The Daily Update - G20 - Putin

Steven Mnuchin, the U.S. Treasury Secretary, will have to be on his game over the next few days as the G20 finance ministers meeting in Buenos Aires begins. The talk of tariffs and trade wars will never be far from ministers’ minds as Mnuchin tries to defend Donald Trump’s trade plans against an increasing irate audience. As former Treasury and Federal Reserve international policy official Edwin Truman put it, ‘He’s going to get an earful from them’ adding, ‘Mnuchin is going to be playing defence in his comments and he’ll put the best face on it that he can’. Whilst the tariffs announced so far may have a limited global impact, anything that constrains trade will also constrain global growth, so any escalation of trade wars will need careful watching.

Another item on the agenda for the ministers will be cryptocurrencies. Mark Carney, who is chairman of the Financial Stability Board, believes that at the moment at least, the board does not see cryptocurrencies as a threat to global financial stability. In a letter published on the eve of the G20 meeting, Carney writes, ‘Even at their recent peak, their (cryptocurrencies) combined global market value was less than 1% of global GDP’ adding, ‘In comparison, just prior to the global financial crisis in 2008, the notional value of credit default swaps was 100% of global GDP’. He went on to say, ‘Their small size, and the fact that they are not substitutes for currency and with very limited use for real economy and financial transactions, has meant the linkages to the rest of the financial system are limited’.

Lastly, as widely expected, Vladimir Putin won a fourth Presidential term to extend his 18 years in office. With over 99% of the votes counted, Putin, who will be 71 at the end of this term, had a landslide 77% of those votes. Putin’s biggest challenger to the Kremlin, Alexei Navalny, was blocked from running due to a criminal conviction for embezzlement in 2017, which under Russian law, means he is unable to stand for public office. There were 7 other names on the ballot paper, with Pavel Grudinin, coming in second with less than 12% of the votes. Russian bonds did not react materially to the news.

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