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Highlights
SGH reports are highly valued for keeping clients and policymakers informed and well-ahead of consensus and the news cycle on the macro policy events driving global markets.
July 16, 2021
SGH Insight
The ECB had agreed to commit to a symmetric inflation “aim” of around 2% already in 2019 under then-President Mario Draghi, even while its formal target has remained a slightly lower, and more unwieldy, “close to, but below 2%.” But the codification of this symmetric 2% goal into a formal inflation target is still significant, and indeed, ECB President Christine Lagarde proudly flagged the upcoming July 22 Governing Council as one worth watching in that it will be now incorporating the new ECB target into its forward guidance on interest rates.
In the process, Lagarde may have been perhaps raising expectations for changes to policy as well.
** On forward guidance, the Governing Council will need to change its current commitment to keeping interest rates “at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 percent within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics” to reflect the new 2% symmetric target, and the desire to hit that target on a “sustainable” basis.
** But on a pragmatic level, rate hike expectations are already more or less flat until 2024, and so an argument can be made that the ECB commitment to keeping rates at the current -0.5% is already more than baked into markets.
Market Validation
In the process, Lagarde may have been perhaps raising expectations for changes to policy as well.
** On forward guidance, the Governing Council will need to change its current commitment to keeping interest rates “at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 percent within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics” to reflect the new 2% symmetric target, and the desire to hit that target on a “sustainable” basis.
** But on a pragmatic level, rate hike expectations are already more or less flat until 2024, and so an argument can be made that the ECB commitment to keeping rates at the current -0.5% is already more than baked into markets.
Policy Validation
FT 7/22/21
The new guidance came two weeks after the ECB agreed a new strategy that lifted its inflation target to 2 per cent, dropped a promise to keep price rises below that level and accepted that they can even exceed it temporarily. It was the first change in strategy for almost two decades.
After the monetary policy meeting in Frankfurt, the central bank said in a statement that its revised guidance would “underline its commitment to maintain a persistently accommodative monetary policy stance to meet its inflation target”.
It said its deposit rate would not rise from minus 0.5 per cent until inflation hits 2 per cent “well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at 2 per cent over the medium term”.
It added: “This may also imply a transitory period in which inflation is moderately above target.”
Some ECB rate-setters have called for a reduction in the pace of bond purchases through the €1.85tn pandemic emergency purchase programme (PEPP) it launched in response to the Covid-19 crisis last year.
But in its statement on Thursday the ECB stuck to its guidance that the PEPP will last until at least March 2022 and only end once its policymakers decide that “the coronavirus crisis phase is over”.
FT 7/22/21
The new guidance came two weeks after the ECB agreed a new strategy that lifted its inflation target to 2 per cent, dropped a promise to keep price rises below that level and accepted that they can even exceed it temporarily. It was the first change in strategy for almost two decades.
After the monetary policy meeting in Frankfurt, the central bank said in a statement that its revised guidance would “underline its commitment to maintain a persistently accommodative monetary policy stance to meet its inflation target”.
It said its deposit rate would not rise from minus 0.5 per cent until inflation hits 2 per cent “well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at 2 per cent over the medium term”.
It added: “This may also imply a transitory period in which inflation is moderately above target.”
Some ECB rate-setters have called for a reduction in the pace of bond purchases through the €1.85tn pandemic emergency purchase programme (PEPP) it launched in response to the Covid-19 crisis last year.
But in its statement on Thursday the ECB stuck to its guidance that the PEPP will last until at least March 2022 and only end once its policymakers decide that “the coronavirus crisis phase is over”.
July 9, 2021
SGH Insight
The People’s Bank of China announced on Friday a cut in its Reserve Requirement Ratio (RRR) of 50 basis points for eligible financial institutions starting on July 15 to support the real economy.
As had been picked up in the press, Premier Li Keqiang at a State Council executive meeting on Wednesday called for a timely cut to the RRR for banks to support the real economy, but he also warned officials to avoid “flood-like stimulus” and to keep monetary policy stable.
After the meeting, China’s top financial officials met and decided to announce an RRR cut of 50 basis points on Friday. The message Beijing is now seeking to convey is that the move does not mean that China’s economic growth has lost momentum, and indeed one of these officials states that he is sure that China’s GDP will keep above 8% year on year in Q2.
