2025-07-03 19:13

July 3 (Reuters) - J.P.Morgan on Thursday forecast stablecoin growth will only reach $500 billion by 2028, calling trillion-dollar projections "far too optimistic", as there was little evidence of mainstream adoption of the dollar-pegged cryptocurrency token. Stablecoins have moved beyond their crypto trading roots to attract interest from fintechs and banks aiming to speed up payments and settlements, drawing attention from U.S. lawmakers, who last month passed the GENIUS Act in the Senate - a step analysts said could bring long-awaited regulatory clarity. Sign up here. Before the Senate passed the stablecoin bill, Standard Chartered projected the market could reach $2 trillion by 2028, while Bernstein forecast in a June 30 note that supply would grow to about $4 trillion over the next decade. But J.P.Morgan said payments adoption of stablecoins remains minimal, accounting for just 6% of demand, or about $15 billion. It estimated the stablecoin market at $250 billion, with most usage concentrated in crypto trading, decentralized finance and collateral. "The idea that stablecoins will replace traditional money for everyday use is still far from reality," the brokerage said. Stablecoin adoption beyond crypto markets faces hurdles from limited use cases and fragmented regulation, while international uptake remains limited as most countries focus on their own digital currencies or strengthening existing payment systems. In June, the head of China's central bank pledged to expand the international use of the digital yuan or e-CNY. Ant Group (688688.SS) , opens new tab, an affiliate of e-commerce giant Alibaba (9988.HK) , opens new tab, said it plans to apply for a license to issue stablecoins in Hong Kong through its overseas arm Ant International, which operates mobile payment app Alipay. "Neither the rapid expansion of e-CNY nor the success of Alipay and WeChat Pay represent templates for stablecoin expansion in the future," J.P.Morgan said. https://www.reuters.com/business/finance/jpmorgan-wary-stablecoins-trillion-dollar-growth-bets-cuts-them-by-half-2025-07-03/

2025-07-03 17:54

PARIS, July 3 (Reuters) - French utility EDF expects to spend 6 billion euros ($7.05 billion) on extending the life of 20 of its nuclear reactors, it said on Thursday, after getting the go-ahead from the country's nuclear regulator. The ASN said that state-owned EDF could proceed with upgrading safety standards at its 1300MW reactors so they could operate beyond their original 40-year lifespan. Sign up here. Raising the safety standards to match those of newer European Pressurised Reactor models would cost an estimated 6 billion euros, said EDF in a statement, adding that preparatory work on the first of the reactors had already begun last year. French President Emmanuel Macron has made expanding the country's nuclear production capability a flagship project, both by extending the lifetimes of existing sites and building at least six new reactors in coming decades. The plans come at a difficult time for heavily indebted EDF, which has faced project delays, budget overruns on new plants and defects in some reactors. They also come as the cash-strapped French government tries to push a budget with 40 billion euros in savings through a divided parliament. The state already stumped up around 10 billion euros to nationalise EDF in 2023. However, CEO Bernard Fontana, appointed earlier this year, has been tasked with jumpstarting the nuclear ramp-up and is currently seeking ways to bring in money to finance upgrades and new builds, including possible asset sales. The regulator said it will issue specific safety requirements for each reactor during its 40-year inspection. Additionally, EDF will be required to provide annual reports detailing its progress in meeting these conditions. The decision concerns 20 reactors out of the country's 56-strong fleet, which will reach their currently approved lifespan between 2026 and 2040. The regulator previously approved extensions for EDF's 32 smaller 900MW reactors. ($1 = 0.8516 euros) https://www.reuters.com/sustainability/boards-policy-regulation/edf-spend-estimated-7-billion-extending-life-nuclear-plants-2025-07-03/

