International Finance - Sep-Oct 2022

Uplifting Kuwait’s Living Experiences

URC aims to transform Kuwait into a financial and trade hub, and make it more attractive for investors

SANJAY KUMAR EDITOR-IN-CHIEF INTERNATIONAL FINANCE

Real Estate: Two sides of a coin

The crisis around China’s real estate sector is growing, as enraged citizens have been sending warnings to property developers, banks and local governments about overpaying mortgages, despite construction activities being stopped. The mortgage boycotts are posing a fresh challenge for the Xi Jinping government.

Construction activities have been stalled across the country and people’s life savings are getting eaten up. China’s property sector, which used to contribute around one-quarter of the nation’s GDP, has been in a crisis situation since 2020, due to COVID lockdowns and soaring debt.

Shifting our attention from China, things are not well in the United States too. A Federal Reserve report states that the households in the world’s largest economy are now battling with a debt crisis, which has reached a record high of USD 16.15 trillion in the 2022 second quarter, driven primarily by a USD 207 billion increase in mortgage balances. Credit card and auto loan debt have also been rising as consumers increase their borrowing to deal with skyrocketing inflation.

Moving on, let’s put our focus on the beleaguered crypto sector, where the digital currency’s negative volatility and an overall poor sentiment among customers have raised the question of whether the industry is going through a bubble burst phenomenon. As a result, the experts are now batting for the introduction of regulations to stabilise the sector.

While this edition revolves around these stories, our cover story is about a leading real estate development and investment firm in the MENA region, United Real Estate Company (URC), which has reported a massive increase in its net profit for the first half of 2022.

IF SEPT - OCT 2022

URC: CREATING VALUE FOR SHAREHOLDERS

URC is a leading real estate developer and investor in Kuwait and the MENA region

TECHNOLOGY

16

GIVE UP YOUR FLIGHT SEAT FOR MONEY

Around 34% of travelers are flying on Frontier Airlines, and 32% on Southwest Airlines

ECONOMY

UK MONARCHY: THE ROYAL FAMILY EMPIRE

The Crown Estate owns nearly the whole seabed surrounding the United Kingdom

IN CONVERSATION

34

OUR CAMPAIGNS HELP PEOPLE OF AFGHAN: ASEEL

Aseel, a mobile app originally designed to sell Afghan-made handicrafts to global markets

ANALYSIS

12 China's real estate crisis threatens global economy

30 Cost-effective biz website no more a dream

IS CRYPTO REGULATION GOOD?

Crypto regulation could bring more stability in a notoriously volatile market

38 58

WHY MUST BANKS TAKE ADVANTAGE OF SOCIAL MEDIA?

44 Is the Russian economy collapsing?

64 Cash is king, but it's not 'cheque mate' yet

US HOUSEHOLDS SINKING IN DEBT

The total household debt in the US has increased by more than USD 2 trillion since the fourth quarter of 2019, right before the pandemic started

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Goldman Sachs retreat from retail banking

Goldman Sachs is retreating from the retail banking sector, as it folds its digital unit Marcus into the asset and wealth management division. The Wall Street giant's boss David Solomon stated that placing Marcus within wealth management is a better place for the company to be focused than to be out massively looking for consumers.

"The concept of really being broad with a consumer footprint is not really playing to our strengths. But when you look at our wealth platform...the ability to add banking services to that and align it with that actually plays to our strength," he said.

Electric air taxi start-up bags mega deal

United Airlines has added as many as 400 electric air taxis, known as electric vertical takeoff and landing, (eVTOL,) aircraft to its order backlog under a new deal with Embraer-backed Eve Air Mobility that was unveiled in September 2022. The deal also includes a conditional order for 200 aircraft plus 200 options, in addition to United’s existing conditional order for up to 200 eVTOLs from Archer Aviation, reported Airline Weekly. The airline will also invest USD 15 million in Eve. With this, United enters the rapidly growing urban air mobility market.

Credit Suisse goes for radical overhaul

Credit Suisse announced a series of radical measures to turn around the beleaguered bank's future after its huge third-quarter losses. The measures include revamping the bank's investment banking unit, 9,000 job cuts and raising fresh capital. Switzerland's second-biggest bank has also launched a strategic review, saying the results were intended to create "a simpler, more focused and more stable bank". The bank also intends to raise capital worth 4 billion Swiss francs through the issuance of new shares to qualified investors.

The Pixel 7 Pro will have minor upgrades as compared to its predecessor. Google is expected to switch to the Tensor G2 with the smartphone. GSMArena predicts that the new chip will bring in GPU, NPU and modem improvements. The Pro model will also be available in 12GB/128GB and 12GB/256GB configurations. It will carry a similar 50MP main, 12MP ultra-wide and 48MP telephoto setup as its predecessor.

TECHNOLOGY

US go after North Korea-linked hackers

Ones to Watch

The FBI and private investigators have seized about USD 30 million worth of cryptocurrency, which was stolen by North Korea-linked hackers from a video game company in March 2022, according to Chainalysis, the US firm which reportedly worked with the Joe Biden government.

However, the recovered amount is just a fraction of the equivalent of more than USD 600 million that the FBI said the North Korean hackers originally

stole from Sky Mavis, a company with an office in Vietnam that makes a popular video game that allows users to earn digital money.

As per CNN, the seizure is still a breakthrough for US law enforcement agencies. According to Erin Plante, Chainalysis’ senior director of investigations, the Joe Biden administration is actively trying to recover some of the remaining loot.

By the Numbers

The OpenAI CEO is changing the tech game by developing sophisticated algorithms with huge computing and data sets. OpenAI’s innovations are AI image generator and speech recognition software.

HOLDING

The Saudi Prince announced his USD 1.9 billion investment in Twitter, during a recent Securities and Exchange Commission filing.

MOHAMED

The Emaar founder will be making USD 4 billion from the Americana Group IPO. Americana, which operates restaurants in the MENA region, is working with Morgan Stanley on the IPO.

ALABBAR EMIRATI BUSINESSMAN

PRINCE ALWALEED BIN TALAL BIN ABDULAZIZ

FOUNDER OF KINGDOM

SAM ALTMAN CEO OF OPENAI

Boeing deliveries in July 2022 had fallen to a five-month low of 26 aeroplanes

Boeing’s delivery figures rise up again

Boeing jetliner deliveries rose in August 2022 to 35 aeroplanes as the US aviation giant resumed handovers of its 787 Dreamliner after a 15-month delay amid supply chain disruptions. Boeing’s monthly deliveries included 27 737 MAX jets, two 787s and five freighters, which raised the total MAX deliveries this year to 240 jets and overall aircraft deliveries to 277 through August.

Boeing deliveries in July 2022 had fallen to a five-month low of 26 aeroplanes, highlighting the pressure on global supply chains due to the COVID outbreak and Ukraine war. In September, Boeing also reported 30 new gross orders for aeroplanes, including 13 737 MAX planes and reported 26 net new orders as four 737 MAXs were unbooked including two for Chinese-based Okay Airways, as per a Reuters report.

Boeing in August 2022 delivered its first 787s since May 2021, a 787-9 to German flag carrier Lufthansa and another 787-10 wide-bodied aircraft to KLM, part of Air FranceKLM. However, two 787s for American Airlines that were "contractually delivered" in August

this year were not yet booked as delivered because Boeing is still performing some pre-scheduled post-delivery customization. Boeing's gross orders net of cancellations rose to 338 for the year 2022.

In July, the Federal Aviation Administration (FAA) approved Boeing's inspection and retrofit plan needed to meet certification standards. In September 2020, the FAA said it was investigating manufacturing flaws in 787 airliners. Boeing has about 120 787s awaiting delivery. The FAA will, however, inspect each aircraft before the issuance of an airworthiness certificate. The aviation watchdog delegates aeroplane ticketing authority to the manufacturer, but in instances like the 737 MAX, it has retained responsibility for approving the new jets. American Airlines has around 40 additional 787s on order. Two of the new 737 MAX orders in August were for American, Boeing said. In January 2022, Boeing disclosed a $3.5 billion charge due to 787 delivery delays and customer concessions, and another $1 billion in abnormal production costs stemming from manufacturing flaws, along with related repairs and inspections.

The hacker tricked the Binance Bridge into sending out 1 million BNB tokens

Hackers target Binance Smart Chain

Transactions on the Binance Smart Chain, the leading crypto exchange, were halted early on October 8 after a security breach was discovered on its cross-chain bridge, BSC Token Hub, as per media reports. While initial estimates said that the hackers got away with stolen funds worth between $100 and $110 million, Binance CEO Changpeng Zhao has now taken to Twitter to confirm the incident, as he reassured the platform's users that their funds were safe.

"An exploit on a cross-chain bridge, BSC Token Hub, resulted in extra BNB. We have asked all validators to temporarily suspend BSC. The issue is contained now. Your funds are safe. We apologize for the inconvenience and will provide further updates accordingly," Changpeng Zhao tweeted.

According to Sam Sun, head of security at Paradigm, the hacker tricked the Binance Bridge into sending out 1 million BNB tokens (cryptocurrency coin powering the BNB Chain ecosystem). As the exploit worked, the hacker used the same method to send out an additional 1 million BNB

tokens to an address controlled by the threat actors. The 2 million BNB tokens would be worth over $540 million, making it one of the largest exploits in crypto history. Blockchain security firm SlowMist has confirmed the figure in a tweet, while stating that the misappropriated assets included ETH, MATIC, BNB, AVA and other tokens.

As per a CNBC report, the actual extent of the hack is estimated to be considerably less due to the crypto community's mitigation and containment efforts. Network validators were also asked to temporarily suspend transactions on BSC, thwarting the hacker's efforts to transfer funds off-chain.

According to a blog post, the hacker was only able to transfer between $100 million-$110 million off-chains, of which "an estimated $7 million has already been frozen." The biggest relief is that the BSC users won't be affected by this cybercrime, as the stolen tokens didn't belong to them. This is the third attack on cross-chain bridges in 2022. Prior attacks saw $650 million and $100 million syphoned from the Ronin and Horizon bridges, respectively.

International benchmark Brent crude futures, which stood at $100 a barrel is at $85.46 a barrel

Elon Musk completed the $44 billion acquisition of Twitter on October 28 2022

Oil production cut by OPEC+

In its recent meeting, OPEC+ decided to slash their daily oil production by two million barrels, citing a fall in the crude oil values in 2022. However, experts and industry stakeholders now fear a rise in fuel prices. The Brent crude value jumped another almost 2% to more than $93 (£82) a barrel in October 2022. International benchmark Brent crude futures, which stood at $100 a barrel is at $85.46 a barrel. An official of the RAC motoring group told the BBC that the OPEC+ decision would force up the wholesale fuel cost. "The question is when, and to what extent, retailers choose to pass these increased costs on at their forecourts," spokesman Simon Williams said.

UK's expensive house under renovation

The United Kingdom's most expensive home, sold in 2020 to a Chinese billionaire, is on the market again, as per a Guardian report. The 45-room mansion in London, which overlooks Hyde Park, was once owned by Saudi Prince Sultan bin Abdul-Aziz. The mansion has a 40-foot swimming pool which cost £200,000. As per reports, plans have been drawn up to convert the house into a private palace, with a two-level basement and a ballroom. Once finished, this high-profile property’s price tag will go as high as £500 million. As per a Financial Times report, the last owner of the property was Hui Ka Yan, former chairman of the Evergrande Group.

Source: Statista

Bitcoin (BTC) price between January - October 2022 (In US Dollar)

ADIB witnesses net profit Tesla employees to work for Twitter

New Twitter owner Elon Musk has pulled over 50 of his Tesla employees into the micro-blogging platform’s fold. As per CNBC, most of these drafted persons are from Tesla’s Autopilot team. Elon Musk completed the $44 billion acquisition of Twitter on October 28 and made his mark there immediately by firing the social media company’s CEO Parag Agarwal, CFO Ned Segal, policy and legal team head Vijaya Gadde, apart from dissolving Twitter’s board of directors. According to internal records viewed by CNBC, employees from Elon Musk's other companies have now been authorized to work at Twitter. Elon Musk told staff that they needed to work long hours at a high intensity, and gave them about 40 hours per week.

Abu Dhabi Islamic Bank (ADIB) has reported its highest quarterly net profit of over Dh1 billion ($274.9 million) in the third quarter of 2022. The bank witnessed a 105% rise in its net profit compared with the Dh 493 million earned in the 2021 period. It also registered an annual growth of 53% in its net profit to over Dh2.4 billion. Revenue for the January-September period jumped 10% to more than Dh4.5 billion compared to Dh4 billion in 2021. The growth was driven by a 22% increase in fees and commissions and another 10% rise in funded income to Dh2.8 billion. Customer deposits rose 26% year-on-year to reach Dhs138bn, versus Dhs110bn in 2021.

China’s property boom has been a huge driver of the country’s economic growth -- the sector is responsible for around one-quarter of GDP

China's real estate crisis threatens global economy

IF CORRESPONDENT

Hundreds of thousands of Chinese people have sent angry messages to China's developers, banks and local governments that have reverberated in Beijing’s halls of power. “You stop construction, I stop paying my mortgage,” says one letter, sent on behalf of 7,200 households that bought deeds in the same property development in Chongqing.

“You hand over the apartment, I will start paying.”

Similar threats have been made -- and in some cases carried out -- across 328 property developments in nearly 100 cities. Some of the messages have appeared briefly on Chinese social media platforms before being scrubbed by censors. But their echoes remain -- the letters have been preserved on a crowdsourced website titled WeNeedHome -- as does the fury. The mortgage boycotts are posing a fresh challenge for the government in a country where widespread dissent is uncommon and other economic troubles loom large.

What prompted people to speak out?

The short answer is that construction has stalled at apartment complexes across the country -apartments that have eaten up many people’s life

savings. The long answer traces to deep-seated problems in China’s real estate sector that have been brewing for decades and laid bare over the past two years.

China’s property boom has been a huge driver of the country’s economic growth -- the sector is responsible for around one-quarter of GDP. But now a pair of factors has brought developers to their knees: China’s economic headwinds -- due primarily to its strict 'zero-COVID' policy that has locked down entire cities -- and a government effort to rein in the real estate industry’s soaring debt.

“We are in the midst of a slow-motion crisis. I would view the property sector’s distress as absolutely central to China’s current economic slowdown,” Logan Wright, a partner at Rhodium Group who leads the firm’s China markets research said.

Roots of the crisis

Logan Wright says that the 'slow-motion crisis' has many roots. To some extent, it was planned: The government explicitly wanted to cool down the red-hot property sector. For years, apartment buildings shot up across China as people moved from the countryside to cities and developers had easy access to credit. But it soon became clear that real estate investors -- not actual home buyers -were the ones driving up demand in a speculative frenzy that left vast expanses of apartments empty.

Construction has stalled at apartment complexes across the country -apartments that have eaten up many people’s life savings

ANALYSIS REAL ESTATE CHINA PROPERTY

Property prices soared, and home ownership became increasingly unaffordable for China’s middle class. At the same time, another problem was brewing: The developers who were benefiting from those high prices amassed a mountain of debt to keep building at a breakneck pace.

“They have taken on too many loans to build too many buildings that no one really wants to live in,” Jeremy Wallace, an associate professor at Cornell University who has studied urbanization in China said.

In recent years, government officials have begun to see the underbelly of risk in that property-fueled economic growth model. President Xi Jinping has taken to repeating the exhortation that 'houses are built to be inhabited, not for speculation'.

In August 2020, the Chinese government decided to intervene to deflate the housing bubble before it burst. The housing ministry and the People’s Bank of China announced a 'three red lines' policy, laying out three benchmarks to evaluate the level of debt developers had taken on. If regulators found that a developer had exceeded any of the benchmarks, they would place limits on the developer’s ability to borrow further.