Market Validation
As had been picked up in the press, Premier Li Keqiang at a State Council executive meeting on Wednesday called for a timely cut to the RRR for banks to support the real economy, but he also warned officials to avoid “flood-like stimulus” and to keep monetary policy stable.
After the meeting, China’s top financial officials met and decided to announce an RRR cut of 50 basis points on Friday. The message Beijing is now seeking to convey is that the move does not mean that China’s economic growth has lost momentum, and indeed one of these officials states that he is sure that China’s GDP will keep above 8% year on year in Q2.
Bloomberg 7/15/21
Chinese Stocks Rally, Bonds Decline as Data Allay Growth Fears
Chinese stocks advanced while bonds declined as fears of a deep economic slowdown were allayed by the latest data. The nation’s benchmark stock index rose, with materials and financial shares leading gains, while the 10-year government bond futures fell for the first time in four days. The onshore yuan advanced.
China’s markets are breathing a sigh of relief after data showed economic growth -- while slowing after a sharp V-shaped rebound -- was tracking estimates, while expectations that the People’s Bank of China would signal further easing to counter a sharp slowdown also proved unfounded.
Chinese Stocks Rally, Bonds Decline as Data Allay Growth Fears
Chinese stocks advanced while bonds declined as fears of a deep economic slowdown were allayed by the latest data. The nation’s benchmark stock index rose, with materials and financial shares leading gains, while the 10-year government bond futures fell for the first time in four days. The onshore yuan advanced.
China’s markets are breathing a sigh of relief after data showed economic growth -- while slowing after a sharp V-shaped rebound -- was tracking estimates, while expectations that the People’s Bank of China would signal further easing to counter a sharp slowdown also proved unfounded.
July 12, 2021
SGH Insight
Fedspeak picks back up a bit this week. The highlight will be Chair Jerome Powell’s Monetary Policy Report testimony at the House (Wednesday) and Senate (Thursday). I expect Powell will lean on a generally dovish story that commits to sustained policy accommodation even as he opens the door for tapering later this year.
Market Validation
Policy Validation 7/14/21
Semiannual Monetary Policy Report to the Congress
Chair Jerome H. Powell
At our June meeting, the Committee discussed the economy's progress toward our goals since we adopted our asset purchase guidance last December. While reaching the standard of "substantial further progress" is still a ways off, participants expect that progress will continue. We will continue these discussions in coming meetings. As we have said, we will provide advance notice before announcing any decision to make changes to our purchases.
Semiannual Monetary Policy Report to the Congress
Chair Jerome H. Powell
At our June meeting, the Committee discussed the economy's progress toward our goals since we adopted our asset purchase guidance last December. While reaching the standard of "substantial further progress" is still a ways off, participants expect that progress will continue. We will continue these discussions in coming meetings. As we have said, we will provide advance notice before announcing any decision to make changes to our purchases.
July 7, 2021
SGH Insight
Didi’s decision to go public in the US was made without consulting the Cyberspace Administration of China and the Ministry of Public Security and does not conform to the position of the Central government. Even if Didi continues to list in the US, its domestic business will suffer a huge contraction. As far as I know, about 20 central ministries and commissions, including the PBoC and CBIRC, have decided in the last two days to ban their staff from using Didi during official duties. If Ant group’s plans to list in Hong Kong and Shanghai were just a mistake, Didi’s IPO is [an] extremely black deed.
Market Validation
Policy Validation
Bloomberg 7/9/12
China Asks Websites, Platforms to Ban Downloads of 25 Didi Apps
China’s cyberspace regulator ordered websites and online platforms to ban downloads of 25 more Didi-related apps that have already been removed from app stores, days after asking app stores to remove the company’s Didi Chuxing app, according to a statement on the Cyberspace Administration website late Friday.
The regulator cites “serious illegal collection and use of personal information” by the apps
*DIDI GLOBAL TURNS NEGATIVE, ERASING INTRADAY GAIN OF 9.1%
Bloomberg 7/9/12
China Asks Websites, Platforms to Ban Downloads of 25 Didi Apps
China’s cyberspace regulator ordered websites and online platforms to ban downloads of 25 more Didi-related apps that have already been removed from app stores, days after asking app stores to remove the company’s Didi Chuxing app, according to a statement on the Cyberspace Administration website late Friday.