2025-07-03 17:37

US job market defies expectations of deterioration Labor data closes door on July Fed rate cut Traders now see just two Fed rate cuts by year-end July 3 (Reuters) - Unexpectedly solid job gains in June bolstered the case for the Federal Reserve to keep interest rates on hold to keep downward pressure on inflation, with one U.S. central banker saying it could take a year or more for the economy to adjust to the Trump administration's tariff and other policies. "The main punchline is that the adjustment of prices and the broader economy to changes in trade and other forthcoming policies in the United States, along with geopolitical developments, is not going to be a short and simple one-time shift in prices, as standard textbook models would suggest," Atlanta Fed President Raphael Bostic said in remarks to an economic conference in Germany. Sign up here. "If I’m right, then the U.S. economy will likely experience a longer period of elevated inflation readings," that will keep the Fed patient before cutting its benchmark policy rate, Bostic said. The Fed "must await more clarity" on inflation, economic growth and jobs before easing monetary policy. The labor market, at least for now, receded as a risk when new data on Thursday showed U.S. firms added a more-than-expected 147,000 jobs in June and the unemployment rate unexpectedly fell to 4.1% - another sign that the economy remained resilient despite the turbulence and uncertainty over how big tariffs will be. President Donald Trump has demanded immediate rate cuts, but Fed officials have said that with inflation risks rising there is no need to ease policy unless the job market begins to weaken in a significant way. New inflation data will be released in about two weeks, and Fed Chair Jerome Powell has said that if inflation does rise due to tariffs it will likely begin happening this summer. The jobs data, meanwhile, undercut the case for a rate reduction as soon as the Fed's upcoming July 29-30 meeting, a possibility raised in recent weeks by Fed Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman, who had called for early action to head off labor market deterioration. "Today’s data of higher-than-expected payrolls, a drop in the unemployment rate, and a fall in jobless claims completely dispels their case for imminent rate cuts and implies that there is absolutely no urgency for Fed support," said Seema Shah, chief global strategist at Principal Asset Management. "We expect the first cut to come in late 2025." Bostic has also said he anticipates just a single rate reduction this year; recent projections from Fed officials see two cuts. The Fed last month left its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December. The decision has drawn fury from Trump, who feels that recent weak inflation means the central bank should be sharply reducing its policy rate. He has asked Powell to resign. Treasury Secretary Scott Bessent, reportedly under consideration as a possible Powell replacement, told CNBC that the jobs number was "good" and that "thus far we haven't seen any inflation from tariffs." "If they want to make a mistake here and not cut, that's fine," Bessent said of Fed policymakers, adding that forgoing a rate cut now increases the chance that the Fed will cut by a half-percentage point in September. Powell, who has said he intends to serve out a term as chair that ends on May 15, on Tuesday reiterated the central bank's plans to "wait and learn more" about how much tariffs push up on inflation before lowering rates again. Rate futures show traders are back on board with that vision, with financial market bets pointing to a September start to rate cuts and a total of just two quarter-point reductions by year-end, not the three rate cuts that they had earlier favored. Despite June's unexpectedly large increase in payrolls, Thursday's data continued to show the labor market is cooling. Average earnings rose 3.7% in June, coming further into line with what Fed policymakers feel is consistent with their 2% inflation goal. Broadly the report contained plenty of evidence that the Trump administration's trade and other policy changes are reshaping the job market. Manufacturing jobs fell by 7,000, and federal government payrolls also slipped. Restrictions on immigration and the administration's push for deportations also look to be reducing the share of foreign-born workers in the job market. In a poor sign for the outlook, hiring was concentrated in an increasingly narrow range of job types. Labor force participation continued to fall in June, dropping a tenth of a percentage point to 62.3%, after falling two tenths of a percentage point in May. Without those declines, the unemployment rate would have risen to 4.7%, wrote Nationwide's Kathy Bostjancic, who attributed the job market exits to potential workers becoming too discouraged to look for jobs, or to reductions in immigration. Characterizing the employment report as "weak," Bostjancic said it "supports our view that the Fed will cut the fed funds rate by 75 bps by year-end to bolster a slowing economy despite a likely temporary run-up in prices stemming from tariffs," she wrote. A separate report on Thursday from the Institute for Supply Management showed the U.S. services sector picked up in June, though employment contracted, with businesses hesitant to fill jobs, highlighting the economic drag from policy uncertainty. https://www.reuters.com/business/traders-pare-bets-fed-rate-cuts-after-jobs-report-2025-07-03/

2025-07-03 16:07

BRASILIA, July 3 (Reuters) - The BRICS group of developing nations is set to announce a new guarantee fund backed by the New Development Bank (NDB) to lower financing costs and boost investment, two people familiar with the matter told Reuters. The initiative, modeled on the World Bank's Multilateral Investment Guarantee Agency (MIGA), aims to address global investment shifts amid uncertainty surrounding U.S. economic policy, the sources said on condition of anonymity. Sign up here. Brazilian officials view the fund as the centerpiece of the BRICS financial agenda during the country's rotating presidency. The fund is expected to be mentioned in the joint statement at the BRICS summit in Rio de Janeiro next week, said the sources. Originally formed by Brazil, Russia, India and China, the BRICS group later added South Africa and recently expanded to include other developing nations to increase its influence in global governance. The proposed BRICS Multilateral Guarantee (BMG) mechanism, incubated within the NDB, has received technical approval from member states and awaits final signoff from BRICS finance ministers, considered a formality, one of the sources said. Brazil's Finance Ministry declined to comment on the matter. The initiative will not require additional capital from member countries at this stage. Instead, it aims to channel existing NDB resources to projects in developing nations. No initial funding value has been disclosed, but officials involved in the talks expect each dollar in guarantees provided by the NDB to mobilize between five and ten dollars in private capital for pre-approved projects. "This is a politically significant guarantee instrument. It sends a message that BRICS is alive, working on solutions, strengthening the NDB and responding to today's global needs," one source said. Technical preparations setting up the fund are expected to conclude by the end of this year, paving the way for pilot projects to receive guarantees in 2026. BRICS countries face challenges common to developing nations in attracting large-scale private investment in infrastructure, climate adaptation and sustainable development. Officials argue that guarantees issued by the NDB, whose credit rating is higher than that of most member countries, could help mitigate perceived risks for institutional investors and commercial banks. https://www.reuters.com/sustainability/climate-energy/brics-launch-guarantee-fund-boost-investment-member-nations-sources-say-2025-07-03/