It turned out that many of China’s biggest developers had blown past the thresholds -- and all

of them now had to start re-balancing their lopsided balance sheets. That left these companies short on cash needed to complete the apartments they would promise to people all over the country. The early seeds of the boycott movement were planted.

“It is no surprise if you have this extensive distress that you are seeing within the property sector, that eventually, this issue would have come to a head," Jeremy

Wallace said.

Real estate bombshell

In the wake of the 'three red lines' policy, China appeared to come close to its own Lehman Brothers moment last year. As in a moment when one company’s troubles nearly cratered the country’s economy. Evergrande is the poster child for China’s real estate craze. It is a privately owned company that became China’s largest real estate developer, and as it grew, it took on an enormous amount of debt: more than $300 billion as of last year.

Even before the three red lines policy, Evergrande was facing pressure as China’s economic growth slowed, cooling demand for the company’s often lavish properties. But the new policy pushed it over the edge. Because it could no longer borrow as easily under the new government rules, Evergrande had to begin rapidly selling off pieces of its diverse business

empire. But it still couldn’t keep up with its debt payment schedule. In December 2021, Evergrande failed to make payments to international bondholders, thereby officially crossing over into default territory.

Evergrande’s fall immediately set off concerns that China’s whole real estate sector would collapse. But instead, Evergrande’s troubles and China’s response have been a part of that slow-motion crisis. The government decided to intervene and has worked with Evergrande to develop a plan to restore the company to solvency. For now, a full collapse has been averted, but Evergrande’s path forward remains uncertain. It recently missed a July deadline to release a plan for restructuring its debts.

Meanwhile, the same story has played out for other large developers in China. The new rules have hit their ability to borrow from banks, and Evergrande’s high-profile struggles have made it harder for all these companies to access capital from foreign markets.

Experts say that some of this fallout from the red line policy was inevitable, but it was made worse because of a “perfect storm” of other economic factors.

“I think they were trying to do something that was very difficult -to deflate something in its real estate sector that looked very bubble-ish. To do this in 2020, 2021, it seemed reasonable that maybe they would be able to pull it off, but with zeroCOVID really destroying other economic activity, it’s really made things a lot more difficult,” said Jeremy Wallace.

Summer wave of mortgage protests

The downfall of Evergrande and other behemoth developers leads back to all those angry mortgage holders. Evergrande is now the target of the largest number of mortgage boycotts. According to WeNeedHome, of the 328 developments where homeowners are threatening to withhold their mortgage payments, 52 are Evergrande properties.

Government policy certainly contributed to the problems, but they are magnified by China’s unusual, and problematic, property sales model. China’s real estate developers typically use a “presales” tactic in which buyers -- or the banks that hold their mortgages -- must pay in full for homes that have yet to be built. So even before many Chinese people move into their apartments, they are already making mortgage payments.

That model worked well enough while developers were able to build at a rapid pace and hand over apartments, but the recent setbacks have thrown wrenches into that process. In the past, developers were able to illegally tap into the cash they collected from presales to build other projects in their portfolios. But with zero-COVID hitting the economy, people have been less willing to buy apartments, so these sales have fallen. That in turn has left developers short on cash for construction.

Meanwhile, the three red lines policy has prevented the developers from borrowing more to compensate. All this has produced a vicious cycle, as Michael Pettis,

The top real estate companies in China as per market capitalization in US Billion Dollar

17.8

China Vanke

15

China Resources Land

10.7

Poly Real Estate

10.6

Shimao Property

6.2 Country Garden

5.8 R&F Properties

5.2

Sino-Ocean Land

5.2 Agile Property Public

4.7

China Merchants Property

4.4

Source: Global Brands

China Overseas Land and Investment Limited -

a professor of finance at Peking University, wrote in a recent blog. The news about the liquidity crisis has also scared people off from buying presale apartments because they fear developers won’t be able to complete them. That, in turn, cuts further into developers’ cash.

“What you’re seeing is the unwinding of confidence that developers are still going to have sufficient resources to complete houses out there. It’s a significant change in credit conditions more broadly for developers,” said Logan Wright.

With no money in hand, developers started to push the pause button on their construction projects, leaving hundreds of thousands of people paying mortgages with no idea when they will actually move into their apartments. That’s why so many mortgage holders have banded together and threatened to stop paying.

What comes next?

Chinese government officials are working hard to contain the boycotts and keep the property market from going farther off the

rails. It’s a delicate balancing act; the government wanted to reduce debt in the sector, but it’s now being forced to intervene to stop the crisis from spreading into other parts of the economy.

So far, authorities have largely allowed the boycotters to pause their payments without penalty. And the government isn’t leaving developers entirely in the lurch. Central government officials are trying to help speed the completion of projects, initially by appointing local governments to oversee the work. Chinese financial outlet Caixin reported that local stateowned companies might even be tasked with purchasing stalled developments and completing them on their own.

But local governments alone can’t fix the problem, in part because they are already highly indebted from implementing the costly zero-COVID policy, and the central government seems to realize as much. Bloomberg reported that the central bank will provide nearly $30 billion in special loans to developers to help them finish the delayed projects.

Even that is likely to be far from sufficient. Given how much revenue the sector is currently losing, the $30 billion “doesn’t seem large enough to help developers significantly at all,” said Logan Wright.

One thing is clear, from Jeremy Wallace’s perspective: Given the political sensitivities, the mortgage boycotters won’t be left to bear the full cost. “It’s a very compelling population. The family that has saved up in order to buy something that they never get because of some billionaire developer -- that is a political fight that they will always win. And I think that’s really a dangerous potential problem that the government won’t let or can’t let sit forever," he added.

Meanwhile, even if the government ultimately manages to get developers to deliver most of the apartments to the boycotters, the broader distress in the property sector still threatens the country. Sales across China’s top hundred property developers dropped by half in the first six months of the year, according to the New York Times. Home prices have also been falling, and more developers are still expected to default this year. In some ways, this is what the government was aiming for, but the real estate sector has plunged too quickly due to zero-COVID. Where will this downward spiral leave China? It is likely to stick to a path of reining in the property sector to a large extent, even if it continues to come at an economic cost.

editor@ifinancemag.com

Although air travel disruptions are nothing new, this year has witnessed a sharp increase in the compensation airlines have paid affected travellers

Give up your flight seat for money

IF CORRESPONDENT

Atraveller feels agitated and angry when he/ she is told to give up their seat on a plane. But what if the person is offered compensation of USD 1,500 or maybe even USD 10,000? The choice may seem quite obvious to some people. A few months back, eight passengers on a Grand Rapids, Michigan to Minneapolis, Minnesota overbooked Delta flight made USD 10,000 after being asked to give up their seats. Despite what some individuals may think, compensating passengers who overbook is a recurring practice. In 2022, travellers were given up to USD 3,000 at New York's LaGuardia Airport to disembark an aircraft to West Palm Beach, Florida. Although air travel disruptions are nothing new, this year has witnessed a sharp increase in the compensation airlines have paid the affected travellers.

According to the law, the compensation amount usually ranges from USD 775 to USD 1,550 depending on the cost of the traveller's ticket and the length of the delay. However, some airlines are wise enough to spend well above these usual amounts to avoid PR disasters. Despite the significant advantages, overbooking flights has outraged many travellers. In the first week of June,

Google searches for "expected flight delays tomorrow" jumped by more than 400%. As a result, many took to social media to complain about missing connecting flights or scheduled engagements. They blamed the overbooking of flights as the main reason behind this. Here is all you need to know about the controversial airline practice and how to deal with it.

The bottom line for these airlines is to make maximum profits. Airlines aim to ensure that every flight is full, just in case a few passengers decide to cancel their reservations or fail to show up, which happens quite often because of frequent weather delays causing people to miss connecting flights. To pay the price of those vacant flight seats, airlines resort to overselling flights. But this is something that doesn't always work out. Overselling caused 7,143 confirmed bookings to be involuntarily denied boarding from an aircraft between January and March 2022,

up from 742 over the same time frame in 2021 and 1,576 in 2020.

According to the latest Air Travel Consumer Report, around 34% of those travellers were flying on Frontier Airlines, 32% on Southwest Airlines, and 14% on American Airlines. Among major airlines, Delta Air Lines, United Airlines, Alaska Airlines, and JetBlue Airways had the least reports. During an interaction with TIME, Scott Keyes, the founder of Scott’s Cheap Flights, said, "Airlines make their best-educated guess at how many people they think are going to show up for that flight based on historical standards. It can end up backfiring if they’re wrong and aren’t able to convince volunteers to take the compensation they’re offering to take a later flight.”

Airlines often overbook both domestic and international flights as a result of their long-running bets on seat availability. The problem was brought to light in April 2017 when a Kentucky doctor was selected at random to give up his seat. But the Kentucky doctor refused to do so as he had patients to attend to the following day. He was not only violently pulled out of the overbooked United Airlines flight but also ended up bleeding and was knocked unconscious. After a video of the incident went viral, United Airlines was forced to make a big settlement amount of somewhere around USD 140 million.

The repercussions compelled the airline industry to alter its overselling strategy. Currently, the airline industry is providing travellers with far more money to prevent unnecessary PR attention. But things always don't happen as you wish. A few months back, a traveller took to Twitter and blasted Southwest Airlines regarding an overbooked aircraft that caused their

family to miss a cruise vacation, and that they were only given a USD 150 coupon as compensation because they were put on a standby flight.

Another passenger who gave up her seat on an overbooked aircraft from Fort Worth, Texas, to New York City said that American Airlines only gave a USD 150 coupon despite telling her that she would get USD 825 in credit. Kanya Grace, who was put on an alternative flight that arrived five hours late to her destination, said, “I understand being 21 is grown but I was also by myself and that can be scary at times. I felt like I was being played with and lied to by American Airlines."

According to Tomasz Pawliszyn, the CEO of AirHelp, a for-profit air travel rights advocacy organization that assists passengers, airlines typically

first ask passengers who aren't in a rush to give up their seats voluntarily in exchange for compensation, but if they are still overbooked, airlines can deny a passenger a seat on an aircraft based on criteria that it establishes, such as the passenger's check-in time, the fare paid by the passenger, or the passenger’s frequent flyer status. Checking in early may be helpful for travellers looking to avoid being bumped off a flight.

By law, airlines must provide checks or cash to passengers who are denied boarding, but the amount of compensation to be paid is up to them. Experts advise negotiating with airline employees to increase your compensation package before agreeing if you're willing to give up your seat due to an overbooked aircraft.

Scott Keyes said, “Many times you

can negotiate for things like a better flight, hotel vouchers, meal vouchers, and lounge passes. A lot of people miss this when it comes to getting bumped from an airline, but it’s not a one-way street. There’s a secret menu of options that airlines have at their disposal that they can offer you beyond money or credits.”

For instance, Scott Keyes advises asking airline employees to make their replacement flight non-stop or business class instead of the economy, in addition to negotiating the amount of money they provide, if you are refused to board. But only some airlines might be able to make accommodations.

“Like so many companies, airlines are profit-seeking corporations. They’re not going to start out by offering USD 10,000. But when they’re desperate

enough, they will," Scott Keyes added. US airlines offer compensation for overbooked flights that cause you to reach your destination more than two hours from the actual arrival time. The minimum compensation rate must be USD 1,550 or 400% of your one-way cost, whichever is less, according to Department of Transportation regulations. The airline must compensate you at least USD 775 or 200% of your one-way cost, whichever is less, if your substitute transportation is due to arrive between one and two hours after your initial arrival time.

Involuntarily bumped passengers who are given alternate transportation within one hour of their scheduled arrival time are exempt from being paid compensation. According to a recent survey from AirHelp, over 95% of US citizens are not aware of these laws.

According to AirHelp CEO Tomasz Pawliszyn, the number of travellers visiting the website is up more than 50% from the previous month and the number of travellers requesting assistance with making compensation claims has doubled. “We see a significant increase in customers using our service,” Tomasz Pawliszyn said.

Visitors travelling to Europe this summer are slightly subject to different legalities. For preventable flight disruptions such as delays longer than three hours, cancellations, or denied boarding owing to overbooking, passengers on flights that are from the European Union member states are eligible for up to USD 700 in compensation per person.

“It’s a bit surprising when you think of it from a purely financial standpoint—

why would airlines be offering USD 5,000 in compensation when under federal law, they’re only required to offer USD 1,550? But when you look at it from a PR perspective, the answer is very clear, because bumping people against their will makes them very upset as it should and can result in some pretty disastrous social media fodder,” Scott Keyes concluded.

It's not just the general public who is dealing with these situations. A few months back, Hollywood actor Matthew Lewis vented out his frustration regarding overbooked flights. He said that Air Canada tore up his first-class ticket in his face.

Matthew Lewis, who is best known for playing Neville Longbottom in the "Harry Potter" movies, complained on Twitter, blaming Air Canada for forcing him to fly from Orlando to Toronto in economy class.

Matthew Lewis said that his first-class flight had to be cancelled due to overbooking and that when he was rebooked, the airline sent him back to coach.

On Twitter, Matthew Lewis wrote, "Confirmed. Air Canada is the worst airline in North America. And that's saying something. I've been bumped before. I think it's a ludicrous policy that we've inexplicably normalized but it is what it is. That said, that's not my issue. I wasn't told till boarding, no apology, no ask if I would like to rebook, and if I want a refund I have to call them."

Not only in the US but overbooking flights has also been a common occurrence at airports all over the globe. AirAsia flyer Susan Yong and her family faced a harrowing tale, as reported by Carlist.my. She booked a flight back in April 2022 for herself, her mother, her husband, and her in-laws to fly out to Chiang Mai, Thailand on 16 November

2022. After arriving at the airport on her travel day, Susan Yong was informed by the Air Asia check-in counter that her flight was overbooked and the families will be given another flight on the following day.

Susan Yong denied the offer as she reportedly had hotel and car bookings on the same day as their original flight. While the AirAsia staff offered a different flight at a later time and promised that Yong and her family members would be in Thailand on the same day, they changed the destination from Chiang Mai to Bangkok. Realizing that the places are almost 700km apart, Susan Yong declined this offer as well, resulting in the airlines issuing 'handwritten tickets' to board the original flight.

While the families proceeded to the boarding gate with those tickets, they were told by the staffers there that the individuals were on the 'No Show' list. However, AirAsia employees started assisting in sorting out the seats.

As the families were about to settle down inside the flight, they were ordered by an AirAsia staffer to disembark from the aircraft, as their 'handwritten tickets don't count'. Despite Susan Yong's husband trying to initiate a discussion, the couple and the families were escorted out of the flight.

While the airlines offered a flight to Chiang Mai for the following day, along with night accommodations and an RM440 AA account credit, Yong declined everything and filed a police complaint. AirAsia hasn't issued a response on this matter.

The Canadian way of securing flyers’ rights

Earlier 2022, Air Canada and 17 other aviation players, including the

Passenger fare revenue generated within the US Airline Industry between 2009 to 2021

Source: Statista Value in US Dollar

International Air Transport Association (IATA), asked a Federal Court of Appeal to quash compensation rules for flyers who encounter delays or lost/damaged luggage. The group’s argument cited Canada’s passenger rights charter, which took effect in July 2019, and said that it violates global standards and should be rendered invalid for international flights. However, the Canadian federal court dismissed the appeal challenging the passenger bill of rights – with the exception of one rule related to temporary luggage loss.

The bill of rights became more prominent during the COVID period

as flight cancellations, lockdowns and border closures affected the airlines and flyers alike. In September, domestic Canadian laws were amended and a new regulation got added under which airlines will have to refund passengers if they cannot provide a new reservation within 48 hours of a flight cancellation or “lengthy delay.”

The updated regulations state that when cancellations and delays occur, passengers will still be protected if the airline cannot complete the itinerary within a reasonable period of time, as France Pégeot, CEO of the Canadian Transportation Agency (CTA), explained in June. WestJet’s vice-president of government relations, Andrew Gibbons, told the Globe and Mail that his company was “disappointed” with the new rule, as he felt that the regulation unfairly makes the airline the “sole provider of reimbursement” for delays it cannot control.

