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Daily briefing - 16 September 2019

"In an attack blamed by the U.S. on Iran, a swarm of drones laden with explosives set the world's biggest crude-processing plant ablaze," writes Yahoo Finance this morning. Truth has been an early casualty in the proxy battle between the UAE-Saudi Arabia axis and Iran, with hopeless reportage from the region, where officially everything is just fine and rockets are missing their targets. But the regular rocket attacks on Saudi oil facilities are having an impact, and these attacks are aimed at the massive Saudi Aramco facility 500 kilometres from the border. The attack caused Saudi oil output to drop by half, sending the price of oil up to $71 a barrel. Worse, though, are the implications for the security of Saudi Aramco's supply. Saudi leaders want to float Aramco imminently and Goldman Sachs is aiming to be in charge of the IPO, even though Abu Dhabi's banks have targeted Goldman over its role in the 1MDB case.

How are those fee-free neobanks going to make money in a negative interest rate environment? Lessons come from Tencent, which is launching something akin to a digital credit card called Fenfu before the end of the year, according to local Chinese media outlet Xinliu Caijing. "Currently, WeChat Pay, which has more than 800 million users, only bundles with its users' debit and credit cards issued by regular banks. On the other hand, Ant Financial's Alipay and JD.com's payment platforms not only enable payments via bank cards, but also have their own virtual credit payment tools called Huabei and Baitiao respectively," reports the South China Morning Post. "The new Fenfu tool will allow users who cannot get a credit card from a bank to have a virtual one via WeChat. In addition, it will grant loans which can be interest-free for about one month, plus other micro-credits options and long-term financial services. The new payment platform could bring Tencent additional revenues by charging users service instalment and late payment fees." Ah yes, late payment fees.

Benoît Coeuré has completely given up warning his fellow ECB-ers about the dangers of bitcoin. Who could you call anyhow? Facebook getting into money is another prospect altogether. Short of rocking up to Libra's HQ in Geneva, "global regulators" - according to the Financial Times, but in face a couple of US federal reserve officers and some European central banks - will meet Libra representatives in Basel, where central bankers attend the hopefully named Financial Stability Board. Libra representatives have welcomed the talks. European policymakers are particularly concerned that Libra will prove popular in the EU where consumers still face difficulties in making cross-border payments. Mr Coeuré on Friday said the project was a "wake-up call" for governments and central banks which needed to work on technologies to make consumer payments "faster and cheaper". Has any of these regulators yet grasped that Libra will have a governing protocol not a million miles from bitcoin? Yes, Benoit has - but now he has started talking about government-issued digital currencies. Honestly.

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