Facebook’s mission is to “bring the world closer together.” Increasingly, that’s not just about connecting friends and family to share messages, but also serving as a platform for people’s financial lives.
Some $100 billion in payments have been enabled by Facebook over the past year, said David Marcus, who runs the company’s financial services unit. But that’s just the start of the social network’s ambitions in the finance industry, Mr. Marcus writes in a new memo about the country’s “broken” payments system, reported in the DealBook newsletter.
At the center of Facebook’s push into payments is Novi, a digital wallet intended for users to move money around the world quickly and cheaply (free, in many cases). The company had plans to pair it with a “stablecoin” cryptocurrency called Libra, but that was shelved amid regulatory scrutiny, and now the scaled-back project, known as Diem, is overseen by an outside nonprofit group seeking the necessary government approvals.
In recounting some of Facebook’s setbacks in trying to break into the crypto payments industry, Mr. Marcus describes the tech giant, the subject of antitrust inquiries around the world, as an underdog.
Facebook faces unfair resistance in the financial industry, he wrote. “I’ve heard multiple conversations about how this proposal would be so great if only Facebook wasn’t involved,” he said. “I understand and accept the need for extra scrutiny due to our scale.”
But Mr. Marcus describes Facebook as a “challenger in the payments industry,” with no specific plan yet to monetize use of the Novi wallet, which won’t charge for person-to-person payments, even across borders.
He added that allowing users to pay with dollars, euros and other fiat currencies via the Novi wallet would bring a lot of value.
“So why not just do that and call it a day?” he wrote. “Well, we might.” But before deciding on that, he doesn’t want to “waste our shot” at incorporating stablecoins into an “open, interoperable protocol” for online payments. “To have the maximum impact, building a closed system using fiat only wasn’t going to cut it,” he said in the memo.
Crypto advocates say blockchain technology allows for products that eliminate middlemen, credit checks and fees and it allows people excluded from traditional financial services to transact anytime, anywhere. Mr. Marcus believes that a well-designed stablecoin pegged to a fiat currency, backed one-to-one in cash reserves, could offer strong consumer protections. It would also be quicker to access funds than traditional bank accounts.
In practice, regulators are wary of stablecoins. An investigation of the popular stablecoin Tether by the New York attorney general’s office found that the company minted tokens without reserves to back them. In recent weeks, crypto tokens have raised concerns from the Treasury secretary, Janet Yellen; the Securities and Exchange Commission chair, Gary Gensler; and Senator Elizabeth Warren, Democrat of Massachusetts.
Mr. Marcus is seeking to allay those concerns. “We will continue to persevere and demonstrate we can be a trusted player in this industry,” he wrote, adding that the Novi wallet has licenses or approvals in nearly every U.S. state and the Diem stablecoin project “has addressed every legitimate concern.”
Facebook’s digital wallet is ready to come to market, Mr. Marcus said, and “we deserve a fair shot.” Judging by Facebook’s difficulties getting to this point, regulators remain to be convinced.
The former acting governor of the Afghan central bank, who has fled the country, said on Wednesday that nearly all of the bank’s $9 billion in reserves were beyond the reach of the Taliban, who took over the country’s government over the weekend.
Ajmal Ahmady, who was appointed to the central bank just over a year ago, said nearly all the money was held overseas, including $7 billion in assets by the Federal Reserve. In a series of Twitter posts, he added that $1.3 billion in assets were held by other international accounts and about $700 million were held by the Bank of International Settlements, which is based in Switzerland and acts as a bank for central banks.
“We can say the accessible funds to the Taliban are perhaps 0.1-0.2 percent of Afghanistan’s total international reserves,” he wrote. “Not much.”
On Tuesday, a Biden administration official said access has been blocked to Afghan central bank reserves held in the United States. This action, which was taken by the Treasury Department, will put economic pressure on the Taliban as they seek to keep public services operating.
Separately on Tuesday, a group of lawmakers sent a letter to the Treasury secretary, Janet L. Yellen, urging her to intervene in the scheduled release of $650 billion in International Monetary Fund emergency reserves this month. The allocation, of so-called special drawing rights, would potentially give Afghanistan and the Taliban access to $450 million.
On Wednesday, Mr. Ahmady wrote that Afghanistan was reliant on obtaining shipments of cash every few weeks because it had a large current account deficit. (Afghanistan imports about five times more goods than it formally exports.)
“The amount of such cash remaining is close to zero due a stoppage of shipments as the security situation deteriorated, especially during the last few days,” Mr. Ahmady wrote.
On Friday, the central banker received a call saying the country wouldn’t get further shipments of U.S. dollars, though the next one was supposed to arrive on Sunday. On Saturday, Afghan banks requested large amounts of dollars to keep up with customer withdrawals, but Mr. Ahmady said he had to limit the currency that could be sent to the banks to conserve the central bank’s supply. He said it was the first time he made such a move.
Mr. Ahmady added that he told President Ashraf Ghani about the currency shipments being canceled and that the Afghan president then spoke with Secretary of State Antony J. Blinken. Though he said the shipments were approved “in principle,” they never arrived the next day.
“Please note that in no way were Afghanistan’s international reserves ever compromised,” he wrote.
Without access to these reserves, Mr. Ahmady wrote, the Taliban will probably have to put capital controls in place and limit access to dollars, beginning a cycle in which the national currency, known as the afghani, will depreciate and inflation will rise rapidly. On Tuesday, the afghani reached a record low of 85.4 to the U.S. dollar, but appreciated about 3 percent on Wednesday, according to Bloomberg data.