WestJet also pitched for federal agencies like the Canadian Air Transport Security Authority and the Canada Border Services Agency, along with the airports, to get involved in air passenger protections. A request from WestJet to suspend the Air Passenger Protection Regulations

(APPR), launched by the airlines in 2019, was denied by the Federal Court of appeal in 2020. The airlines back then argued that the regulations exceed the CTA’s authority and went against the Montreal Convention, a multilateral treaty, by imposing higher compensation requirements for cancellations or lost luggage.

The Canadian state of Ottawa argued that there is no conflict between the passenger protections and the Montreal Convention. The passenger rights were finally upheld in December 2022 by the court and now the airlines will be required to pay passengers for flight delays, compensations, and boarding denial due to overbooking. Also, flyers affected by cancellations and long delays must be provided with food/drink, hotel accommodations, and access to communication. Airlines will have to pay the accommodation charges, along with the transportation costs.

Also, the airlines must assign seats to children aged 14, that too within close proximity to a parent/guardian with no extra charge. These regulatory reforms came after a 2017 incident in which two Montreal-bound Air Transat jets were diverted to Ottawa because of bad weather and held on the tarmac for

close to six hours. While Air Transat apologized for the incident, it was fined USD 295,000 after a decision by the CTA, which put the carrier at fault. Passengers on board these two flights were also compensated.

On November 28, Minister of Transport Omar Alghabra noted the "unacceptable" issues faced by flyers at airports in 2022 alone, be it delayed/ cancelled flights or misplaced luggage, indicating that the regulations securing passenger rights will be tightened further. Overbooking flights, especially during the festive seasons, has become a quick fix for airlines to make more money, at the expense of passengers’ conveniences. Booking the tickets early, planning for months, and then reaching the airport, only to be told by the airline staffers to give away the seats, doesn’t make sense for the passengers. While customer awareness on this issue matters, so does the state intervention, in terms of introducing stronger legislation against the overbooking practice.

URC focuses on creating value for its shareholders

URC Vice Chairman Mazen Issam Hawwa has extensive experience across many KIPCO Group verticals, including finance and real estate

The United Real Estate Company (URC), a leading real estate developer in Kuwait and the MENA region, announced its financial results for the 3rd quarter that ended on 30 September 2022. The Company recorded an increase in its net profit by 33.33% to reach KD 1.60 million for the 3rd quarter of 2022, compared to a net profit of KD 1.20 million for the same period in 2021. Moreover, 2021 marked a rebound of activities as restrictions from COVID-19 started to phase out.

Mr. Mazen Issam Hawwa took over as URC Vice Chairman and Group Chief Executive Officer in 2020. He had served in the senior management of Kuwait Projects Company Holding (KIPCO Group) for 19 years.

Mr. Hawwa has multi-facet experience in various verticals in which KIPCO Group is involved including real estate and financial services. As part of KIPCO Group’s strategy, Mr. Hawwa has been involved in various operating companies providing thought leadership and advice on strategic directives, financial planning, and governance.

Mr. Hawwa holds an Executive MBA from HEC Paris and is a graduate of the Lebanese American University. He has attended several executive education programs, including the General Management Program at Harvard Business School, and holds several professional qualifications from prominent USbased institutions.

In an interview given to the International Finance Magazine, Mr. Hawwa shares his insights on URC, commercial real estate, business strategies, and other factors, influencing the real estate sector in Kuwait.

IF: How is the current economic rebound impacting the different activities at URC such as shoppingrentals, hospitality sector, and real estate services?

Mazen Issam Hawwa: The year 2021 saw strict restrictions being imposed to ensure public health and safety due to the COVID-19 pandemic in Kuwait and abroad. By Q2 of 2021, our market operations witnessed an easing of regulations, and business returned to normal gradually. The last two quarters were positive, and the re-normalization improved to some degree. Further, URC's business verticals saw considerable operational recovery after governments across the world lifted the partial and complete lockdowns.

During these difficult times, we went the extra distance to fulfill the needs of our tenants and customers without compromising any safety protocols. This helped us maintain and improve our occupancy, without suffering any drop. On the contrary, occupancy started growing during the rebound.

On a local retail level, Marina Mall, Kuwait's ultimate shopping destination and home to 137 international multi-category mix brands spanning over 225,945 square meters, thrived as consumer spending power spiked, especially on luxury and essential goods. The mall attracted more footfalls and registered a good performance in the retail outlets.

On the real estate front, our expectations were borne out by the fact that the sales of residential units in Hessah Towers and Byout Hessah continued as planned.

Has demand for commercial real estate and hospitality picked up?

Demand for commercial real estate and hospitality has definitely seen growth in 2022. This was mainly due to the easing of health restrictions by the government. As a leading real estate developer and investor in Kuwait and the MENA region, we took timely measures to ensure that our offerings are well-placed to meet market needs, precisely Egypt.

We also expect further growth in Kuwait’s tourism sector. By 2025, we expect spending on travel and tourism in Kuwait to increase to USD 1.13 billion at a compound annual growth rate of approximately 21%.

What are your expectations for the year ahead?

URC works efficiently and effectively to uplift the living conditions in Kuwait, promote well-being for all, and promote inclusive and sustainable economic growth full of productive employment and decent work for everyone. Driven by our values, we also lay great emphasis on fostering innovation, increasing the quality of life, and making cities and human settlements inclusive, safe, resilient, and sustainable—in line with the sustainable development goals (SDGs).

Our priorities remain constant on creating value for our shareholders, building sustainable communities, and delivering high-quality projects. URC's commitment to continuous development ensures timely delivery in Kuwait, Egypt, and Morocco. When it comes to Kuwait, we are continuing with the development of our residential components “Hessah Towers” and “Byout Hessah” in the “Hessah District,” which are expected to be completed and ready for handover in 2023. We are also aiming to finalize the development of the Commercial District and are locked in negotiations with several retailers of all kinds—medical clinics, restaurants, cafes, malls, and hospitals.

In Kuwait, we have been creating a unique customer experience and a pleasant journey with Marina World, a landmark mixed-use development located on the Arabian Gulf Road

UNITED REAL ESTATE COMPANY

and considered to be one of the country's most bustling areas & most visited malls.

Our project in Oman, the Salalah Gardens Mall & Residences, is fully operational and self-reliant as it has become self-sustainable to meet its obligations. Salalah Mall continues to promise its visitors a seamless shopping experience, an exceptional blend of culinary options, and a wide range of entertainment attractions for families to enjoy.

In Jordan, our Abdali mall has been a strategic investment for URC and has seen improvement after the easing of restrictions by the government in 2021. Currently, we are continuing to navigate new methods to incorporate value-added elements that attempt to recast the mall through innovative services that provide a level of leisure and entertainment to share quality time with friends and family.

Our Egypt market has seen considerable growth in 2022. Hence, the company has completed one project – Aswar Residences – and one project in the making – Medius Residences.

In March 2022, URC announced the merger of United Towers Holding Company and Al-

Dhiyafa Holding Company. What are your goals with this merger?

True, in March 2022, URC decided to merge with Al Dhiyafa Holding Company (DHC) and United Towers Holding Company (UTHC). These two companies had already signed a Memorandum of Understanding (MoU) in which URC is the merging entity, while they become the merged entities.

In July 2022, URC further announced that its board of directors has approved the asset valuation report and the independent investment advisor's fairness opinion report related to the merger of DHC and UTHC.

In August 2022, URC announced that it has obtained the approval of the Capital Markets Authority (CMA) to merge by amalgamation with DHC and UTHC. The merger is a non-cash transaction, and the share swap ratio has been set at 0.64 URC share for every UTHC share, and 0.58 URC share for every DHC share.

Shareholders of the URC have approved the company’s merger with UTHC and DHC at the Extraordinary General Assembly held on October 24, 2022. The shareholders also agreed to increase the company’s capital by about KD 24.3 million from KD 118.8 million to KD 143.1 million, by issuing 242.6 million ordinary shares at nominal value.

We are working within a clear strategy that aims to

achieve the desired value and results from this merger, which is to enhance URC’s asset portfolio and improve the company’s capacity. We’re basically looking to increase revenues, which leads to added value for all the shareholders participating in this entity resulting from the merger.

Moreover, we expect to capitalize on the advantages that the merger of two operationally synergistic entities (United Towers Holding and AlDhiyafa Holding Company) would bring us.

We are confident that this transaction will create a unified entity that achieves synergy between the merged companies in order to expand and diversify investment and assure growth. We look forward to completing the final procedures and implementing the deal by the end of 2022.

How is the merger likely to affect URC’s activities and business performance?

This step will impact URC by increasing revenues and improving the bottom line and focus.

We want to describe to our readers the reach and operations of the group through its geographical presence. So, let's analyse the completed operations, the ones in the process, and the ones to come. Let’s start with Egypt, here the company has developed the Aswar Residences and Medius Residences, which is under development.

What are your expectations for your properties in Egypt?

This step will impact URC by increasing revenues and improving the bottom line and focus.

After the sale of Aswar Residence, a gated residential community comprising 75 three-story villas located on the eastern side of New Cairo, we are preparing to launch the sale of our residential project in Cairo, along with the possibility of resort development in Sharm El-Sheikh. Medius Residences is a high-end residential community developing in the heart of New Cairo, Egypt.

The project spans a 108,000 square meter plot and comprises six clusters. We have divided the clusters into 61 apartment buildings, including 468 apartments with various flats and duplexes, retail complexes, and office units.

The hospitality sector in Egypt has also seen a considerable improvement due to the easing of restrictions and specific economic measures taken by the government. Furthermore, Egypt's new capital city,

currently under development, will be a spring of new contract opportunities in the coming years. As a result, our Egypt market has seen considerable growth in 2022, and we hope to launch Medius Residences apartments soon.

With the climbing demand in Egypt's real estate market, the country has begun to develop new cities with scope for large-scale real estate projects. The ongoing development and construction of new cities, in addition to the development of the existing new towns, present attractive investment opportunities.

The excellent macroeconomic stability in Egypt will result in funneling international investments into the country's non-residential sector. Due to the high population, developing residential projects will be the state’s top priority

URC works efficiently and effectively to uplift the living experiences in Kuwait

UNITED REAL ESTATE COMPANY INDUSTRY COVERSTORY REAL ESTATE

in its bid to construct affordable housing for the average Egyptian.

What are your plans for development as the economy continues to boom?

Our plans include developing a world-class allinclusive resort in Sharm El-Sheikh. In Morocco, the Assoufid is of particular significance. The first phase included a golf club, and now we’re developing the second phase which boasts a fivestar hotel and a residential component.

When will the second phase be fully operational?

The five-star hotel, St. Regis Marrakech, is expected to commence construction in Q3 of 2023 and will be completed in mid-2025.

In Morocco, we’ve managed to overcome the stagnation in the local tourism industry by creating a new wave of branded luxury-living in the Assoufid project. With infrastructure works completed, we are the construction of the award-winning five-star hotel, The St. Regis Marrakech Resort, alongside branded villas, premium residences, and a retail hub soon. In addition to our world-class golf course, these high-end components will be part of our success story in creating valuable experiences.

By creating a new wave of branded luxury-living with the Assoufid project, we’ve managed to overcome the stagnation in the local tourism industry. The second phase of the Assoufid development will introduce the iconic five-star hotel brand, The St. Regis Marrakech Resort, operated by Marriott International, Inc.

As branded residences continue to prove successful,

the standard of luxury living continues to evolve.

The upcoming Assoufid Residences are changing the standards for luxury living, with exclusive amenities and personalized services that will include a worldclass spa, a swimming pool, a state-of-the-art fitness center, and three specialty restaurants for a unique culinary experience.

What are the company's future prospects in Morocco? Do you see enormous potential in real estate?

The real estate market in Morocco has always been attractive due to its geographic position, and we expect good growth on the completion of Assoufid.

Our main objective is to position Assoufid as the first exclusive St. Regis branded residence in Morocco that provides a variety of premium offerings and services, in addition to providing an authentic experience for a unique lifestyle to the residents.

Marrakech in Morocco is one of the most luxurious destinations for international stars and celebrities, who choose it as their regular holiday destination.

Analysts project a moderate but robust industrial

performance and a fast-paced recovery for the tourism sector in Morocco. There’s also hope that the ongoing reforms would pace the growth rate over the medium term.

As the country's economy is recovering from the pandemic, I believe Morocco's tourism sector will be performing better this year.

In the first eleven months of 2021, the number of people staying in hotels, Airbnbs, and Riads increased by 30%. Riads are looked upon as the quintessential Moroccan accommodation. Many traditional Riads have been converted into

As I look ahead, I believe

Morocco's tourism sector will be performing better this year

guesthouses, allowing visitors to live like a local while in Morocco.

At the crossroads of Africa and Europe, Morocco is a destination that offers endless possibilities for travel lovers. Morocco has everything for discovery, nature, culture, gastronomy, or luxury stays. It is open for all visitors to discover, explore, and enjoy the many facets of the Moroccan experience.

In Oman, you started operations with the Salalah Gardens Mall, and other projects are waiting for the green light. What are your expectations for your Omani properties?

Oman's residential real estate market could register a CAGR of more than 13% during the forecast period 2022-27. However, due to COVID-19, Oman's real estate sector has felt the heat of an economic slowdown in 2020.

Oman's commercial real estate market could also register a CAGR of more than 11% during the forecast period. It is experiencing significant growth in the hospitality and travel sectors.

Our project in Oman, the Salalah Gardens Mall & Residences, is fully operational and selfreliant. The properties comprise a leasable retail area of 28,810 sq. m and 166 serviced rooms.

What are the long-term development plans for Oman?

Currently, our focus is on the operational improvement of our existing assets.

Your development in Lebanon, Raouche View, has been praised locally as one of the top residential developments in the country. Could you share your strategy or plans for Lebanon?

Despite the challenging economic situation in Lebanon, we managed to rent out the majority of our apartments in Raouche View 1090, Beirut, in particular. The property has 42 apartments, including two penthouses. We have sold twelve apartments, while out of the remaining 30 apartments; we leased 24. We are currently not pursuing further development projects in the country.

How do you plan to maximize URC's performance during your tenure?

I believe in a three-pronged approach towards maximizing URC's performance, namely,

enhancing the capabilities of our internal team, product innovation, and digitalizing our operations. All businesses have to take the path of digital transformation to realize the enormous growth opportunities that are there. Meanwhile, I will lay great emphasis on engaging with our customers, ensuring operational excellence on all our operating assets, and exiting certain targeted assets and investments.

How does URC's overall strategy fit into KIPCO's?

KIPCO is our biggest shareholder, and URC is the real estate arm of KIPCO. We fit well with the overall strategy of safeguarding and improving the stakeholders' interests.

As a corporate leader in Kuwait with a US academic background, what’s your opinion about the challenges that Kuwaiti entrepreneurs and corporate leaders face as the country’s economic fulcrum shifts to the private sector with a big push for economic diversification? Could you please summarize these challenges?

Kuwait's long-term challenges are related to the economy's heavy dependence on oil and domestic consumption and the slow progress in implementing diversification plans.

Non-oil growth is stalling due to short-term challenges related to the fallout from the coronavirus pandemic and structural problems such as the lack of a dynamic private sector, compounded by political barriers to structural reform. Additionally, Kuwaiti authorities still need to balance between containing the mounting fiscal pressures and supporting citizens and businesses disrupted by the pandemic. As a result, capital spending and development projects have stalled; fiscal outturns show a 27.5% reduction in capital spending in FY20 and FY21.