The regulator cites “serious illegal collection and use of personal information” by the apps
*DIDI GLOBAL TURNS NEGATIVE, ERASING INTRADAY GAIN OF 9.1%
June 14, 2021
SGH Insight
Altogether this argues for the dots to edge higher in 2022 and 2023 such that the median FOMC participant anticipates a rate hike in 2023. I think any reasonable forecast likely has the economy meeting the Fed’s employment and inflation objectives as early as the end of 2022 and as such it doesn’t seem particularly credible within the context of the new framework to not expect a rate hike in 2023.
Market Validation
Bloomberg 6/16/21
Treasuries Tumble, Curve Flatter as Fed Dots Show Two 2023 Hikes
Treasuries drop sharply to session lows with 10-year yields jumping back above 1.50% after Fed’s latest economic projections show two rate increases by the end of 2023. In front-end the IOER was hiked 5bp to 0.15%.
Treasury 10-year yields rose to 1.523% session highs, cheaper by 2.7bp on the day, while belly-led losses flattened 5s30s curve as low as 135.1bp, tightest levels since January.
Futures volumes over the release saw 130k 10-year note contracts trade on move down to 132-04 session lows.
Revised Fed dots show 13 officials seeing a hike by the end of 2023, while 7 officials see a hike by the end of 2022 vs 4 in March.
Treasuries Tumble, Curve Flatter as Fed Dots Show Two 2023 Hikes
Treasuries drop sharply to session lows with 10-year yields jumping back above 1.50% after Fed’s latest economic projections show two rate increases by the end of 2023. In front-end the IOER was hiked 5bp to 0.15%.
Treasury 10-year yields rose to 1.523% session highs, cheaper by 2.7bp on the day, while belly-led losses flattened 5s30s curve as low as 135.1bp, tightest levels since January.
Futures volumes over the release saw 130k 10-year note contracts trade on move down to 132-04 session lows.
Revised Fed dots show 13 officials seeing a hike by the end of 2023, while 7 officials see a hike by the end of 2022 vs 4 in March.
June 10, 2021
SGH Insight
*** Our understanding is that at a State Council Executive Meeting held in Zhongnanhai on Wednesday morning, Beijing time, Premier Li Keqiang said that while China now imposes a 25 percent general corporate tax rate (with exemptions for a few industries such as semiconductors), which is higher than the proposed minimum global corporate tax rate, we (China) are inclined to endorse the G7’s minimum global corporate tax deal at the G20 Finance Ministers and Central Bank Governors Meeting that will be held in Venice on July 9-10th. ***
Market Validation
Policy Validation
Bloomberg 7/1/21
The U.S. has won international backing for a global minimum rate of tax as part of a wider overhaul of the rules for taxing international companies, Dow Jones reported, citing people familiar.
Key excerpts from original article:
Officials from 130 countries that met virtually agreed Thursday to the broad outlines of the overhaul, including all of the Group of 20 nations, according to one of the people familiar with the matter.
They include China and India, the large developing countries that had previously had reservations about the proposed overhaul.
Bloomberg 7/1/21
The U.S. has won international backing for a global minimum rate of tax as part of a wider overhaul of the rules for taxing international companies, Dow Jones reported, citing people familiar.
Key excerpts from original article:
Officials from 130 countries that met virtually agreed Thursday to the broad outlines of the overhaul, including all of the Group of 20 nations, according to one of the people familiar with the matter.
They include China and India, the large developing countries that had previously had reservations about the proposed overhaul.
June 9, 2021
SGH Insight
...The EU and US will also commit to putting an end before July 11 to the long -standing conflict over aircraft subsidies in the Boeing-Airbus wars, and in doing so will prevent an escalation of the retaliatory measures that the EU has warned it could impose under WTO rulings should there be no deal by that date...
...The Russia Nord Stream Angle
Biden seems to have won Berlin over into a more robust stance against China in large part through bribery — by giving up on his initial promise to block the completion of the Nord Stream 2 gas pipeline that is set to provide cheap Russian gas to Germany.
Controversial in both the US and EU, the government of Chancellor Angela Merkel had been fighting tooth and nail to complete that project, over objections that the pipeline will increase Europe’s dependence on fossil fuels, on Russia for energy supplies, with all the security implications involved, and in the process weaken Ukraine as a transit country for the existing Russian gas pipeline.
