's the view that emerges from an Associated Press survey this month of 30 economists. Still, the economists remain optimistic that Beijing's high-stakes drive to reform its economy — the world's second-largest — will bolster Chinese banks, ease the lending bubble and benefit U.S. exporters in the long run.

"They've really got to change the way they do business," said William Cheney, chief economist at John Hancock Asset Management. "But they have a good track record of doing just that. I'm an optimist about their ability to make this transition."

The source of concern is a surge in lending by Chinese banks. The lending was initially encouraged by the government during the 2008 global financial crisis to fuel growth. Big state-owned banks financed construction of homes, railroads and office towers. But much of the lending was directed by local officials for pet projects rather than to meet business needs.

On Monday, the International Monetary Fund issued a warning about China's private debt. It released a report citing "rising vulnerabilities" in China's financial system, including lending outside traditional banks. Lending by that "shadow" banking system now equals one-quarter of China's economy, the report said.

The IMF also pointed to recent defaults in credit card and other debt sold to investors by banks and heavy debts owed by local governments.

If it continues, "this could spark adverse financial market reaction both in China and globally," the IMF said.

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Bank of China Shutting Down Bitcoin Exchanges ABefore April 15 Deadline

China may be tightening the noose around Bitcoin: two exchanges dealing in the virtual currency have been forced to suspend bank transfers from customers depositing yuan to buy bitcoins.

On Thursday, local exchange FXBTC said several banks had ordered it to close accounts used for taking customer deposits, due to tightened regulations from China's central bank. Now all commercial banks and third-party payment platforms have been ordered to close all related services tied to bitcoin transfers, the exchange said in on its website.

Hours before, another exchange, BTC38, issued a similar notice, and said due to the "influence from China's central bank" the site had been forced to revoke deposits via bank transfer. In the interim, the exchange can still accept withdrawals in Chinese yuan.

Last month, the bitcoin exchanges were put on alert when the publication Caixin reported that the nation was tightening regulations covering the virtual currency. By April 15, the nation's central bank would require all banks and third-party payment companies to close accounts operated by bitcoin exchanges.

But not all exchanges in China are reporting issues. On Thursday, BTCTrade.com said on its website it would temporarily suspend currency transfer over the Internet, but that bank transfers were still accepted.

Another exchange, OKCoin, said its bank transfers were still in operation.

China has been concerned about how to deal with bitcoin, and in December banned banks from trading in the virtual currency. Days later, China's online third-party payment companies began halting services for local exchanges.

In response, the local exchanges began setting up corporate bank accounts that could take direct deposits from customers.

The virtual currency was once rising in popularity in China. But the nation's government is concerned with Bitcoin's lack of central monetary authority, and its potential use for laundering money. Nonetheless, the government has said consumers are free to buy bitcoins.

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JP Morgan Blocked Payments by Russian Embassy in Kazakhstan

Russia's Foreign Ministry said on Tuesday U.S. bank JP Morgan had "illegally" blocked a payment from its embassy in Kazakhstan to insurance agency Sogaz "under the pretext of anti-Russian sanctions imposed by the United States".

In a statement on its website, the Russian Foreign Ministry suggested the action, which it called "unacceptable, illegal and absurd", would have consequences for the U.S. embassy and consulate in Russia.

JP Morgan gave no immediate comment.

"Washington should understand any hostile action against a Russian diplomatic mission not only constitutes a flagrant violation of international law but is rife with consequences that will inevitably effect the work of the embassy and general consulate of the United States in Russia," the statement said.

Sogaz is partly owned by Abros, according to the Sogaz website. Abros is a subsidiary of Bank Rossiya, according to Russian media reports.

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Chinese Bank Reform

“OUR banks earn profit too easily. Why? Because a small number of large banks have a monopoly.” So declared Wen Jiabao, China’s former prime minister, two years ago. He went on to say that the only solution was to allow more private capital in banking.

That seemed unlikely to happen soon, given the firm grip the government has had on banks in the country. The industry is tightly regulated, with deposit interest rates controlled by the authorities and all bank savings enjoying the implicit backing of the state. The biggest Chinese banks, which also happen to be the largest in the world, are all state-run.

Undaunted, the newish government of President Xi Jinping vowed to push ahead with financial liberalisation. This week it did just that. On March 11th regulators approved a pilot scheme to allow five privately owned banks to be set up in various parts of the country. The new banks will be regulated much as existing lenders are, but will be required to have clear provisions for orderly dismantlement in case of bankruptcy.

By welcoming more private capital, officials are hoping to inject competition and innovation into China’s sclerotic banking sector. The aim is for these new banks to target small and medium-sized enterprises, long starved of capital by the state-run banks (keener to lend to state-owned enterprises). Two giant Chinese internet firms, Tencent and Alibaba, are among the chosen investors. That suggests the authorities are taking a favourable view of the forays the two firms have made into internet finance.

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Falciani Has Been Doing a Snowden on Tax Evaders Hiding in the Bank HSBC

WHAT Edward Snowden is to mass surveillance, Hervé Falciani is becoming to private banking. In 2008 the now 41-year-old native of Monaco walked out of the Geneva branch of HSBC, where he had worked for three years, clutching five CD-ROMs containing data on thousands of account holders. The theft lobbed a bomb into Europe’s private-banking market, spawning raids and tax-evasion investigations continentwide. In the latest, this week, Belgian agents swooped on the homes of 20 HSBC clients, including some with ties to Antwerp diamond dealers.

Mr Falciani went on the run when the Swiss charged him with data theft. After moving to Spain he was imprisoned, but freed when a judge denied a Swiss extradition request. At one point, he claims, he was kidnapped by Mossad agents who wanted a peek at the clients’ names. He has now taken refuge in France, where the government has offered him protection in return for helping it hunt for tax dodgers.

Several countries have used the data to bring cases against suspected evaders. Revelations that dozens of Greek public figures hid money offshore have magnified the tumult in that country’s politics. Spain and France have fingered hundreds of high-level cheats and retrieved €350m ($610m) in back taxes. Mr Falciani maintains that his CDs provided support for an American probe into weak money-laundering controls at HSBC, which led to a $1.9 billion settlement. HSBC disputes this.

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huh. Not heard of this before now, but head is in the science circles, not financial.

Whatever happened to the data that Assange et al claimed to have on the American banking sector? Just hot air?