As I look ahead, I remain optimistic about the Kuwaiti market as it actively seeks to create new business sectors within the economy. The Kuwaiti government's policy to diversify the economy recognizes the value of SMEs and, consequently, has instituted schemes to provide entrepreneurs with funding, advice, and support to encourage the growth of the SME sector.

editor@ifinancemag.com

To build a website, you can either reach out to a website builder or hire a professional designer

Cost-effective biz website no more a dream

IF CORRESPONDENT

Starting a new business in the 21st century comes with certain must to do things from the owner’s side. Building an interactive, responsive website tops that list.

To build a website, you can either reach out to a website builder or hire a professional designer

Having an operational website means you have to deal with technical things such as being search engine friendly and adopting the SEO model faster to have a strong organic reach to your existing and new customers. It requires a good knowledge of fronts such as servers and website development costs, etc. The good news is that you have plenty of options when it comes to choosing a website development process and the cost. The even better news is that this article breaks them all down for you.

To build a website, you can either reach out to a website builder or hire a professional designer. However, some market studies have said that going for website builders can be a cost-effective one.

While you need a good website that can take care of your professional needs, it has to be costsaving as well at the same point of time. This article will discuss the nitty-gritty of how to achieve the above-mentioned goal.

Discover the financial aspect of developing a website

For any website, the basic components are the same, hosting platform, domain name, an interface and a good set of search tools to help your prospective customers to find it.

The first solution covers mostly the nascent businesses, with low budgets. Based on Zyro, Wix, and Squarespace, the average website building cost is USD 21 per month. In the case of e-commerce sites, it can be USD 26 per month. These businesses also need to shell out some USD 10 as a yearly fee for having a presence in search domains. It’s all about paying one yearly cost under your subscription plan and an annual domain fee.

While WordPress is a free and flexible one for building up a cost-effective business website, a CMS-based website can cost entrepreneurs from USD 10 to USD 100 per month. But in this case, you need to add professional developers to the picture, which in turn, will demand a bigger budget from your side. In that case, your budget will start from a few hundred and reach up to USD 10,000, including expenditures on areas such as security, maintenance, website hosting, and marketing.

Generally, the average yearly cost of starting a website remains around USD 200. The monthly maintenance cost in this case will be nearly USD 50. If a web developer comes on board, the particular business will have to spend some USD

7000, including upfront and yearly charges. Creating marketing content is free with a web builder, but can become a USD 5,000 affair, if the web designer comes into the picture.

When it comes to taking the help of website builders, it is the cheapest option, as WordPress is a free platform. The cost factor, once again, comes into play, if you are taking help from a professional web developer, along with opting for website hosting, themes, and plugins. Although web designers are expensive for a lot of professionals to afford, they are the best ones, if businesses want to build customised websites with complex functionalities.

Taking the help of a website builder is not only the cheapest option, but is the best option if you either want to cut short your business launch time on the internet or want to personalize your website. Using a website builder is the cheapest way to build a website, and is best for. A website builder can be either free or can go to price ranges up to USD 500 per month.

You also need a paid plan, if you want a state-of-the-art professional website for your customers. Free plans, may sound tempting, but have drawbacks in form of limited storage and bandwidth allowances, along with no e-commerce features (which means you can’t sell your products

online). Even the plan doesn’t offer you basic customer support. The most you can do here is create test sites and try out new ideas without spending your capital.

However, there are proven website-building platforms such as Zyro (It is known for its speed and artificial intelligence-enabled toolkit), Wix (It has 500 design templates and three price plans) and Squarespace (comes with a complex interface), which provide cost-effective solutions for the new businesses.

Let’s divulge into the website developing arena

So the principal questions here are how much will it cost to develop a website from the scratch and what are the cost-effective options?

For having a customised website or taking help from website builders, businesses need online hosting domains. With this option, they can store the website files on a server and pick from solutions such as shared, VPS, or dedicated hosting. While finding a candidate among the web hosting providers is not a difficult one, not all of them carry basics such as SSL Certificate and huge data storage.

If you are going for website builders, you won’t require hosts. In the case of a Content Management System like WordPress, a hosting provider needs to be sourced.

Next, you need to find a domain name for your

website and get that registered with an ICANN (Internet Corporation for Assigned Names and Numbers)an accredited domain register. Generally, domain names are rented ones, so cost becomes a key factor here. While the most preferred domain name is .com and comes with a premium-level subscription fee, .online has proved to be an affordable one for small businesses and personalised brand promotions. .shop is very popular among e-commerce platforms

Next comes website designing, which is a time-consuming process and design requirements perceived in this phase decide whether the user wants the help of a website builder or other options such as CMS. With website developers, it’s a cost-effective option, as the customers can access the already available templates and customize them further. In WordPress, you can choose from a wide variety of design themes, but they range from USD 13 to nearly USD 4000, as third-party platforms like ThemeForest provide those templates. For custom-coded websites, the customer will have to pay as much as USD 4000. You can add e-commerce plans like Facebook Shop, Tax Calculators, Inventory Management, Product Pages and Payment Gateways via a website builder programme. For custom-coded sites, the businesses need to pay a development cost starting from USD 10000.

Talking about the website building market, Wix and GoDaddy have free plans, while Squarespace gives a two-week free trial for its users. Among paid plans, GoDaddy is the cheapest one with a monthly

Approximately 71% of small businesses have a website

One in 5 businesses say their main website issue is low traffic

38% of people will stop interacting with a poorly designed site

38.5% of users judge a business by how website looks at first glance

70% of our time is focused on the left side of the webpage

Consistent branding can increase website conversions by 33%

73% of businesses invest in unique design

Nearly 40% of people will stop engaging with a slow website

80% of consumers will leave a brand after three bad experiences

43% of small businesses plan to invest in web performance

Source: fitsmallbusiness.com

package of USD 6.99 (USD 11.99 from the second month itself), followed by Wix and Squarespace (USD 16 each).

Marketing and SEO solutions matter as well

While sound knowledge of Search Engine Optimization (SEO) is key for a business owner to push up his/her website to the top of search rankings, it can only be achieved with an integrated toolkit. With a website builder, SEO essentials like page load speed and in-built tools like Google Tag Manager can be achieved. For pay-per-click advertisements, the user needs to pay. In WordPress mode, plugins like Yoast SEO and PPC ads can help businesses as well. On a customcoded website, a different set of marketing and SEO mechanisms need to be installed.

Website builders also come up with search-optimised solutions such as Google Analytics, Google Tag Manager and Content Creation Tools.

Viability of a website made with CMS/WordPress

WordPress, which started in 2003 as a blogging platform, has become the most preferred Content Management System (CMS) over the period of 19 years. Then there are CMS solutions like Joomla, and Magnolia, which get picked by the businesses as well.

For using WordPress or any other CMS, the primary requirement is that of personalised website hosting provider. Some of the prominent solutions here are Hostinger (gives you dedicated WordPress website hosting with a free SSL certificate, unlimited

bandwidth and daily backups at a monthly cost of USD 15), Bluehost (offers similar features, along with access to customised themes at a rate of USD 12 per month) and HostGator (has a monthly subscription fee of USD 6).

However, CMS solutions can only work for users who have website developing experiences, despite those tools offering a massive amount of flexibility. Customers need to pay for registering a domain for their websites.

Most web hosting companies offer free WordPress installation, but it’s a manual job. With that in mind, CMS solutions are best for users with some website development experience.

Hosting aside, the user interface on platforms like WordPress takes some getting used to. You’ll get tons of flexibility, but an understanding of technical terms is recommended.

Just as with a website builder, you’ll need to pay for and register a domain for your site to make sure that the end user can find you. Proper selection of TLD or Top Level Domain to suit the operational budgets is another crucial function

the businesses need to perform, to make it a cost-effective solution.

TLDs vary from .com (around USD 8.99 per year), .tech, .online (both come at USD 0.99 per year) to .live and .digital (these two cost some USD 3.50 on a yearly basis)

You can pick a TLD that suits your website needs as well as your budget – expect to pay:

Although WordPress is highly recommended for those aiming to create websites with customisation opportunities, it’s not cost-free at all. Be prepared to shell out money during the web designing stages, as you need to add themes, plugins and domain extensions.

A WordPress website contains built-in customised themes and editing interfaces. For choosing a suitable theme, either you have to pay an annual fee or in some cases, they come in the “Freemium” category (free to begin with).

Elaborating more on the cost factor, a premium third-party WordPress theme costs somewhere around USD 50 per license, but depending on your needs, you may have to pay up to USD 200. Even plugins’ cost becomes a factor. For

making the site e-commerce viable, spend some more money on the SEO, security and analytics front. These plugins can be bought either from WordPress or via third-party websites. The yearly cost of paidfor WordPress plugins comes to around USD 13-USD 4000.

Another spending area is the marketing toolkit, for which you may need an expert team who can research the SEO plugins, and marketing aids and then come up with the best possible solution for you.

Building an interactive, customerresponsive website is not everyone’s cup of tea, but given the business needs of the 21st century, this function tops the to-do list of every upcoming entrepreneur. At the same point in time, the cost factor becomes important too. While this article has tried its best to suggest some budget-friendly stateof-the-art solutions to take businesses online, the readers must understand that technology is something that is always evolving. The more tech-savvy the business is, the more successful it will be in the long run.

editor@ifinancemag.com

NASRAT KHALID ASEEL, MOBILE APP

'Our campaigns help Afghan'

PRAJWAL WELE

The Afghan people have seen many upheavals in the past year -- the end of the US occupation, the Taliban regaining control, and sanctions. However, it was the 5.9-magnitude earthquake that really rallied Afghans all over the country to reach out and help the thousands of victims.

According to reports, the earthquake in the southeastern provinces of Paktika and Khost resulted in at least 1,100 fatalities and more than 1,500 injuries. Those numbers startled Afghans inside and outside the country and spurred them into action, as groups of volunteers headed towards the remote districts of Gaiyan, Spera, Barmal and Orgun.

One of the first ones to set out from Kabul was the team behind 'Aseel', a mobile app originally designed to sell Afghan-made handicrafts to global markets. Over the last year, they have transformed the app to become an aid distribution and fundraising platform in response to the sanctions, banking restrictions and aid cutbacks that were imposed on Afghanistan.

International Finance caught up with Nasrat Khalid, the founder of ‘Aseel’ mobile application, who shared his insights about the app, emergency packages, 'Atalan', and much more. Excerpts from the interview:

IF: What is the idea behind the 'Aseel' mobile app?

Nasrat Khalid: In 2019, the Aseel platform, website, and iOS/Android mobile application were initially designed to support and connect Afghan artisans, especially artisans from rural Afghanistan. We enrolled over 100 small family-owned and women-owned businesses from all over Afghanistan and sold over 10,000 handmade products to people in countries like the US, Australia, and the UK. We used to ship all our products through DHL,

Aseel, a mobile app originally designed to sell Afghan-made handicrafts to global markets

International Shipping Service from Bagram Airbase before the fall of the republic of Afghanistan.

After Afghanistan came under a new regime, most of the enrolled businesses stopped. After a brief full pause in the delivery of products, we found ways of sending products cross-border to neighboring countries and then shipping them to the US and elsewhere. As a platform committed to supporting people and development, we decided to use the platform as a means to help Afghan people. At that time, organizations such as the United Nations, the Red Cross, the International Rescue Committee, the World Food Program, etc., were unable to do money transfers, transportation, and human resources, in such a high-risk environment 'Aseel' went beyond and came up as a helping hand to Afghan people.

Aseel launched its Emergency Response (ER) (now called Aseel Do Good) program and has distributed aid packages to 62,241 families and 4,35,687 individuals in 28 provinces of Afghanistan. The Aseel mobile application and website allow people to purchase necessary aid packages and our team on the ground will deliver them to families in need inside Afghanistan.

Also, 'Aseel' enables people to support specific families inside Afghanistan through “Aseel Beneficiary Forms.” This option is best for those who have relatives or their families who are still living in Afghani-

stan. The donor fills out the Aseel beneficiary forms, receives a beneficiary ID (called Omid Hope IDs), and then donates any aid package. The Omid ID helps both the donors and the beneficiaries track the delivery of the aid packages. Furthermore, 'Aseel' also engages people worldwide to create fundraiser campaigns to support people in Afghanistan for more significant community distributions.

What do you offer to your users?

We offer two features to people: First is 'Do Good' which enables anyone, anywhere in the world, to directly send aid to Afghans transparently. And second is 'Buy Good' which enables anyone, anywhere in the world, to buy handmade products directly from Afghanistan and receive it in homes in the US, Canada, and Australian markets.

You played a significant role in helping people during the earthquake in June. Tell us about it?

On June 22, 2022, around 1:30 AM, a massive earthquake shook eastern Afghanistan (AFT). Over 1,000 people died, and 1,500 suffered severely. Due to the earthquake, homes and livelihoods were destroyed, and many family members were homeless. Aseel mobilized assistance and provided essential services to survivors. Our emergency response team began distributing

AFGHANISTAN SANCTIONS

We have organized teams of volunteers (more than 150 individuals) in different provinces of Afghanistan that can support the dissemination of these emergency packages and a group of volunteers out of Afghanistan that can help us make partnerships with donors, media agencies, social media, and so on. Aseel enables anyone from anywhere to help an individual or family in Afghanistan

the first batch of 1000 gifts to those in immediate need of assistance while documenting and identifying the recipients in the disaster-affected areas. Aseel launched a Grand Challenge (GC) in affected areas. The aim was to raise USD 150,000 to buy a portion of exceptional food, hygiene, and life packages for the earthquake-affected households. We managed to raise USD 150,000 and supported over 1,000 people. We were on the scene before any other rescue groups to assist people.

Take us through the emergency packages that your app offers.

The aid packages were designed based on our research from the ground and the people’s needs which include emergency food packages, emergency medical packages, emergency baby care packages, and emergency life packages. The platform also allows people to donate a certain amount of money and let Aseel decide on buying the boxes for the affected families. Packages include flour, oil, rice, beans, slabs, chickpeas, macaroni, salt, sugar, tea, and milk. The sanitary package includes paper, pads, masks, disinfectant liquid, a box for children in the north, milk, diapers, clothing, and winter aids.

Can you tell us about young Afghan volunteers 'Atalan' and what role they play?

The success of Aseel is all because of ‘Atalan’ (volunteers), who provide insightful local knowledge and real-time humanitarian updates. These brave individuals are minimally compensated for their time and transportation costs yet help verify beneficiaries and deliver aid to families, both integral to Aseel’s operations. During the transition, well-known organizations such as The United Nations and Red Cross could

not operate within the country due to the high-risk environment coupled with a lack of transportation and the inability to transfer funds. Aseel's Atalan excelled as individuals and was among the first to respond to the humanitarian crisis in Afghanistan through the Emergency Response program.

Can you tell us about your different campaigns and how they benefit Afghanistan’s commoners?

Aseel is collecting donations in the form of crowdfunding from all over the world on the platform and is reaching the needy in Afghanistan. All campaigns are created to benefit the people of Afghanistan. Campaigns range from support to the ultra-poor in the form of food packages to support for education, women empowerment, and so on.

Tell us about your distribution channel. How can you reach out to local people?

We have organized teams of volunteers (more than 150 individuals) in different provinces of Afghanistan that can support the dissemination of these emergency packages and a group of volunteers out of Afghanistan that can help us make partnerships with donors, media agencies, social media, and so on. Aseel enables anyone from anywhere to help an individual or family in Afghanistan.

How do you plan to take 'Aseel' global?

We know that our fintech system, which was in place way before this crisis started, custom solutions development, and global connection with the rest of the world is much better than large-scale international development institutions and charity organizations. At the same time, we are an Afghan company that was born out of Afghanistan and went on to try to become a global company. This means that we understand scaling and growth from a startup perspective which is an excellent fit for the current situation. Our Atalan platform provides the local infrastructure for communities to take action while connecting to the rest of the world. Moreover, the vast handmade market is estimated to be around USD 1 Billion in value and backed by the worth of companies such as Etsy (USD 16 Billion). While most of the world’s handmade items are created in underdeveloped countries, there is no infrastruc-

ture to support them. We believe Aseel can quickly fill this gap as we expand into other countries.