China’s retaliatory measures against EU officials over criticism of its human rights, which led to the suspension of the EU-China Comprehensive Agreement on Investment in the European Parliament, did help to play into US hands – indeed, even before swearing in on January 20, 2021, the incoming Biden administration had sent informal signals to the EU in late 2020 to refrain from signing the CAI before consulting with the US.
There is some speculation now that Biden will also use the dropping of White House opposition to the Nord Stream 2 pipeline when he meets on Wednesday in Geneva with Russia’s President Vladimir Putin as a reminder of America’s clout and of potential rewards that could come to Russia through better relations with the US.
While the Nord Stream compromise might serve on the margins to soften an otherwise ice-cold bilateral relationship between Moscow and Washington, whether it does much more than that will remain to be seen.
Market Validation
...The Russia Nord Stream Angle
Biden seems to have won Berlin over into a more robust stance against China in large part through bribery — by giving up on his initial promise to block the completion of the Nord Stream 2 gas pipeline that is set to provide cheap Russian gas to Germany.
Controversial in both the US and EU, the government of Chancellor Angela Merkel had been fighting tooth and nail to complete that project, over objections that the pipeline will increase Europe’s dependence on fossil fuels, on Russia for energy supplies, with all the security implications involved, and in the process weaken Ukraine as a transit country for the existing Russian gas pipeline.
China’s retaliatory measures against EU officials over criticism of its human rights, which led to the suspension of the EU-China Comprehensive Agreement on Investment in the European Parliament, did help to play into US hands – indeed, even before swearing in on January 20, 2021, the incoming Biden administration had sent informal signals to the EU in late 2020 to refrain from signing the CAI before consulting with the US.
There is some speculation now that Biden will also use the dropping of White House opposition to the Nord Stream 2 pipeline when he meets on Wednesday in Geneva with Russia’s President Vladimir Putin as a reminder of America’s clout and of potential rewards that could come to Russia through better relations with the US.
While the Nord Stream compromise might serve on the margins to soften an otherwise ice-cold bilateral relationship between Moscow and Washington, whether it does much more than that will remain to be seen.
Bloomberg 6/15/21
The U.S. and the European Union agreed to a five-year truce in their 17-year dispute over aircraft subsidies to Airbus SE and Boeing Co. that saw the allies impose tariffs
on $11.5 billion of each other’s exports. The European Commission spent Monday night discussing the accord with member states to get the deal over the line before
an EU-U.S. summit in Brussels with President Joe Biden, according to EU officials familiar with the deliberations. A formal announcement is expected later Tuesday.
Policy Validation
Bloomberg 6/23/21
The U.S. and Germany are discussing a range
of possibilities aimed at resolving a dispute over the Nord
Stream 2 gas pipeline and could settle their differences over
the summer, according to Foreign Minister Heiko Maas.
The U.S. considers the almost-completed link between Russia
and Germany a threat to Europe’s energy security, while Berlin
argues it’s a commercial project and won’t bolster the Kremlin’s
influence. Washington had imposed sanctions on entities and
individuals connected to the project, but most of those have
recently been waived by U.S. President Joe Biden.
Speaking after discussions with U.S. Secretary of State
Antony Blinken in Berlin, Maas suggested that talks between
Chancellor Angela Merkel and Biden in Washington on July 15
could pave the way for an agreement, which Germany is seeking by
August.
Bloomberg 7/19/21
U.S., Germany Expected to Announce Nord Stream 2 Deal
The U.S. and Germany are expected to announce an agreement to end a dispute over Russia’s $11 billion Nord Stream 2 natural gas pipeline in the coming days, Reuters reports, citing people familiar.
A deal is near that would avert U.S. sanctions against Nord Stream 2, according to a person familiar with the negotiations
The U.S. and the European Union agreed to a five-year truce in their 17-year dispute over aircraft subsidies to Airbus SE and Boeing Co. that saw the allies impose tariffs
on $11.5 billion of each other’s exports. The European Commission spent Monday night discussing the accord with member states to get the deal over the line before
an EU-U.S. summit in Brussels with President Joe Biden, according to EU officials familiar with the deliberations. A formal announcement is expected later Tuesday.
Policy Validation
Bloomberg 6/23/21
The U.S. and Germany are discussing a range
of possibilities aimed at resolving a dispute over the Nord
Stream 2 gas pipeline and could settle their differences over
the summer, according to Foreign Minister Heiko Maas.