The Daily Beast digital news site on Wednesday named Tracy Connor as its next top editor.
Ms. Connor, 54, will take over as editor in chief immediately, the company said in a statement. She has been acting in the role since the recent departure of Noah Shachtman, who left for the top job at Rolling Stone magazine.
A native New Yorker, Ms. Connor worked at the city’s tabloids, The New York Post and The Daily News, for more than a decade. She then moved to NBC News and spent time in its investigative unit, where she helped to lead an investigation into serial sexual abuse by the former gymnastics doctor Larry Nassar.
In 2018, she joined The Daily Beast as executive editor, working under Mr. Shachtman. She said in an interview that she came to The Daily Beast because it seemed “like an almost perfect blending of my tabloid background and also the passion that I had developed for deep digging.”
Ms. Connor will now lead all of the editorial strategy and functions of the publication’s newsroom.
“I really want to double down on investigations and impact,” she said, adding, “What we want to do is find the scandal before the scandal breaks.”
Ms. Connor said she also planned to expand The Daily Beast’s opinion section.
“We’re definitely known for our sharp political columns,” she said. “I’d like to expand that ‘voiciness’ into more columns on a broader array of topics, whether it’s culture and entertainment and lifestyle topics, and then also more columns that are pivoting right off national news that is happening outside of D.C.”
With a newsroom of 65, The Daily Beast has become known for its frequent scoops and scrappy tabloid style. The website was started in 2008 by Tina Brown, the former Vanity Fair and New Yorker editor, and Barry Diller, the chairman of IAC, which owns The Daily Beast.
“I’m always most pleased to promote from within, and Tracy Connor is a fine example of that preference: talented, savvy and more than capable of leading the Beast,” Mr. Diller said in a statement.
Heather Dietrick, the chief executive of The Daily Beast, said in a statement that Ms. Connor had a “ferocious appetite for unearthing the biggest stories and an unwavering commitment to excellence.”
A spokeswoman for IAC said that the publication’s overall revenue was up more than 50 percent in the last quarter, compared with the same period in the previous year. She added that revenue from memberships, which provide additional content, had more than doubled year over year. The website had its highest traffic on record last month, she said.
Propelled in part by surging demand during the pandemic, people spent more than $610 billion on Amazon over the 12 months ending in June, according to Wall Street estimates compiled by the financial research firm FactSet. Walmart on Tuesday posted sales of $566 billion for the 12 months ending in July.
Wall Street firms had been expecting this retail baton to change hands in the coming years, Karen Weise and Michael Corkery report for The New York Times. But the pandemic accelerated the timeline, as people stuck at home relied on deliveries. Walmart’s sales rose sharply during the pandemic, but it has not matched Amazon’s.
Alibaba, the giant online Chinese retailer, is the world’s top seller. Neither Amazon nor Walmart is a dominant player in China.
Walmart’s sales grew $24 billion in the last year, the company said Tuesday. During roughly the same period, the total value of everything people bought on Amazon rose by nearly $200 billion, analysts estimate.
Although the figures are calculated differently, analysts regularly use them as a rough comparison. Knowing the full value of Walmart’s sales is simple, because they nearly all come from its own inventory and are disclosed publicly each quarter. But analysts must estimate the value of Amazon’s overall sales because most of what people buy on its site are products owned and listed by outside merchants. The company publicly reports only the fees it takes from those transactions.
With Amazon’s success has come greater scrutiny. And the company has started to receive many of the same complaints that Walmart faced during its biggest periods of expansion more than a decade ago. READ THE FULL ARTICLE →
The Australian airline Qantas will require vaccinations for all employees. Pilots, flights attendants and other airport workers must be fully vaccinated by Nov. 15, while other employees will have until March 31. In a survey of nearly 12,000 employees, 89 percent said they were or planned to get vaccinated, with 4 percent saying they were unwilling to do so, the airline said. About three-quarters of those surveyed supported a mandate.
Coffee roasters have a problem. The cost of the beans that they import has soared this year, leaving roasters anguishing over whether their customers, from grocery stores to cafes to people looking for their daily latte, will tolerate higher prices.
Climate shocks in Brazil and shipping bottlenecks have pushed the price of coffee beans higher — and farmers and roasters are feeling the effects.
That also means your coffee could get more expensive. Here’s why →
U.S. stocks fell in early trading Wednesday, with the S&P 500 down about 0.2 percent ahead of the release of the minutes of the Federal Reserve’s policy-setting meeting last month.
The Fed will release the details of its deliberations on Wednesday afternoon, and investors will scour them for insight on when the central bank might start to wind down some of its pandemic-driven money policies.
Wednesday’s decline followed Wall Street’s sharpest drop in a month. The S&P 500 fell 0.7 percent on Tuesday, following a report from the Commerce Department that showed retail sales fell 1.1 percent in July.
Target dropped 1.4 percent in early trading after the retailer reported that sales growth is slowing after the big-box chain’s revenue surged during the pandemic. The company forecast single-digit growth in comparable-store sales for the second half of the year.
Lowe’s shares rose more than 8 percent, rebounding from a drop on Tuesday, after the home improvement chain reported that profits rose 6 percent from a year earlier, driven by home installation services and home décor products. Lowe’s same-store sales declined by 1.6 percent in the quarter.
The British pound rose 0.2 percent against the U.S. dollar after data showed Britain’s annual inflation rate fell more than expected in July to 2 percent from 2.5 percent the previous month. But economists expect prices to rise again next month. July’s decline was largely explained by base effects and the ability to collect prices last year as lockdown’s eased, the national statistics office said.