You have tie-ups with more than 100 brands. How do you manage to attract them?

We have a local team that enrolls vendors; we have photography studios to capture the products and their photos. In addition, our “Atalan” volunteers get paid based on each product they add to our platform and the sales they receive.

What are your plans for Aseel?

We are planning to do two things, first is to enable anyone, anywhere in the world, to support anyone, anywhere in Afghanistan, which we are planning to do 100% transparently. For this, we are registering people who need support and providing them with Omid IDs. After doing this we will map them with resources from the international community.

Secondly, we are planning to empower women and

all artisans to sell their products globally. Our company can create Ten thousand jobs in Afghanistan in the next three years, and we believe that, amongst other sustainable efforts for Afghanistan, even our contribution can change the direction. Our company can bend this curve and return to getting Afghanistan on the right path.

For Aseel as a technology company, though, we want to be a publicly traded company and expand the operations to other countries that need help. So many disasters in the world leave innocent people affected, but no functional system takes care of them. Aseel can be that!

AFGHANISTAN SANCTIONS

Is crypto regulation good?

IF CORRESPONDENT

Cryptocurrency regulation can be a controversial topic, but plenty of experts say crypto investors should welcome it. For starters, more regulation could mean more stability in a notoriously volatile crypto market.

Tally Greenberg, head of business development at Allnodes, a platform that provides hosting, monitoring, and staking services, said, "Regulations will come up and they have to come up at some point, which would stabilize the market even further. These regulations protect investors, so it's a good thing. It is not a bad thing."

Still, many cryptocurrency enthusiasts fervently oppose new regulations. They say it would hinder innovation and goes against the spirit of cryptocurrency, which emphasizes decentralization at its core.

For these anti-regulation crypto enthusiasts, the decentralized nature of digital currencies like Bitcoin

According to Tally Greenberg, head of business development at Allnodes, regulating cryptocurrencies could be a healthy development for the industry

-- which, unlike traditional currencies, aren’t backed by any institution or government authority -- is a big draw. So in this view, any new regulation would pose a threat to the decentralization that is a feature, rather than a bug.

Aaron Klein, a senior fellow in economic studies at the Brookings Institution, focused on financial technology and regulation. The new regulation also has the potential to protect long-term investors, prevent fraudulent activity within the crypto ecosystem, and provide clear guidance to allow companies to innovate in the crypto economy. But forthcoming regulation will need to strike the right balance.

Aaron Klein said, “In reality, you kind of has three possibilities: no regulation, bad regulation, good regulation."

What’s next in crypto regulation?

While a rise in mainstream adoption of crypto in 2021 led to a running debate on the role of the government in this largely unregulated sector, clear rules are still in development. This has left the industry guessing while thousands of tokens and digital currencies are introduced, and new companies and platforms emerge to help store and trade them.

Tally Greenberg said, “Policies haven’t been devised yet, because there’s no precedent to blockchain and crypto, so it’s a hell of a task. I understand why people are stalling on it, but something needs to happen soon.”

Recent conversations on Capitol Hill suggest it’s not a matter of if further regulation is coming, but when.

President Biden signed off on new crypto legislation related to taxes in the US 1.2 trillion bipartisan infrastructure bill late last year. And the Federal Reserve is toying with the idea of issuing a US digital currency.

The Fed released a long-awaited report in January 2022 exploring the costs and benefits of a government-issued digital currency. The report ultimately deferred a final decision on whether to move forward, and the Fed is giving the public and other stakeholders to share their input before taking further action. Stablecoins are also a hot-button topic, and many experts anticipate it will be the first type of cryptocurrency to be regulated.

While new regulation has the potential to bring more stability to the crypto market, it’s still a highly volatile and speculative investment. That’s why financial experts advise most investors to keep crypto holdings to under 5% of their portfolios, and never to invest in crypto at the expense of saving for emergencies or paying off high-interest debt.

Why would crypto regulations be good for investors?

Many experts gave their take on the changing crypto regulatory landscape. Here’s why they say more regulation would be a good thing for long-term crypto investors.

More stability in the market

Regulating cryptocurrencies could be a healthy development for the industry, at least where everyday investors are concerned. Greater regulatory guidance, if well-targeted, could help reduce speculation among crypto assets. Less speculation can lead to higher investor confidence, which could draw in more long-term investors who have so far said no thanks to a highly speculative, volatile crypto market.

Aaron Klein said, “Even if it doesn’t bring more people in, it may change people’s current behaviour. Enthusiasts claim there are a lot of benefits cryptocurrency has over fiat currency

and other asset classes, but those benefits can only come to full fruition if an appropriate regulatory framework is put into place,” according to Aaron Klein.

It’s hard to predict how the pricesensitive asset class will react to regulation over the long term since it’ll depend on whether the US government takes a more lenient or stringent approach. In the short term, any new regulation could inspire knee-jerk investor reactions to the markets, suppressing the trading values of cryptocurrency. For example, when China banned cryptocurrency transactions in September 2021, cryptocurrency markets dropped. But over the long term, regulation may have the potential to stabilize the market and reduce some risk for cryptocurrency investors, Tally Greenberg said.

To be clear, new regulations could slow the roll of those trying to get rich quickly by predicting the next coin that goes to the moon, she says. But that’s a good thing for long-term investors.

TECHNOLOGY FEATURE CRYPTOCURRENCY CRYPTO REGULATION

“Slowly but surely, we are not only being massively adopted as an industry, but we’re also stabilizing more or less. Regulation will stabilize the market even further,” Tally Greenberg added.

Increase in investor protection and confidence

Crypto investors currently have little to no protection in the market, as there is no regulatory framework in place to ensure the protection of assets. Some exchanges maintain compliance with evolving federal and state regulators in the United States. This includes many established, high-volume US-based exchanges, like Coinbase and Gemini, but they’re not regulated similarly to public stock exchanges or alternative trading systems. That can be problematic, according to Timothy Massad, former chairman of the Commodity Futures Trading Commission and a senior fellow at the Kennedy School of Government at Harvard University.

“Most of the trading that goes on in the crypto world today is not regulated by any federal authority, and that’s a big gap. That means that investor protection is much, much weaker on these big exchanges than it is in our securities markets or our futures market,” Timothy Massad said.

That’s why regulation is needed to make the market safer, says Aaron Klein. Crypto will still likely be a risky investment, like individual stocks, but investor protections could make the market less vulnerable to outside manipulation. Safer markets can lead to more investor confidence, which often means greater value over time.

“Regulation is important for investor confidence. It’s important for basic fairness, and ultimately it’s important for the industry to grow,” Aaron Klein added.

Safer crypto ecosystem Crypto has been described as the “Wild

West” by SEC chair Gary Gensler due to the lack of regulation in the industry. The lack of laws and policies in this burgeoning area has created an opening for widespread fraud, scams, rug pulls, and market manipulation.

Timothy Massad said, "Crypto isn’t subject to requirements to prevent fraud manipulation. It’s not subject to standards on conflicts of interest. My point is simply that we don’t have the same kind of standards that we have in other markets. Today, that means buyer beware, essentially."

Crypto crime has grown tremendously over the last two years. Scammers took USD 14 billion worth of crypto last year, a record compared to the USD 7.8 billion taken by scammers in 2020, according to a report by blockchain data firm Chainalysis. And there are more than 17,000 altcoins, which are typically even more volatile and speculative than Bitcoin, and come with a higher risk of crypto scams and frauds.

Even the most advanced and enthusiastic cryptocurrency experts understand there are many new and evolving risks in the world of crypto right now.

But there are several ways to protect your crypto. For starters, watch out for some common red flags that are similar to classic money-wiring scams and credit card fraud, like obvious misspellings in emails or social media posts, promises to make you rich, or even large-scale social media crypto schemes known as rug pulls.

To protect your digital wallets from hackers, practice good digital security habits such as using a hot or cold wallet for extra safety or keeping your crypto in exchange with robust security. It’s also extremely important to keep track of your wallet key and not show it to anyone. Losing your key or having it stolen could mean losing your crypto altogether.

Kiana Danial, the author of “Cryptocurrency Investing for Dummies, said, “As much as I like the decentralization and the lack of government involvement, I am glad that they are paying attention, because unfortunately with cryptocurrency, there are a lot of scams.”

Experts' argument on crypto’s anti-regulation

As some experts are keen to regulate crypto but there are some experts who are against the move. Here are some common anti-regulation arguments.

It goes against the spirit of cryptocurrency

The core of the cryptocurrency culture is the decentralization concept, which eliminates middlemen like large banks and governments from financial transactions. It deprives the banks and companies of their authority and gives

people the freedom to manage their finances independently. Simply said, regulation runs counter to this notion.

It will damage innovation

Blockchain technology's potential to upend numerous industries, particularly finance, has contributed to the cryptocurrency industry's recent success. Due to the absence of centralized networks and infrastructure, these enterprises' start-up costs are frequently significantly lower.

However, the sector is also prospering as a result of the adaptable fundraising strategies. Companies that use cryptocurrencies have been able to raise money fast without being constrained by onerous security regulations. Additionally, small-scale investors have had access to projects that they otherwise would not have been able to access.

It will push the crypto industry into other countries

There is concern that stronger US

regulation would merely drive the company into more crypto-friendly jurisdictions because the bitcoin industry is a global one. This would have two significant effects: First that the economic advantages of this new business might be lost to the United States. Locations like Miami and California are already making an effort to draw in the money and jobs that may result from becoming cryptocurrency centres. And second, it would be more difficult to provide any type of investor protection if the industry moved outside of American borders. Keep everyone inside the tent; it's usually for the best.

It will drive down crypto prices

It does not appear realistic that the United States will attempt to follow China and outright outlaw cryptocurrencies. But because so many people are afraid of it, tougher regulation would almost surely have a short-term negative impact on prices. In the world of cryptocurrencies, regulation itself has taken on a certain

Total cryptocurrency market capitalization (excluding bitcoin)

Jan 2020 $61bn

Jan 2021 $226 bn

Jan 2022 $1.3 trln

July 2022 $527 bn

Source: Tradingview

specter. As a result, cryptocurrency values decline despite reports of significant governmental action.

It's important to note that some experts contend regulation would, over time, have a favourable effect on prices. For instance, money from significant institutional investors may eventually more than outweigh any short-term loss of illicit funds. And regulation that builds trust and adds a level of investor protection would help the industry to grow even further.

What matters most, in the end, is how any new cryptocurrency legislation is structured. Regulators should exercise restraint to avoid severely impeding the operations of genuine initiatives. However, sensible regulation that eliminates bad actors might foster an environment where sincere ventures can succeed.

Who should regulate cryptocurrency?

The federal government’s reticence to

identify precisely what a cryptocurrency is makes it difficult to determine which federal agency ought to be responsible. No government or Congress has yet to express an opinion. The necessary outcome has been a turf war between the financial authorities, which has resulted in the regulatory control that does exist. This does not imply that the choice is simple: The Federal Reserve and Treasury are concerned about the currency features of cryptocurrencies, the CFTC is concerned about the commodities parts, and the SEC is concerned about the security aspects. Depending on the cryptocurrency issuer, several organizations, such as the Fed, the Office of the Comptroller of the Currency, and even the Small Business Administration might be the accountable regulator.

Depending on the appropriate federal agency, the tenor, burden, and characteristics of the regulatory reaction will vary greatly (or worse, multiple agencies). Whichever federal agency or agencies is ultimately made responsible will then face a number of operational challenges, as this new brief will require staff, time, and expertise to address, even as the new ordinary course of business, let alone the time it will take to meet the needs of regulating cryptocurrencies. Given these increased responsibilities, the relevant body may even need to evaluate the application of its charter.

Even if the correct agency can be identified and has an abundance of regulatory resources, it also remains true that cryptocurrency is inherently quite a tricky beast in and of itself to regulate. The extreme volatility of cryptocurrencies is a major factor in this (technically a measure of dispersion around the mean value of a security, but more generally rapid or significant

fluctuations in value as defined by the market).

Should the US government back cryptocurrency?

All of these concerns have thus far been raised in relation to cryptocurrencies as represented by the private sector. The US Congress may later take into account the idea of a central bank digital currency or cryptocurrency that is backed by the federal government (CBDC). The speed and transparency that cryptocurrencies give to users are cited by proponents of the technology, who in certain cases predict that not only the traditional banking industry but also eventually the US currency is in jeopardy.

Since the 1944 Bretton Woods Agreement, the world's currencies have been tied to the US dollar rather than to gold, on the grounds that the latter was also tied to gold. The US dollar continues to be the world's reserve currency despite ex-President Nixon's decoupling of the dollar and gold and the emergence of the system of fiat money currencies in use today. This is unlikely to change given the stability and liquidity of US Treasuries supporting the dollar as the globe's most redeemable currency.

This situation could of course change if a sufficiently strong digital contender emerges, with the most obvious contender a CBDC backed by the Chinese government. Even though this risk might not materialize for several decades, establishing a US CBDC would be one of the best strategies to prevent it. The US government has taken the first step in this approach with a recent discussion paper from the Federal Reserve that examines the potential advantages and hazards of a CBDC.

editor@ifinancemag.com

Since the start of the war, the fall rate has been rising, and Russia's GDP has decreased by about 5% from last year

Is the Russian economy collapsing?

IF CORRESPONDENT

Russian President Vladimir Putin insisted that the West could never choke off Russia's economy in April 2022, just weeks after he started the invasion of Ukraine. He informed his officials, "We can already say with confidence that this policy toward Russia... this economic blitzkrieg has failed."

However, six months after the war's start and the sanctions' application, analysts are speculating whether the US-led Western bloc’s design of punishing Moscow financially has shown its real results. International observers have increased their estimates of the Russian GDP from earlier 2022. Russia's economy has performed better than the original projections made immediately after the imposition of sanctions, partly due to factors like nimble technocratic Russian policymaking and competitive global energy markets.

However, the Russian economy is still experiencing a slower development rate than it did during the 2008 financial crisis, and it is unlikely that a post-crash recovery will follow this slowdown. Moreover, living standards are sustained by social spending, which will be

challenging to maintain and require difficult budgetary decisions for the government in the upcoming years. As time goes on, the war's price and the sanctions' impact on regular Russians will only increase.

Russia Tightens Belt

Start by looking at some macroeconomic data to assess the state of the Russian economy. Since the start of the war, the fall rate has been rising, and Russia's GDP has decreased by about 5% from 2021. Although the manufacturing sector has decreased by 4.5%, industrial production, including Russia's energy industries, has reduced by just approximately 2% compared to 2021 (a reflection of the high energy costs). The inflation rate is just over 15%, a little decline from the peak of about 18% following the March collapse and subsequent recovery of the ruble. In addition, inflation-adjusted monthly salaries are down by around 6% from 2021.

Russia's inflation statistics may not accurately reflect that purchasing some goods is now ranging from occasionally challenging to almost impossible. Similar problems in estimating the effects of a lower quality are seen with inflation statistics. The Russian government is modifying laws to permit the sale of cars without airbags or antilock brakes, which are now challenging to manufacture due to supply chain issues. Although economists won't

At a time when labor expenses are rising, RussiaUkraine war and the COVID pandemic put significant pressure on operator margins

reflect this decline in quality in inflation statistics, Russians will soon notice it, particularly the urban, affluent section of the population who consume more of the imported goods that are now more difficult to obtain.

Even after accounting for the inflation recorded by official data, salaries drastically declined, falling by almost 6% from 2021. Inflation has been eroding social welfare payments like pensions since the Ukraine war started. To make up for this, the government raised pension payments by more than 8% in June 2022. However, if no substantial increases in social spending are made in the ensuing months, the average Russian's income will decrease in the year's second half. In addition, retail sales are down over 10%, which shows that consumers have already begun saving in preparation for future budget cuts.

