New payment methods, to configure market Part.II

Deregulation also imposed with the SEPA will work no doubt for these new products, improving competition and market dynamics. However Europe's payments, particularly heterogeneous, certainly will offer a unique business model and transposed from one country to another.

The payments market is evolving towards a model driven "co-distribution". For credit institutions, historical market leaders, the challenge is to partner with as soon as new entrants, suppliers of innovative materials. This is not only to respond to the risk of decline in the volume of commissions received, but also to offer their business customers innovative and robust solutions, and this, as soon as possible to maintain their market share. The players in the consumer credit will also fit on their revolving credit card.

Sites are consistent adaptation to provide both a business perspective (definition of responsibilities, risk management, targeting policies and pricing ...) as a point of view of information systems (changing production tools and CRM, electronic banking trade flows with partners, upgrade repositories ...) The needs are also important to provide training in the branch networks, to spread the new methods of marketing and loyalty.

Finally, the area of payment being in a phase of great change, both in terms of regulation or in terms of new offerings / technologies, some players have an attitude rather than "defensive" (including banks ...) while others may adopt a logic "offensive" to take advantage of this window of opportunity to enter the market. In all cases, regardless of the type of actor, it's being played today that the reconfiguration of the market tomorrow.

New payment methods, to configure market Part.I

There are innovative ways of payments in the market. The payment of the future just around the corner: NFC mobile phones, TPE biometric or contactless cards etc. Given the diversity of solutions, potential entrants and business models possible,

In the United States and Great Britain, stores now offer the ability to adjust by putting his finger on a biometric TPE. This device allows in particular reducing the rate of commissions charged to merchants by offering an alternative to traditional electronic payment networks (MasterCard, Visa, Amex ...). A single operator manages all the activities: Registration and scanning fingerprints, food bases CRM containing biometric markers, center management authorizations and payment instructions via electronic checks.

Asia is basically the payment by mobile phone that has developed. These are the operators themselves who are behind this revolution, like NTT, Do Como - the first Japanese operator - which now has a banking license.

Other supports innovative payments, already launched or still in study, will also put in place: contactless payment card, bank transfer by SMS, prepaid bank cards, biometric payment online ...

In Europe, experience "laboratories" abound, but no business model seems to be finalized at this point. Bids still need to mature to provide an appropriate policy mix in terms of palatability and customer profitability, particularly in arbitrating on the following:

* Choice of media and associated technologies: NFC mobile phone (with card integrated or not with the SIM card), biometric POS, RFID card reading (with or without chip), USB drives to borrow for online payments ...
* Types of payments and services available: electronic wallet, bank account debit (backed or not network card), revolving credit line, transfer, various insurances ...
* Partners in the presence and role distribution business (distribution, retention, risk management, billing and collection ...): banks, telecom operators and MVNOs, biometrics specialists, retail signs, payment networks, card manufacturers and chips, cards and managers authorization centers ...

Carry Trade Part.III

This trend leads to a significant increase in financial markets, coupled with the disappearance of the concept of risk in the minds of market players due to a depletion of non cash flow. However, a decline of return on financial markets, a sudden reversal of the market, would result in substantial losses for investors, given the high level of leverage and risk now borne in the carry trade. Such a situation would cause a repositioning of investors followed by a rapid and concomitant unwinding of positions in many currencies.

The lower level of liquidity resulting from this movement would affect all markets and could be the detonator of a global currency crisis or a global economic crisis. The same situation was experienced in 1997-1998 in Asia while the yen carry trade operations had already been implemented and that the Russian market, object placement, had fallen sharply. Today the extent of yen carry trade is more important and the crisis would reach Europe and the United States, countries in which investments are made.

Against a backdrop of continued increase in U.S. and European markets, increasing the risk borne by financial transactions recently introduced, the Japanese monetary policy is closely watched by central banks. To prevent slippage of the financial markets, a gradual closing of the "tap" cash is needed and must go through a rate hike. However, the continued movement deflation in Japan does not motivate a significant rise in interest rates. Japan cannot afford to hire a genuine policy of monetary tightening; the Bank of Japan announced Feb. 21 an increase of 0.25% and should not go much further in the short term.

Several questions arise: what are today the real levers available to the Bank of Japan? Central banks have they any means to influence the global liquidity? Is it too late to avoid the worst?

Carry Trade Part.II

Since last few years, the carry trade is the most developed of the yen carry trade, however, note that they are also processed the Swiss franc.

For investors, the yen carry trade is interesting on two levels: firstly because of the difference in rates (the Bank of Japan lends at a rate of 0.25%, while investors can invest this money to rates above 5% in England and the United States), secondly because the yen's depreciation during the duration of the operation.

The situation faced today was introduced by Japan's economic policy. Following the crisis of the 2000s, Japan and the United States and Europe have dropped their rates sharply to avoid an economic slump. However, if the United States and Europe have been sharply reversed the trend, growth in Japan that has developed since then have been accompanied by a significant reduction of unemployment, low wage growth but to no inflationary pressures, the Bank of Japan was not forced to change its monetary policy and rates remained extremely low (0.25%). The yield spread, which has gradually opened up between the rates of Western central banks and the central bank has caused the Japanese yen carry trade phenomenon. The main actors are not taking advantage of that opportunity, the more comfortable it is artificially maintained by the Japanese central bank and no sign of change seems to appear.

However, significant risks facing the global economy. The current danger is that the carry trade is no longer limited to playing on differences in rates, but it greatly increases the global liquidity moving into the pockets present in economies with weak currencies to countries with high rates. The yen is borrowed in dollars, pounds sterling, Euros ... then invested in operations with high leverage.

Carry Trade Part.I

The asset borrowed at low rates is placed in high-yield assets is otherwise called Carry trade. Today, the phenomenon has grown strongly over the yen and becomes problematic. Many analysts calling the Banks to reconsider their policy. They do not seem to find echoes in Japan, but show an awareness of the danger generated. However, non-termination of existing problem at the G8 conference does not seem to go in the direction of a rapid response. The carry trade exchange, a concept theoretically unworkable in the long term.

A carry trade involves borrowing in foreign exchange currency in a country where rates are low, to change this amount in a currency "strong" and place it at high rates (treasury bills ...). Theoretically, the operation of the arbitrage transaction is ephemeral because the markets are efficient (at each moment is a financial security to its price) and rebalance through exchange rates and interest rates.

Moreover, because of the rule of parity uncovered interest rate, the interest of such an operation is theoretically zero. Indeed, a difference in rates between two countries reflects inflation differentials. But these differences are offset by a realignment of exchange rates. Thus, when an investor speculates on the difference in rates between two countries, he loses the same value on the exchange. That said, sometimes the law does not hold true in fact and that the currencies of countries with low rates suffer the opposite effect and depreciates. This is the case on the yen, which reached historic lows against the U.S. dollar and the euro.