The U.S. considers the almost-completed link between Russia
and Germany a threat to Europe’s energy security, while Berlin
argues it’s a commercial project and won’t bolster the Kremlin’s
influence. Washington had imposed sanctions on entities and
individuals connected to the project, but most of those have
recently been waived by U.S. President Joe Biden.
Speaking after discussions with U.S. Secretary of State
Antony Blinken in Berlin, Maas suggested that talks between
Chancellor Angela Merkel and Biden in Washington on July 15
could pave the way for an agreement, which Germany is seeking by
August.
Bloomberg 7/19/21
U.S., Germany Expected to Announce Nord Stream 2 Deal
The U.S. and Germany are expected to announce an agreement to end a dispute over Russia’s $11 billion Nord Stream 2 natural gas pipeline in the coming days, Reuters reports, citing people familiar.
A deal is near that would avert U.S. sanctions against Nord Stream 2, according to a person familiar with the negotiations
June 7, 2021
SGH Insight
** In addition to a global minimum tax, and indeed as a condition of that agreement with the United States, the G7 also struck a deal on the even thornier issue of a cross-border digital tax, agreeing in its communique that the largest and most profitable multinational digital firms [read Google, Amazon, Facebook, Apple, Microsoft, etc.] will have to pay [some] tax in the countries where they operate, not just in their tax-based domiciles.
Market Validation
Bloomberg 6/7/21
*AMAZON SET TO BE INCLUDED IN GLOBAL TAX ACCORD ON LARGE FIRMS
*AMAZON TAX MECHANISM DETAILS STILL UNDER DISCUSSION, PEOPLE SAY
*AMAZON FALLS TO SESSION LOW AFTER BEING INCLUDED IN TAX ACCORD
*AMAZON SET TO BE INCLUDED IN GLOBAL TAX ACCORD ON LARGE FIRMS
*AMAZON TAX MECHANISM DETAILS STILL UNDER DISCUSSION, PEOPLE SAY
*AMAZON FALLS TO SESSION LOW AFTER BEING INCLUDED IN TAX ACCORD
June 2, 2021
SGH Insight
The G7 will commit to “properly embed” climate change and biodiversity loss in economic policymaking and will use carbon pricing as a policy lever. Central banks, and supervisory agencies, are to treat risks posed by climate change as financial risks.
The G7 will agree that the global financing system needs to be “greened” to better price climate risks and will call for mandatory climate related financial disclosures from companies to help markets value shares accordingly.
To avoid many different standards around the world for what constitutes a “green” or “sustainable” investment, the G7 will pledge to work among themselves and with other international partners towards one common line.
Market Validation
The G7 will agree that the global financing system needs to be “greened” to better price climate risks and will call for mandatory climate related financial disclosures from companies to help markets value shares accordingly.
To avoid many different standards around the world for what constitutes a “green” or “sustainable” investment, the G7 will pledge to work among themselves and with other international partners towards one common line.
Reuters 6/6/21
Group of Seven (G7) rich countries backed moves to force banks and companies to disclose their exposure to climate-related risks on Saturday, a measure seen as vital to efforts to safeguard the financial system from climate change shocks.
G7 finance ministers meeting in London also called for more coordination to measure what impact companies are having on the climate and environment, warning of the risk of fragmentation as local jurisdictions adopt different approaches.
"We support moving towards mandatory climate-related financial disclosures that provide consistent and decision-useful information for market participants...," said a final communique released after the two days of talks.
"This will help mobilise the trillions of dollars of private sector finance needed, and reinforce government policy to meet our net zero commitments," it said of a growing number of pledges by major economies to attain net-zero carbon emissions.
Group of Seven (G7) rich countries backed moves to force banks and companies to disclose their exposure to climate-related risks on Saturday, a measure seen as vital to efforts to safeguard the financial system from climate change shocks.
G7 finance ministers meeting in London also called for more coordination to measure what impact companies are having on the climate and environment, warning of the risk of fragmentation as local jurisdictions adopt different approaches.
"We support moving towards mandatory climate-related financial disclosures that provide consistent and decision-useful information for market participants...," said a final communique released after the two days of talks.
"This will help mobilise the trillions of dollars of private sector finance needed, and reinforce government policy to meet our net zero commitments," it said of a growing number of pledges by major economies to attain net-zero carbon emissions.