Oil Continues To Flow

Some businesses have already been severely impacted by decreasing living standards, even if households are only now starting to experience their effects. Therefore, it is more enlightening to examine each sector independently rather than using aggregate industrial output numbers. The

natural resources industry has not been significantly impacted, which is not surprising given the high prices and Western sanctions that have been put in place to maintain the free flow of primary commodities, including oil, up to this point.

The trade-in of natural resources is primarily responsible for the durability of the Russian economy. The United Kingdom and the EU have been softening sanctions set to go into effect against Russian oil exports with the covert assistance of the United States. The West has backed down from attempts to prevent Russia from diverting oil shipments to other clients, such as China and India, to prevent a spike in energy prices. As a result of recent changes to the restrictions, European businesses will now be permitted to ship Russian oil to third parties.

The volume of Russian oil exports has remained mostly steady since sanctions were put in place because the West has only recently enforced severe penalties for Russia's energy exports and since the EU's oil import ban won't go into effect until December 2022. Russia is being forced by sanctions to sell oil at a discount of roughly USD 20 per barrel compared to market benchmark pricing. However, the most recent data on monthly oil tax receipts published by the Russian government indicates that

the country is earning around the same amount from exports as it did in January 2022. Since the Kremlin prohibited its sale to Europe, natural gas export revenues have plummeted, far less significant to Russia than oil exports.

Troubled Industry

The output of vehicles, trucks, locomotives, and fibre optic cables has decreased by more than 50%, making them among the worstaffected industries. Businesses with less exposure to foreign ownership or complex supply networks, like textiles or food processing, have been on the flatter side or occasionally rising production compared to 2021.

The evacuation of Japanese, American, and European companies with plants in Russia is one reason for this industrial disruption. While some of these factories will reopen under new Russian management, running them could be challenging. Obtaining sufficient supplies is a challenge for manufacturers as well. It is now much more difficult to get components from outside because it is more difficult to obtain, ship, and pay for even goods that are not officially restricted. Regarding the challenges, his company faces in shipping and paying for imported components, the CEO of Moscowbased railroad equipment company Transmashholding told Russian media, "I cannot say we're facing a total blockade. But there is more friction now."

The crucial question is whether these industrial disruptions change for the better or worse in the coming months. On the one hand, Russia

has had over six months to set up alternate payment and logistics systems, which should enable some essential unrestricted imports to enter the nation. However, Russian businesses, when polled, claimed that they were still using their existing inventories, suggesting that they were still having trouble finding the required components. Moreover, according to monthly data, Russian imports of industrial products and parts are still significantly below levels before the war.

Russia’s industrial sector must need to have a secure future, due to multiple reasons. First, the industry is a crucial source of employment, particularly in what the Russians call "monogamous towns," dependent on a single factory or sector and frequently located in the Urals or Siberia. Layoffs in these cities have historically sparked large-scale riots and social unrest that have proven politically unstable. According to recent research by a Russian think group, sanctions will directly affect 50% of all monogamous towns. Given the government's constrained budget, Russia's government will have difficulty raising money to support hampered industries.

Since the Kremlin ceased disclosing spending information, perhaps to conceal the costs of the conflict, it has become more challenging to understand how Russia's government finances operate. The last month for which Russia provided comprehensive data was April, and during that month, defence spending had grown by 40% annually. As a result, the Kremlin will need to set

Countries where international trade with Russia equals the highest shares of GDP in 2020 Mongolia

Belarus

48.6%

Armenia

17.0%

Kyrgyzstan

16.9%

Lithuania

13.1%

Tajikistan

12.2%

Estonia

11.7%

11.1% Kazakhstan

10.6% Uzbekistan

9.7% Georgia

8.6% Moldova

7.1% Latvia

7.0%

aside significant future resources to restore the massive stock of equipment lost or destroyed on Ukrainian battlefields, in addition to more substantial salaries and operating costs to pay for the attack on Ukraine. Moreover, as regional governments are requested to organise volunteer battalions, the costs of the war are mounting, not only for the central government but also for them.

Over 2023, inflationary pressure will increase due to this spending binge. As a result, the amount of money the government receives has decreased. Due to the minor dip in global oil prices since June and the vast discounts at which Russia must now sell its oil, Russia's oil tax revenues have fallen to more typical levels than the bumper revenues it was generating in the first few months after the invasion. However,

Source: Macrotrends

ANALYSIS RUSSIAN ECONOMY RUSSIA-UKRAINE WAR

non-oil tax revenue has sharply decreased. After accounting for inflation, non-oil revenue fell by about 15% over the first seven months of 2022; this percentage is likely to rise throughout the rest of the year.

As a result, if current trends continue, Russia's budget will be heading toward a significant deficit. Of course, this situation might significantly alter in the upcoming months if oil prices rise and tax revenue increases. But if the war rages on and living conditions drop, spending needs will not disappear.

The Kremlin will be in a difficult situation if the budget deficit increases. Although Iran had almost no debt when the war began, Western sanctions have prevented it from issuing new bonds to most foreign investors. It might allow the ruble to weaken versus the dollar, which would balance the budget since Russia's government expenditure is in rubles. A

decline in the currency, however, would increase inflation, worsen living standards as a result, and jeopardise the Kremlin's claim that the Russian economy is solid and that the sanctions are ineffective.

A Toll Too High

The Kremlin is, in some ways, correct to claim that the Russian economy has stabilised. Most of its industries are working, as usual, its banks remain solvent, and its vital energy sector is still producing oil. Even though there aren't many luxury cars available, there is still plenty of food on store shelves. Nevertheless, customers will put off making large purchases if they can because the production of vehicles and washing machines will be much lower than anticipated. The Kremlin's best-case scenario is that Russians tighten their belts and manage.

Even though the first effect was less devastating than the West or Russia predicted, the

consequences of the war and sanctions are still mounting. The Russian government is currently content with having lasted through six months of Western sanctions. However, the Russian industry will still have difficulty transitioning to a world without imported Western components during the course of 2023. If oil prices do not rise, the Russian government will have to make more challenging decisions on whether to maintain social expenditure while accepting budget deficits and high inflation. The Russian economy will not fall apart to the point where the Kremlin's military efforts are put on hold. However, the country is currently experiencing a severe recession, a period of decreased living standards, and scant prospects for a speedy recovery.

editor@ifinancemag.com

US households sinking in debt

IF CORRESPONDENT

A Federal Reserve report showed that the United States household debt reached a record high of USD 16.15 trillion in the second quarter, driven primarily by a USD 207 billion increase in mortgage balances. Credit card and auto loan debt also raised as consumers increase their borrowing to deal with skyrocketing inflation. According to the New York Fed's quarterly household debt report, overall delinquency rates increased moderately for all debt types, with credit card and auto loan delinquencies "creeping up," notably in lower-income areas.

The report states that mortgage debt had grown to USD 11.39 trillion. The origination of purchase mortgages increased by 7% in the second quarter as a result of increased borrowing limits. The US central bank started raising interest rates in March as it ended the easy money policies it had maintained during the worst of the COVID-19 pandemic to safeguard an economy that had been severely harmed by lockdowns and other protective measures.

Since then, the Fed's benchmark overnight lending rate has been increased by 225 basis

points as a result of persistently high inflation that has reached four-decade highs. The goal range for that rate is now between 2.25% and 2.50%. The central bank is expected to continue raising interest rates for the rest of the year in an effort to stop the inflation that is draining Americans' wallets. Over the past two and a half years, prices for expensive commodities like homes and cars have risen sharply as demand has outpaced supply. As a result, the average new purchase origination dollar amount for both of those goods has increased by 36% since 2019.

The invasion of Ukraine by Russia led to an increase in global food and energy prices. According to the New York Fed, total household debt in the United States has increased by more than USD 2 trillion since the fourth quarter of 2019, right before the pandemic started. In the second quarter, credit card balances rose by USD 46 billion, ranking among the highest the Fed has seen since 1999, while auto loan originations increased by USD 33 billion to USD 199 billion. According to the research, this was mostly due to

The total household debt in the US has increased by more than USD 2 trillion since the fourth quarter of 2019, right before the pandemic started

higher origination rates per loan as opposed to a bigger number of loans.

"All debt types saw sizable increases, with the exception of student loans. In part, the growth in each debt type reflects increased borrowing due to higher prices," the regional Fed bank's researchers said. The average contract rate on a 30-year fixed-rate mortgage has shot up by more than 240 basis points since the turn of the year to levels not seen since 2008, according to the Mortgage Bankers Association. It now stands at 5.74%.

New York Fed researchers said on a call that delinquency rates were increasing to more typical pre-pandemic levels seen in 2019 that are still historically low. "But we have to keep an eye on that because if they rise above that we'll be a little more concerned about the state of household balance sheets. The concern is where we are heading," New York Fed researchers said.

Consumers' credit soaring?

Americans have racked up record-high credit card debt. According to the doomsayers, this demon-

Number of households in the US from 2015 to 2022 (in millions)

strates unequivocally how difficult it is for households to make ends meet in the face of the highest inflation rates since the early 1980s. The truth is not quite so bad. Consumers have a long runway until mounting debt commitments become an issue because their finances are actually in some of the greatest shapes they have ever been in. It is simple to comprehend anxiety. According to data from the Federal Reserve, there have been four of the largest monthly increases in consumer credit on the record. Over the last six months, outstanding balances have increased by an average of USD 33.1 billion each month. To put that into perspective, the monthly average for all of 2019 was USD 15.4 billion, or slightly less than half that sum. Although the figures are indeed startling, there are signs that they are largely healthy and normal.

First, think about revolving credit, such as credit cards. Early in the COVID-19 pandemic, this type of financing rapidly declined as customers used extra savings and stimulus money to settle bills rather than spending since they had fewer options. As long as the quantity of revolving

Source: Statista

Average sales price of new homes sold in the United States from 2015 to 2022

Homeownership rate in the United States from 2015 to 2022

credit outstanding stays below the pre-pandemic trend line, consumers will primarily just be playing catch-up. The financial system as a whole isn't even close to that degree now, but if it bursts past the trend that would suggest wider inflation-induced trouble. Of course, many households with lesser incomes are impacted by the sharp increase in costs and are being compelled to use their credit cards. But there are no indications that a widespread debt issue is developing that could harm the economy.

The situation with non-revolving credit is a little different. That includes financing for other expensive items like boats and trailers, which saw an increase in popularity during the pandemic. The majority of those loans are for education and cars. Automobiles, which make up 39% of non-revolving credit and 30% of consumer credit, appear to be the main culprit for the category's pandemic-era expansion that outpaces the trend. Put that down to the startling rise in car prices in 2021 and, possibly to some extent, the increased interest in car ownership brought on by concerns about public health. Many people who earlier used public

transportation now choose to drive because it offers better social isolation.

Although considerably smaller than the auto sector, the other category of non-revolving loans, which includes the aforementioned maritime toys, was the true driving force behind the loan increase. Early in the COVID-19 pandemic, boating interest skyrocketed in coastal areas as a result of social distance rules. However, that category is too small to have a significant effect. Additionally, boat owners often don't live paycheck to paycheck, so exclude that possibility from the list of potential causes of a structural leverage crisis. The non-revolving credit segment would contain any cause for concern in the consumer credit data. However, that segment's growth reached its apex earlier in the year and began to moderate in the most recent report.

Finally, the household debt service ratio, which measures how much of a household's income is used to pay off debt, is at or near historic lows. That's because there will be opportunities to refinance debt at cheap rates in 2020 and 2021, as well as because the government poured in trillions of dollars during the COVID-19 outbreak. Even if

Source: Statista

Consumer spending in US from 2nd quarter of 2021 to 4th quarter of 2022

Value of household savings in the United States from 2015 to 2022

inflation is terrible, homeowners with fixed-rate mortgages—which make up the vast majority of home loans—might have benefited from pay raises while their greatest liabilities stayed the same or were renegotiated at lower rates. Even when you combine credit card debt with mortgage debt, the overall load is still incredibly low.

Household debt history

Historical data might shed light on the current condition. Since the middle of the 1980s, the ratio of household debt to total disposable income has increased significantly. By the turn of the century, the percentage had risen from 60% to 130%. This excessive family debt was a major cause of the financial catastrophe in 2008.

After fast declining from its 2008 peak, household debt stood at around 92% by the time of the pandemic. In a report for Barons, economist J.W. Mason makes the case that this growth in debt was actually caused by high-interest rates set by Fed Chairman Paul Volker in the 1980s rather than an increase in borrowing. Mason claims, “With higher rates, a level of spending on houses, cars, edu-

cation and other debt-financed assets that would previously have been consistent with a constant debt-income ratio, now led to a rising one.”

After the 2008 financial crisis, interest rates were low. Household debts decreased as a result of this, along with decreased borrowing and defaults. Contrary to common assumption, higher interest rates combined with excessive borrowing appear to be the main contributors to today's rising debt burden rather than excessive borrowing alone. Mason comes to the conclusion that a decrease in borrowing and low-interest rates is both necessary for a decrease in household debt. The Fed's evident commitment to continuing rate hikes suggests that household debt will increase in the near- to medium-term.

(In Billion US Dollars)

(In Billion US Dollars) Source: Statista

UK Monarchy: The Royal Family Empire

The United Kingdom royal family gains significantly from the surge in offshore energy, which could lead to a discussion over how to pay for the monarchy. The sovereign grant, valued at £86.3 million annually, is undergoing an official review, which the Treasury has indicated will take effect in April 2023. However, according to the officials, the money is at acceptable levels.

The organisation that oversees the management of the crown's public lands, including coastal and marine assets, is known as the ‘Crown Estate’. It receives public funding from a fixed percentage of its revenues. However, because of the energy firms' push to harness wind power, these revenues are anticipated to increase significantly. According to a Whitehall source, "The review will take account of the huge additional revenues the crown estate expects to get from the next wave of

offshore wind initiatives — projected to be several hundred million pounds each year while these projects are in construction."

The Crown Estate owns nearly the whole seabed surrounding the United Kingdom, which extends to 12 nautical miles. Its marine portfolio is worth £5 billion, primarily due to the demand for seabed leases for wind farms. As Chancellor George Osborne announced a change to the monarchy's public funding in 2011, the sovereign grant will replace the civil list. For staff expenditures, official travel, and royal household expenses, the first such grant in 2012–13 was for £31 million. However, by 2021–22, the primary funding for these expenses had grown to £51.8 million, with

The need for land leases for renewable energy projects may drive hundreds of millions of dollars in revenue for the crown estate

an extra £34.5 million for Buckingham Palace renovations.

Under these arrangements, the monarchy benefits from a "golden ratchet" clause, which states that money can only be increased yearly or maintained at the same level. Parliamentarians have to change the law to reduce the grant. The Prime Minister, Chancellor, and Privy Purse Keeper are the royal trustees who oversee the review. Under the sovereign grant agreements, the royal household initially earned 15% of the crown estate's income, but this was boosted to 25% starting in 2017–18, to help pay for Buckingham Palace renovations.

Over ten years, the expected £369 million in "reservicing" operations will repair 20 miles of skirting boards, 6,500 electrical outlets, and 100 miles of electrical cabling. The project is scheduled to be finished around 2026–2027 and the royal household will continue to receive 25% of the crown estate income till then. However, given the increased anticipated revenues at the crown estate, the United Kingdom government might now re-examine it.

The Queen has a private estate called the Duchy of Lancaster. Profits from the Duchies of Lancaster and Cornwall pay for royal obligations as well. It has a total area of 45,667 acres, or 18,481 hectares, most of which are in northern England. The Goathland estate in North Yorkshire, which served as the setting for Hogsmeade Railway Station in the first Harry Potter movie, quarries in the High Peak regions of Derbyshire, an airstrip in Staffordshire, and other properties are among its assets. The duchy's net worth is £652 million, and in the year ending March 31, 2022, it generated profits of £24 million. Although it has primarily been used

to pay for the late Queen Elizabeth II's formal obligations, tax is still spent on income not allocated to royal duties.

