Etiqueta: T1

link: https://www.esgtoday.com/mercedes-benz-secures-e11-billion-sustainability-linked-loan-tied-to-climate-goals/

Date: Wed. Oct. 26 2022

Media: ESG Today

What happened?

The German company, Mercedes Benz, secured an 11 billion € sustainability-linked loan for its sustainable strategy “Ambition 2039” (they want to offer carbon neutral cars). 

Whom and where it affects?

The news specifically affects a German car company, Mercedes Benz. But it also affects the rest of the companies that compound the automotive industry. The fact that Mercedes started to use this type of financing loan, shows to the sector how the company’s future moves will continue being and how they have to react to compete in a changing world that is increasingly concerned about climate change and the CO2 emissions.  

What sort of public or private institutions are involved?

Directly is involved Mercedes ( a private company). Banks are also involved since they are the ones who provides the credit.

However, in 2014, the Spanish government also gave Mercedes 27 million dollars for its plant headquartered in Vitoria, allocated to promote sustainable industrial activity, so public institutions were involved in this plan of the company as well.

Why is it important for Banking and Finance?

Because it starts a trend for the automotive industry and how to finance their change to a new type of cars that produces less pollution and CO2 emissions, highlighting it’s not all about creating a cleaner car, but also about the way it is financed.

What do you think will be the consequences in the foreseeable future?

From our point of view, companies will be aware about the profitability of Mercedes, observing if this type of financing it’s not only worth it to climate change, but is also profitable to the company, keeping in mind how investors will react. If the industry concludes that this type of loans are worthwhile, it will result in an increase of sustainability-linked loans in the long term future. 

Keywords: Mercedes Benz, sustainable-linked loans, automotive industry, CO2 emissions

SDG: 9. Industry, innovation and infrastructure: inclusive and sustainable industrialization, 11. Sustainable cities and communities: affordable and sustainable transport systems and 12. Responsible consumption and production: sustainable management and use of natural resources.

Link: https://economictimes.indiatimes.com/tech/tech-bytes/g7-finance-leaders-lay-out-guidelines-for-central-bank-digital-currencies/articleshow/87012431.cms

Date: October 14, 2021
Media: The Economic Times

• What happened?

The G7, a group formed by some of the seven most influential countries in the world (Germany, United Kingdom, Japan, France, Italy, the United States and Canada), is stating that their financial systems are willing to support the creation of digital currencies. The main issue is that it needs to provide rigorous standards of privacy, transparency, and accountability for protection of user data. Also, in the article is stated that a central bank digital currency (CBDC) could help the flow of economy with liquidity, representing a safe-settlement asset that would be ideal to perform as an anchor for the whole payment system.

• Whom and where it affects?

This possible measure directly affects the economic system of the G7, and also the organizations they belong to (i.e. The European Union, in the case of France or Germany), but also, it would be a gamechanger in normal people’s lives, since the governments could arguable have more control over theirs population’ monetary movements.

In the long run, we estimate that, if given the opportunity, it would restructure the global economy as we know it, so technically everyone around the world would be splashed sooner or later.

• What sort of public or private institutions are involved?

Mainly, it would be the G7 Central Banks that are involved, since they will be the ones issuing and regularizing the virtual money and ensuring compliance with their rigorous privacy standards, to modernize financial systems and speed up both domestic and international payments in a safe way.

Also, It is expected that private banks will also be changing their intern structure to cope with these groundbreaking changes.

• Why is it important for Banking and Finance?

This is important because the Central Bank of each country rules the rest of the Banking of its own country, as main responsible of guaranteeing the stability of its currency. Therefore, the rest of financial entities, public or private, will be heavily encouraged to embrace Central Banks’ guidelines.

So, on the bottom line, if this measure is adopted, all the Banking systems will change, including the way people and companies invest.

• What do you think will be the consequences in the foreseeable future?

We think it is a risky move over the future of the world economy, since not many Central Banks have evolved this way and, with the ‘Boom’ of Cryptocurrencies like Bitcoin, Ethereum and many others revolutionizing the way people see finances, it is definitely a step forward that will shape the rest of the 21th century, the era of technology.

If the G7 Central Banks carry out this financial regulation, we think it will not be too long before the rest of countries start implementing these measures too, just because it is better for governments to avoid fraud risk and control people’s debts, payments and other aspects.

Also, we do not think it will be bad for the people’s privacy when it comes to private external companies, because they will not, assumably, be able to trace nor to access to the public systems of the Central Banks.

KEYWORDS: central banks, digital currency, G7, financial stability, payments sistem

Link:  https://www.thebanker.com/World/Americas/US/Fed-plans-new-round-of-bank-stress-tests-in-response-to-Covid-19

Date: 15^th of October 2020

Media: The Banker

What happened?

Due to the ongoing uncertainty around the Covid-19 pandemic, the US Federal Reserve Board has announced another round of bank stress tests to see how large banks stand up against two scenarios featuring severe recessions.

Whom and where it affects?

Firstly, it affects US-based banks and financial institutions, especially those with large trading or processing operations, because their strength and solvency will be tested.

It also affects all creditors of those banks, as the results of the tests will give them insight into the banks’ capital strength under a tailored set of assumptions, given the ongoing coronavirus-related uncertainty.

Finally, it indirectly affects everyone, as the strength and health of the international banking system is something that has effects on our daily life.

What sort of public or private institutions are involved?

The most important institution involved in this piece of news is the US Federal Reserve, which is the central bank of that country and the competent authority for carrying out stress tests, which are now needed because of the fragile economic situation due to the Covid-19 pandemic.

Also, private banks are important in the article because they will be subjected to those stress tests, what means that their resiliency is going to be evaluated by the FED.

Why is it important for Banking and Finance?

As we are facing a pandemic that is affecting all aspects of our lives, the strength of the international financial system is a fundamental key to prevent possible future crashes.

Therefore, it is important to evaluate the health of the most important financial institutions worldwide, especially private banks, because we need to know if they would be capable of resisting to an adverse economic scenario derived from the pandemic. Depending on the results of those tests, the confidence in the financial system will either increase or decrease.

What do you think will be the consequences in the foreseeable future?

If the results are positive and banks can demonstrate their solvency and strength despite the adverse financial situation, creditors and investors would be more willing to keep investing on them, and therefore, the economic situation might improve, as those investors would maintain their confidence in the system. That could also reduce the impact of the pandemic in the economy.

However, if banks fail those tests, the confidence in the banking system would plummet, and consequently depositors and investors might want to withdraw their money, what would lead to a bank failure that could easily extend to the rest of the institutions because of the adverse situation resulting from the pandemic.

Key words

Stress test, banks, FED, scenario, economy, pandemic.