May 24, 2021
SGH Insight
Lest there be any questions as to the seriousness of Beijing’s efforts and its intentions, a very senior official source had this to say after the ban:
There is no doubt that this time we have cracked down on encrypted virtual currency more severely than in September 2019, and the price of virtual currency will be hit even harder than last time. We must provide an absolutely safe financial environment for the pilot and promotion of the digital RMB in China [our emphasis added].
Market Validation
There is no doubt that this time we have cracked down on encrypted virtual currency more severely than in September 2019, and the price of virtual currency will be hit even harder than last time. We must provide an absolutely safe financial environment for the pilot and promotion of the digital RMB in China [our emphasis added].
Bloomberg 6/5/21
Bitcoin continued its decline on Saturday
after potentially positive catalysts from El Salvador and Square
Inc. were unable to assuage investor concerns over Chinese
regulatory risks.
The world’s largest digital coin slipped to trade around
$35,220 as of 6:31 p.m. in New York, down 5.3% in the past 24
hours. The move extends its downtrend for a second day after a
cryptic tweet from Elon Musk that hinted at a potential split
with the cryptocurrency.
Weibo, a Chinese social-media service, appears to have
blocked some crypto influencer accounts on Saturday, citing
violation of unspecified laws and Weibo community rules.
Bitcoin continued its decline on Saturday
after potentially positive catalysts from El Salvador and Square
Inc. were unable to assuage investor concerns over Chinese
regulatory risks.
The world’s largest digital coin slipped to trade around
$35,220 as of 6:31 p.m. in New York, down 5.3% in the past 24
hours. The move extends its downtrend for a second day after a
cryptic tweet from Elon Musk that hinted at a potential split
with the cryptocurrency.
Weibo, a Chinese social-media service, appears to have
blocked some crypto influencer accounts on Saturday, citing
violation of unspecified laws and Weibo community rules.
May 14, 2021
SGH Insight
Senior Chinese sources hope the talks may be held by the end of this month. Furthermore, our understanding is that media reports that Vice-Premier Hu Chunhua has replaced the elderly but still extremely highly respected Vice-Premier Liu He as the top Sino-US trade negotiator are false, and that these negotiations are still being led by Liu.
Market Validation
Bloomberg 5/27/21
U.S., China Trade Chiefs Hold ‘Candid’ Talks in First Call
U.S. Trade Representative Katherine Tai and
China’s Vice Premier Liu He had a “candid” first conversation as
the two sides try to resolve some of their differences on trade.
The trade chiefs spoke Thursday morning in Beijing, China’s
Ministry of Commerce said in a statement, and “conducted candid,
pragmatic and constructive exchanges in an attitude of equality
and mutual respect.”
U.S., China Trade Chiefs Hold ‘Candid’ Talks in First Call
U.S. Trade Representative Katherine Tai and
China’s Vice Premier Liu He had a “candid” first conversation as
the two sides try to resolve some of their differences on trade.
The trade chiefs spoke Thursday morning in Beijing, China’s
Ministry of Commerce said in a statement, and “conducted candid,
pragmatic and constructive exchanges in an attitude of equality
and mutual respect.”
May 24, 2021
SGH Insight
EU officials say in private that the 15% rate is likely to be good enough for Luxembourg, Ireland, and other EU tax havens. There is a very strong expectation that the G20 will reach an agreement in principle on that 15% global minimum tax rate during the G20 finance ministers and central bank governors’ meeting in Venice in the first days of July.
Market Validation
BBC 6/5/21
The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax.
Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business.
They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each other.
Tech giants Amazon and Facebook are among those likely to be affected.
The deal announced on Saturday, between the US, the UK, France, Germany, Canada, Italy and Japan, plus the EU, could see billions of dollars flow to governments to pay off debts incurred during the Covid crisis.
Negotiated over many years, it will put pressure on other countries to follow suit, including at a meeting of the G20 next month, which includes China, Russia and Brazil.
The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax.
Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business.
They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each other.
Tech giants Amazon and Facebook are among those likely to be affected.
The deal announced on Saturday, between the US, the UK, France, Germany, Canada, Italy and Japan, plus the EU, could see billions of dollars flow to governments to pay off debts incurred during the Covid crisis.
Negotiated over many years, it will put pressure on other countries to follow suit, including at a meeting of the G20 next month, which includes China, Russia and Brazil.
News and Events
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