Twenty counties, mainly in the southwest of England, total 52,449 hectares in the Duchy of Cornwall. Its holdings include — Most of the Scilly Islands, substantial farming parcels in Cornwall, Dartmoor Prison in Devon, The Oval cricket stadium in south London.

It has a net worth of more than £1 billion and generated over £23 million in earnings in the fiscal year that ended on March 31, 2022. The duchies are not subject to corporate taxes. Furthermore, by a "sovereign to sovereign" exemption negotiated by Prime Minister John Major in 1993, King Charles will also not pay inheritance tax.

The late author David McClure, who wrote ‘The Queen's True Worth’, a book about the royal finances, came across a telling HM Treasury note while researching it. The message read, "The state provides for the monarchy in two ways: first through explicit finance and second by forgoing tax on the sovereign's private fortune." David found it in a cache of papers about a 1989 review of the civil list.

"In practice, it should be highlighted that immunity from taxation has enabled the government to pay a small civil list confined to specified official aspects and therefore keep the entire question of financing the monarchy in a somewhat lower key than would otherwise be the case," the author writes.

The royal household's emphasis on value for money and the reduction of the number of royals performing frontline activities may prompt new scrutiny of the funding arrangements.

Former Liberal Democrat MP Norman Baker revealed that he had written to the

National Audit Office and the Commons public accounts committee to request a thorough assessment of the funding arrangements. Norman Baker is the author of the royal family biography And What Do You Do? "Their money can stay the same or increase," he remarked. It will never decrease. They now have considerably better circumstances thanks to the money from wind turbines.

King Charles will likely examine the royal family's vast real estate holdings. Twenty-two residences are listed on the royal family's website, including Windsor Castle, St. James's Palace, Kensington Palace, and Buckingham Palace. In addition, private ownership can be seen at Scotland's Sandringham

ECONOMY FEATURE UNITED KINGDOM MONARCHY

and Balmoral. On the grounds of Balmoral, Charles and the Queen Consort reside at the Birkhall palace. Additionally, he owns a home in the Welsh county of Carmarthenshire with rental cottages right next to it. The King reportedly bought a five-bedroom house in Romania in 2006 to use as a secluded vacation property.

Prince Andrew and Prince Edward both have leases from the crown estate for the surrounding Bagshot Park and the Royal Lodge at Windsor. Princess Anne resides at privately owned Gatcombe Park in Gloucestershire. In his book, McClure pegged the monarch's wealth at roughly £400 million. In addition, the crown has assets worth several

billion pounds in its name. Regarding the review of the sovereign grant, the Treasury declined to comment.

So how big is the crown's fortune?

Prince Charles will inherit more than USD 500 million in personal property that Her Majesty left behind during her 70 years as monarch. The Queen's fortune—and what happens to it now—is complicated, even though much of what is perceived as her property belongs to the USD 28 billion "Royal Firm," a USD 28 billion empire that former members of the British royal family like King George VI and Prince Philip once referred to as "the family business."

What

will happen

to the Queen's money after her passing is detailed below.

How is the Queen compensated?

The Sovereign Grant, an annual taxpayer payment to the British royal family, provided revenue to the Queen. It has its roots in a deal King George III struck to give up his income from Parliament in exchange for a set annual payment for himself and future royal heirs. It was once referred to as the "Civil List" until the Sovereign Grant took place in 2012. In 2021 and 2022, the government set this grant's size at just over 86 million pounds. These funds are for official travel, property upkeep, and operational or maintenance expenses

for Buckingham Palace, the Queen's home. The Queen, however, gets more than just a yearly income. The Royal Firm is an enterprise worth USD 28 billion. The Firm, sometimes known as the Monarchy PLC, is a collection of prominent figures from the House of Windsor, the monarchy's reigning family, and of which the Queen served as the head. They jointly run what might be described as a global economic empire that annually injects hundreds of millions of pounds into the British economy through televised events and tourism.

The Firm is made up of Her Majesty and seven other royals, including Prince Charles and Camilla, the Duchess of Cornwall, Prince William and Kate, the Duchess of Cambridge, Princess Anne, the daughter of the Queen; Prince Edward, the youngest son of the Queen, and Sophie, the Countess of Wessex.

According to Forbes, the monarchy has unsellable real estate holdings worth close to USD 28 billion as of 2021. That includes — The Crown Estate (USD 19.5 billion), Buckingham Palace (USD 4.9 billion), The Duchy of Cornwall (USD 1.3 billion), The Duchy of Lancaster (USD 748 million), Kensington Palace (USD 630 million), The Crown Estate of Scotland (USD 592 million). The Windsors don't personally benefit from the business. Still, it stimulates the economy, bringing them wealth through free media coverage and royal warrants, which, according to Forbes, are essential "stamps of approval" on high-end goods and increase revenue for warrant holders.

Royal Estate

The Crown Estate is a group of properties that belonged to the British monarchy and were under the control

of Queen Elizabeth II. However, this is not private property that she owns herself. It is managed by a somewhat independent public board. The Crown Estate reported a USD 312.7 million net revenue profit for the fiscal year 2021–2022, an increase of USD 43 million from the previous year, in June.

Dan Labbad, chief executive of the Crown Estate, said in a statement that "In what has been another year of upheaval and turmoil, our broad portfolio continues to demonstrate its strength and resilience through our return to the public purse."

According to the Royal Household, a portion of the revenue's profits—fixed initially at 15%—goes toward paying the Sovereign Grant. However, to help refurbish Buckingham Palace, the grant was increased in 2017–2018 to 25%. By 2028, it is expected to be lowered to 15%. The funding covers costs associated with conducting business, such as personnel salaries, security, travel, housekeeping, and upkeep. In addition, the Privy Purse, a separate budget, covers the Queen's and her extended family's private costs.

The Secret Wallet

The Queen's Privy Purse, which gives Her Majesty private income from the Duchy of Lancaster, is essentially an assets portfolio held in trust since the 14th century. The Duchy of Lancaster had net assets of USD 652.8 million at the end of March 2022, resulting in a USD 24 million net surplus.

According to a statement on the Duchy of Lancaster website, these come from real estate and financial assets. The USD 24 million in excess money is paid to the Queen, but the net assets are not. Instead, this taxable money is mainly used to pay for expenses that the Sovereign Grant does not already cover.

Personal possessions of Her Majesty

According to Business Insider, the Queen has amassed over USD 500 million in personal assets, primarily due to her investments, art collection, jewellery collection, and real estate holdings, which include the Sandringham House and the Balmoral Castle. Most of her personal belongings will now be given to Prince Charles as he ascends to the throne after her death. When the Queen Mother passed away in 2002, Her Majesty also received a similar endowment of about USD 70 million, which included investments in artwork, a stamp collection, fine porcelain, jewels, horses, and even a priceless Faberge egg collection. The collection of paintings includes pieces by Monet, Nash, and Carl Fabergé.

ECONOMY FEATURE UNITED KINGDOM MONARCHY

The Queen is immune from paying inheritance tax on the estate left by her mother thanks to a specific legal provision in existence. This clause will also cover Prince Charles. As agreed upon in 1993, to prevent the dilution of the royal family's riches, inheritance from the sovereign to the sovereign is exempt from the 40% inheritance tax. But the USD 28 billion empire, which includes the Buckingham and Kensington Palaces, the Duchy of Lancaster, the Duchy of Cornwall, and the estate of Scotland, will not be passed straight to Prince Charles. Instead, the Monarchy PLC will give only the personal property Queen Elizabeth II authorised for him.

Will such an expensive monarchy be abolished?

If the British government ever decided to abolish the monarchy, it would be a constitutional issue that would require parliamentary action. Even before that, it would need to receive the support of the British people in a referendum, which the government would have to call for (just as the Brexit referendum was). According to June polling, if such a referendum were held today, the nation would likely choose to maintain the monarchy by a sizable plurality. And other countries would join Britain in doing so. Despite the fact that past referendums resulted in the monarchy being abolished in Italy and Greece, they also reinforced support for the institution in Belgium, Denmark, Luxembourg, Norway, and Spain.

According to Hazell, abolishing the monarchy or just stripping it of its

ceremonial obligations would be "a huge change," in large part because it would necessitate a comprehensive overhaul of the way the British state is run. Britain's parliamentary system divides those duties between the monarch, who assumes the role of head of state at birth, and the prime minister, whose position is chosen by the British public. This is in contrast to the United States, where the elected President serves as both the country's head of state and its head of government (or, in the case of the current occupant of 10 Downing Street, a select group of Conservative Party members).

As is necessary for almost all parliamentary systems, Britain would need a new head of state if the queen were to pass away. The President, a position that currently exists in parliamentary systems in countries like Germany and Italy, would most likely play this job. The majority of the monarch's current duties, including approving laws, making state visits, and addressing the nation in times of crisis, would fall to one person. But according to Hazell, an elected head of state would also likely be required to serve as "a kind of constitutional umpire"—something that a monarch could never do.

The monarchy's eventual extinction is improbable in the near future because republicanism isn't now a potent force in Britain. But that might alter if the institution succeeds or if the younger British population does not support it. Support for the monarchy has decreased among individuals between the ages of 18 and 24 from 59% in 2011 to just 33% currently.

The average person spends more time on social media than any other activity in this digital era

Why must banks take advantage of social media?

The significance of social media has never been greater. In this article, we'll discuss how social media can make our lives easier and how banks can use them to their advantage. The average person spends more time on social media than any other activity in this digital era. Since hundreds of millions of active users are on Facebook, Twitter, and Instagram, banks can't ignore social media marketing.

What online resources can banks use?

A bank's primary goal is to protect its clients (especially during economic headwinds) and offer them financial convenience. This concept is taken to another level by social media. Here are a few online resources banks could use:

Creating access to information

Social media marketing is a fantastic way to give clients more convenience. Many fear banks and only use their services when necessary. Lack of knowledge is the cause of this issue.

Social media is an excellent way for the financial services industry to share important information like interest rates, credit, loans, fees, etc. Customers are likely to find banks more approachable if they provide this information on a site

like Facebook. The creation of educational content and images can achieve incredible results. Also, when specific information is put online, it can reach many people and be made easier to understand.

Consumer assistance

Customer service is undoubtedly a crucial part of using social media. When customers have problems with their accounts, the internet gives them a direct and honest way to talk about it. Typically, calling banks takes time due to traffic and delays in processing. Social media networks enable customer support to troubleshoot issues much more quickly. The best thing banks can get from social media is the ability to set up a team to help customers through live chat.

Bringing in new clients

Existing customers cannot guarantee a bank's continued success. However, a healthy bank will balance the number of new and current customers. Financial institutions can use social media marketing to ensure this balance. For example, a bank may draw in new clients by offering incentives for customers to open an account with your bank. You need to use SEO techniques in your postings so that people looking for financial services can find your bank and its offers. That's why it's crucial to use social media to link to your main website. Visitors will go above and beyond and check the website for further information.

Advertising collaborations

Partnerships are the best way to motivate customers. An example of this would be special discounts offered to your bank's credit card holders. Or you could hold an online contest with a prize from a linked partner. Again, customers will be

interested because taking part in the post will help them directly.

The advantages of social media

There is a lot that marketing can accomplish with social media. However, banks must realize that social media offers some benefits that traditional channels cannot obtain.

Instant trend response

One must be quick to adapt to the fastpaced atmosphere of social media. As a result, marketing trends may be quickly identified and explored. Furthermore, it enables your bank to reassess and create a plan considering these developments. Additionally, banks that promptly capitalize on a trend will receive greater visibility and interaction due to how algorithms operate.

Establish public relations

By having a presence on social media, banks can talk to current and potential customers in a casual setting. Success on every network depends on having a "brand persona," but Twitter and Instagram require it more than other platforms. A fantastic way to communicate your institution's values and the guiding principles it adheres to is to provide a developed persona of your organization.

Cost-effective

Social media marketing is typically less expensive than its alternatives. To begin with, anyone who takes the time to learn about social media's subtleties can join it for no cost, and anyone can comprehend the algorithms. You can pay a set amount regularly on social media platforms to boost the visibility of your posts. As a result, an online marketing effort benefits a bank while costing less.

Social media banking: What is it?

Although it isn't official terminology, social media banking combines social media and financial service providers into a single phenomenon, where web portals make it simple to access a bank's functions. It would save on printing expenses and promote crowdsourcing. And, more than ever, the focus will be on the customers' needs.

Recommended practices for social media marketing

include:

Start by making the main point clear: In the opening three seconds of a video, 63% of TikTok patterns with the highest clickthrough rate showcase the main idea or item. Users on social media have a brief attention span, so banks must communicate with them as soon as possible.

Utilise trends: Similarly, 21% of the videos with excellent view-through rates use current music, effects, or trends. To

gain more visibility, banks could take advantage of trends like vlog-style and tutorial-style videos.

Humanise business: Instead of static photographs, banks can humanize their brand and message by using real people in their campaigns. You can develop a strong connection with the audience by using images and language that everyone can understand. Using information and messages that are raw and real is another way to make your business seem natural.

Be inclusive: One other technique to ensure your business comes off as genuine is to use inclusive images. Banks need to represent different groups on social media so the campaign will do well in many places. This includes the contents' visuals, phrasing, tone, and context.

Get the basics right: Finally, remember the fundamentals. Videos for social media

should always be full screen (vertical), high-definition, with music, voice-over, or a combination of the two, and should be succinct and to the point. In what ways do banks help society? In society, banks play a variety of roles. But to put it plainly, they represent the financial services industry and offer individuals financial solutions.

Reduce expenditures and effort: When teams, departments, and individual advisors use social media in concert, social activities are most effective. Most likely, a shared social media management platform is involved.

Both employees and brands can benefit from a content library. Content that has already been pre-approved and is compliant is available to staff. When employees share a consistent message that advances strategic objectives, brands are at ease.

There is no waste of time or money when everything is kept in one central

library. The top two issues that financial advisers have with social media are addressed by this pre-approved library: Limited time & apprehension about making a mistake.

Offer centralized digital customer support: Customer service must adapt to the growing digitalization of the financial sector. Customers want to communicate with companies on the platforms where they currently hang out. That could refer to social media platforms like Facebook, and Instagram or messaging services like WhatsApp.

You may coordinate your customer assistance across all channels by using social customer service solutions. You can sync discussions with your CRM (Customer Relationship Management) at the same time. This makes sure you adhere to compliance standards for both record-keeping and response times.

Additionally, you may employ social media bots to respond to straightforward customer care requests or direct visitors to already-existing resources on your website. To match consumers with the appropriate members of your customer service staff, you can even utilize bots to screen incoming requests.

A useful tool for creating a centralized social customer support program is Sparkcentral from Hootsuite (A customer care platform that helps brands to engage with their audiences and manage conversations seamlessly on messaging channels/social networking sites).

View actual business outcomes: Simply put, social media has demonstrable, tangible effects on your bottom line.

According to 81% of financial advisers who utilize social media, their social media initiatives have helped them acquire new company assets. In actuality,

successful social media users who work as consultants report gaining an average of USD 1.9 million in assets.

According to Deloitte's Global 2022 Gen Z and Millennial Survey, young people are becoming more optimistic about their own financial positions. Overall, though, both of these groups continue to worry about their financial stability.

Campaign content and influencer marketing integration: A recent survey found that 75% of Gen Z and millennial customers who use social media to seek financial advice follow particular social media influencers that provide material on personal finance. 45% of those who sought help report acting on the advice.

It is obvious that influencers have a significant impact on the financial world. Real-time sharing of open, personal experiences will make viewers feel connected and inspire them to act similarly or based on what they see. It's crucial to advise viewers to conduct their own research before making any financial decisions because influencers typically lack the same training as professional financial advisors.

Relationships between consumers and financial organizations are significantly shifting. Banks can benefit from the transition by utilizing social marketing to forge closer relationships with clients rather than falling behind. We go into more detail below:

Comfortable and secure

People can benefit from banks' convenience. With a bank account, you have a safe and secure place to deposit money and know it’s being handled carefully. Banks also keep adequate transaction records if it becomes necessary to present them (taxes, etc.). The security at a bank is unbeatable, and there are many

ways to ensure that no one else can get to your money without your permission.

Managing your money

The convenience of saving is another benefit of having a bank account. You will be able to live comfortably knowing that you won't need to worry about money if you keep up with your savings account.

Transferring funds

Sending money to and from any place benefits the modern, highly connected world. You can count on banks to follow the proper steps to move money to the account you want without any problems.

Campaign content and influencer

marketing integration

Influencers have a significant impact on the financial world. Real-time sharing of open, personal experiences will connect viewers and inspire them to act similarly or based on what they see. But it's important to tell your audience to do their research before making any financial decisions since influencers usually don't have the same training as professional financial advisors. Relationships between consumers and financial organizations are significantly shifting. Banks can take advantage of the change by using social marketing to get closer to their clients and keep up with the times instead of falling behind.

Four more tips: Put compliance first Your brain might spin with all the compliance obligations, including FINRA, FCA, FFIEC, IIROC, SEC, PCI, AMF, and GDPR.

In particular, to regulate independent advisors' use of social media, it is crucial to have compliance protocols and technologies in place.

As you create your social media

General social media statistics

Over 4.62 billion people across the world use social media

Social media has grown at a compound annual growth rate of 12% since 2012

In 2021, social media usage grew at an average rate of 13.5 new users every single second

Nearly 75% of the world’s population aged 13+ uses social media

Over 93% of regular internet users log into social media

72% of Americans use social media

Source: blog.hootsuite.com

strategy for the financial services industry, incorporate your compliance team. They'll offer valuable advice on the actions you should take to safeguard your brand.

All social media posts should go via the proper chain of approvals, which is equally vital. For instance, FINRA declares:

Before using any social media platform that an affiliated person wants to use for business, a registered principal must review it.

Keep a complete archive

Although this is a matter of compliance, it is significant enough to warrant mentioning separately. Firms and their registered representatives must keep records of discussions pertaining to their "business as such," according to FINRA.

The minimum retention period for

BANKING AND FINANCE FEATURE BANKING FINANCIAL MARKETS ONLINE BANKING

those records is three years. The interfaces between Hootsuite and compliance software like Brolly and Smarsh archive all social media communications for you. Your social media content will be saved in a safe database that can be searched, complete with the original context.

Carry out a social media analysis

You compile information on all of your company's social media outlets in a social media audit. You also take note of any essential details pertaining to each. You will look for any phony or unofficial accounts at the same time so you can shut them down.

List every account that your internal staff usually utilizes to get started. But keep in mind that this is just the beginning. You must search for dated or dormant accounts as well as department-

specific accounts.

Make a note of the social media sites where you don't have any social accounts while you're at it. Perhaps it's time to create some profiles there.

Introduce a social media strategy

Your organization's usage of social media is governed by a social media policy. Accounts for your agents and advisors are also included. Contact each of the pertinent teams in your company, including Compliance, legal\IT, information protection, marketing, public relations, and human resources, all of these teams ought to contribute. This will lessen compliance difficulties while assisting you in maintaining a consistent brand identity.

So that everyone is aware of the procedure for a social post, your policy

will also specify team roles and approval processes. The annoyance that social media might not move as swiftly as some would like can be lessened by being clear upfront.

Security issues might also be associated with using social media for financial industry activities. Include a section in your social media policy that describes security precautions for social media's less seductive features. For instance, specify how frequently software should be updated and passwords should be changed.

Conclusion

As financial markets change, digital means largely supplanted branch banking. Therefore, the bank's ability to maintain sustainable development in the current environment hinges on its ability to transform into a digitally savvy company, especially in the marketing divisions.

Customers, especially young people who are tech-savvy, find it easier to look around, make purchases, and keep track of their portfolios online. So, the biggest problem in this area is getting the right product to the right customer quickly.

Nowadays, very few young people visit a bank branch since they find internet transactions much more straightforward. Today, it is far simpler to reach the millennial population online than in person at bank offices. Banks too have made several technological improvements that work with mobile and social media.

Social media makes it easy for brands/businesses to get quick consumer behaviour information and formulate marketing trends toward the target customers. Depending on how quickly banks understand the truth, it will decide their future.

Cheques are an outmoded and expensive holdover from the laborintensive banking era

Cash is king, but it's not 'cheque mate' yet

IF CORRESPONDENT

Our economy has suffered dramatically over the last few years. However, in terms of how we conduct business and function moving forward, COVID has been a defining element. Our traditional high street is in danger because of the central banks' hasty retreat as they try to change the status quo and get customers to "Go Digital." However, we were already on the verge of change because new and emerging FinTech companies made it easier to pay online and with mobile devices.

Checks now make up less than 1% of payments made to retail banks; there were 185 million transactions altogether last year versus 272 million in 2019

The shift to electronic banking COVID and the fact that we don't like to touch cash or coins helped speed up the inevitable move toward digitization. Good technology helps us expand and increase efficiency. For example, making the most of Open Banking and PSD2 gives us new ways to deliver goods and services in an omnichannel setting. But we shouldn't abandon people. We shouldn't just throw something away because it's no longer helpful, efficient, or stylish.

Cheques are here to stay Cheques are an outmoded and expensive holdover

from the labour-intensive banking era. However, there are compelling arguments for maintaining them. People don't always trust digital payments, and it has been shown repeatedly that they can be affected by fraud, cyberattacks, and power outages.

Mainly the weak and old believe cheques might be more dependable than electronic payments. There are no PIN codes to keep track of, and seeing numbers on a screen does not require 20:20 eyesight.

An old woman used hers to give gifts to her greatnieces and nephews. She has lost faith in the internet because she has read so many stories about people scammed out of money and couldn't get it back. But it's getting harder and harder for her to use checks for everyday things like grocery shopping.

Checks now make up less than 1% of payments made to retail banks; there were 185 million transactions altogether last year versus 272 million in 2019. Cash usage is also declining; it made up only 6% of United Kingdom transactions in 2018 compared to 23% in 2019.

However, it matters to the minority of people who routinely spend cash. According to consumer advocacy groups, 1.9 million consumers make almost all purchases with notes and coins. Money and checks are necessary if the internet or our power supply is compromised.

However, that does not stop the government from gradually trying to phase out both

conventional forms of payment. For example, when some of the 22 million people who owned Premium Bonds refused to give their bank information to get their prizes, National Savings and Investments (NS&I) tried to stop giving out tips by checking the year before and had to change its mind.

Still, a lot of holders switched from using checks to using bank transfers. Cheques were distributed in July 2021 in 319,752, down from 1,009,165 in July of the previous year. Nearly 90% of awards were deposited directly into customers' bank accounts or used to purchase additional Premium Bonds.

The consumers of banks who depend on cheques have been ignored. Recently, an old woman from Lincolnshire had run out of cash and could not pay for birthday presents. Her bank had shuttered the final branch. The phone support line was utterly useless. Due to the pandemic, a recorded voice advised that there would be a lengthy wait to speak with a staff member. She tried to use the automated system but couldn't because she didn't have an online banking code.

She talked to the Co-operative Bank after repeated attempts to get in touch with the bank. According to our systems, the bank reported that a new chequebook has been triggered and is on its way to her. Once a specific number of cheques have been

cashed from the book, they are automatically requested.

Cheques are still a safe way to make payments to people when you don't know their bank account information. In 2020, there were 185 million transactions with just £12.3 million in cheque fraud. However, scams involving 4.1 billion online payments totalled £479 million last year.

However, it appears that big business is bringing back cheque payments, maybe in response to the rise in "phishing" scams, in which criminals send fraudulent emails to victims to obtain personal information. Customers no longer believe emails or phone calls purporting to be from their bank or asking for information about bank accounts.

Between October 2020 and March 2021, HSBC's customers—including those of subsidiaries First Direct, John Lewis Finance, and M&S Bank—received tens of thousands of cheques out of the blue for subpar service. Cheques were provided, according to HSBC, "to give the receivers full control over the account that they deposited it into."

Lloyds Bank recently gave 350,000 insurance customers who were promised discounts when they renewed their contracts but didn't get them a total of £13.5 million. Payments of £40 on average were made via check or bank transfer.

Because banks were closed less during the

pandemic, checks have become more modern. Customers can pay them through an imaging device on their mobile banking app. Thanks to its convenience and speed, the recipient can receive the funds in their account in about a day.

In the first half of 2021, clients of Lloyds Bank used the mobile app to deposit 3.8 million checks. The maximum amount that can be paid via this technique is typically £1,000, with personal customers being able to write up to four checks totalling £2,000 every day.

Bank of Scotland, Barclays, First Direct, Halifax, HSBC, NatWest, RBS, Starling, and Virgin Money are among the banks offering this service. This revival came more than ten years after the UK Payments Council resolved to phase down checks in the UK by October 2018 in 2009.

But the House of Commons Treasury Committee started looking at the idea of doing away with checks in February 2010. The payments council announced that cheques would continue as long as customers need them, following concerns from charities and others.

Even though internet banking will undoubtedly continue to hold a sizable market share, cheques have a future and history. If the higher limits on transfer amounts were removed, it would be easier and more popular to use a check as payment through an app. If other banks join, the system might be expanded even further.

Many customers will believe they need checks if banks don't develop more robust online systems. But don't overlook the

65.3% of the U.S. population uses digital banking services

The number of people using digital banking has increased by 4% since 2018

About 27% of Americans use an online-only bank

66% of consumers report being satisfied with traditional banks

Between 2017 and 2019, the number of consumers who visited a branch 10 or more times per year declined from 35.4% to 28.4%

Source: Statista

emotional benefit either; a cheque slipping out of a birthday card is much more pleasant than a cold online bank transfer.

What exactly does ‘Cash is King during a recession’ mean?

We live in unprecedented economic

times, and there may be difficult days. As a result, people frequently resort to currency as a safe harbour in choppy circumstances. This has given rise to the common belief that during a recession, cash is king. That raises the following query: to what extent is that true?

The adage "Cash is king" frequently appears in business and finance talks. It broadly refers to the importance of sufficient cash flow and liquidity for the financial health of an organisation, home, or portfolio. Any wallet gains flexibility by having cash on hand, especially in an emergency.

The benefits of having liquid assets on hand when the economy falters are best summed up by the phrase "cash is king during a recession" for investors. Investors can use cash to leverage their financial positions in various ways, from navigating volatile markets to going all-in on discounted assets.

When the economy is uncertain, investors often add cash to their

portfolios. But overdoing it can lead to unforeseen consequences.

Are image-based payment systems the future for safe transactions?

For instance, while not as old as currency, checks have been used for hundreds of years. But since a government-led initiative told the financial industry that consumers need alternatives, just like cash, cheques have gotten a second chance. As a result, cheques have been used less frequently as other forms of payment have become more common.

In 2017, our banking sector spent approximately £800 million on developing an image-based payment system (ICS) that can significantly improve the customer experience and provide those who still want to use them with payment options. In addition, due to new, improved security features, check fraud as a percentage is negligible (£9.70 of fraud is averted for every £10 of fraud).

So why don't banks tell us that we can deposit checks with our cell phones by taking a picture of them and scanning them and that the funds will be cleared by the next business day? Why don't they inform corporations that they can take photos of scanned checks in one location and deposit them online as bank branches close? Cash and checks are still more expensive for the bank to manage. However, they continue to be among the safest payment methods in terms of security. Also, they could still use the current payment system as a backup in a power outage, network outage, disruption of a financial platform, hacking, or problems with legacy systems.

Nevertheless, the risk is a constant worry. We, therefore, look for means of reducing it. In case of any of those above, have cash in your pocket, a chequebook in your locker, additional cards, and mobile apps. But even the new payment options are under pressure as banks, fintech companies, and competitors are forced to close and stop their shiny new consumerfacing and business-to-business apps because of rising operating costs, shrinking market share, and falling demand.

Keep the cheques coming!

For different reasons, it seems like a large number of businesses still take checks as payment. Most small and medium-sized businesses that still use checks do so for various reasons, one of which is that it gives them more time to arrange their finances because it delays the time the money leaves their account.

Many SMEs also assert that they will continue to utilise checks as a form of payment since it is the procedure they are most accustomed to and because many payees still insist on it. Even though cash and electronic payments now predominate for lesser sums, many people and businesses are still willing to "cut a check" to pay higher costs.

Therefore, instead of taking away the option to order one when opening an account, removing the possibility to order one online without having to jump through hoops, or not informing their customers about the many simple ways that they can keep using them, why don't banks urge people to accept tried and trusted payment options by keeping a backup chequebook just in case? The government was ready to give the customer what they wanted by reversing the cheque's death. Why are the banks steadfastly trying to push them out when it is evident that their clients still value the "good old trustworthy" cheque?

However, one country thinks otherwise

The Reserve Bank of Fiji will remove cheques by 2024, as Governor Ariff Ali called the move a part of the banks’ plan to modernize the island country's payment system.

Ariff Ali also said that RBF was not previously mandated to regulate the payment system until 2021, and its initial priority is the upgrade of its Real Time Gross Settlement System.

“By 2024, there’ll be no cheques. So hopefully once we launch the

CSDs and the real gross settlement system, something we’re working on is by 2024 there’ll be no cheques so basically, no more paper cheques there’ll be more electronic payments,” the official remarked.

Cheque usage goes down in Australia as well

Monthly cheque usage has been steadily declining since 2002, with some of the biggest decreases being seen in recent years, show latest figures from the Reserve Bank of Australia, which states that cheque usage was down 17.8% for the year ended June 2022 and 18% down for the same period in 2021.

While cheques have not entirely disappeared, the decline in their usage is reflective of a societal shift towards technology.

"For some Australians, it’s hard to imagine a life without cheques. For others, they may have never used a cheque or owned a chequebook in their lifetime. In 1980, cheques accounted for 85% of the number of non-cash payments and almost all their value. Now, they account for just 0.2% of transactions, a number that continues to decline year on year," a CommBank report stated.

An RFI Global Report in 2022 said that the likelihood of cheque usage regularly increases with age. Consumers above 65 years are significantly more likely to have written one to two cheques over a six-month period, than the younger user base. Also, the study saw one in four users report using cheques due to personal preference, with bill payments being cited as the top reason behind the move, followed by

paying for items, services, or giving cheques as gifts. However, younger demographics were more likely to use mobile payments and buy now pay later services (BNPL) in a typical month rather than cheques.

CommBank commented in its report, "While cheques are still in use in Australia, usage has been declining at 20-25% yearly since 2016, while digital transactions increase. Looking to other nations around the world, including neighbouring New Zealand, who became cheque-free in 2021, we can expect to see the trend of embracing a cheque-free economy to continue."

"After seeing huge growth in new payment platform transactions over recent years, digital payment technologies are showing no signs of slowing down. As consumers continue to adopt quick and easy digital payment methods, banks will continue to find ways to meet their needs through safe and secure digital platforms," it concluded.

Conclusion

As we have mentioned in our article already, small and medium industries (SMEs) will continue to utilise checks as a form of payment since they are most accustomed to this particular practice and also many payees are still insisting on it. Even in the Australian case study, we have seen consumers above 65 years still writing one to two cheques over a six-month period.

Despite cash and electronic payments now becoming predominant mechanisms for lesser sum transfers, customers and businesses are still willing to 'cut a check' to pay higher costs. And the trend will continue in the coming years as well.

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