2025-07-03 14:41

WARSAW, July 3 (Reuters) - A 25-basis-point cut in Polish interest rates this week is not the start of a policy-easing cycle, central bank Governor Adam Glapinski said on Thursday, though he did not rule out another such move in September. Poland's central bank unexpectedly cut its main interest rate to 5% on Wednesday, citing its expectation for a clear decline in inflation in the coming months. Sign up here. Glapinski said on Thursday that the bank was not giving a path for interest rates. "Further decisions will depend on incoming information, we are not announcing a path of rate cuts, this is not the beginning of a cycle," Glapinski told journalists, when asked if there would be another cut at the next meeting in September if data was positive. "We are not closed to any decisions," he added. Poland's statistical office said this week that annual inflation in June was 4.1%, slightly higher than the 4.0% forecast in a Reuters poll and up from a revised 4.0% in May. The central bank's inflation target is 1.5%-3.5%. On Wednesday, the bank also published new forecasts for inflation and economic growth, which indicated the pace of price growth would be lower than expected in its projection from March. Glapinski said that he expected inflation to fall to the target range as soon as this month. "If inflation stays at 2.5%, interest rates will also go down to a similar level, but these are not high rates. We rather try to maintain rates so that they have an anti-inflationary effect, but are not excessively high and do not stifle the economy," he told journalists. Glapinski also said that inflation may rise slightly in coming quarters, but it would be in line with the central bank's target in the medium term, adding that the situation for household energy prices in the second half of the year was still unclear. Analysts said that although the central bank governor's description of the economic situation in Poland was quite hawkish, they expected interest rates to fall further. "The MPC’s communication is unfortunately not very transparent. To sum up, inflation will fall to target in the second half of 2025, and rate cuts will be larger than the first part of the conference might have suggested," ING economists wrote on social media platform X. https://www.reuters.com/markets/europe/polands-july-rate-cut-not-start-cycle-central-bank-chief-says-2025-07-03/

2025-07-03 14:30

Global officials at ECB Forum discuss future of the dollar Stablecoins, Trump attacks on Fed seen as threat Fed's safety net for foreign banks openly questioned SINTRA, Portugal, July 3 (Reuters) - At their annual gathering in the hills of Portugal's Sintra, central bankers this week confronted rising challenges to their control of the global money system, from political attacks on the U.S. Federal Reserve to the rise of stablecoins. Recent editions of the European Central Bank's getaway event have been dominated by worries about high inflation - no surprise after central banks whose core task is price stability were mostly late to react to a surge in prices in 2021-22. Sign up here. But this year's discussions - from choreographed panel debates among central bank chiefs to late-night exchanges at the hotel bar - were centred on more existential threats to the monetary system as we know it. U.S. President Donald Trump's frequent, often personal, attacks on Federal Reserve chair Jerome Powell - and hints about his replacement - were the most obvious example. Any suggestion that the Fed might bow to pressure from the White House to lower borrowing costs would hurt its reputation for independence - for decades a core tenet of central banking seen crucial for keeping policy credible and investors on-side. Two in three reserve managers at central banks polled by UBS Asset Management said in a survey released this week they feared that Federal Reserve independence was at risk. Powell batted away such worries during a panel discussion, saying he and colleagues were focused "100%" on low inflation and full employment "in a completely non-political way". He drew applause from an audience of economists and central bankers, with ECB President Christine Lagarde saying she and her peers would do the same if they were in Powell's shoes. CONFIDENCE DENTED But confidence has already been shaken. Central bankers were openly fretting about a topic that was taboo only a few months ago: will the Fed, even under a Trump-picked chair next year, continue to lend dollars to foreign banks when they are in trouble? Commercial lenders outside the United States have been able to borrow dollars even when they are shut out of financial markets via swap lines between the Fed and some other central banks created during the 2008 global financial crisis. These facilities underpin the $25-trillion market for dollar credit outside the United States and also serve a domestic purpose: by helping to douse financial fires abroad, they effectively prevent them from spreading to Wall Street. The Trump administration's retreat from international coordination has raised some concerns about these lifelines, even though there has been no action so far to suggest they will be cut. Governor Rhee Chang-yong said his Bank of Korea, which unlike the ECB and other major central banks does not have a standing arrangement with the Fed and relies on temporary help when needed, might have to fend for itself in the future. "If there's no global dollars shortage, our understanding is that the Fed cannot extend the swap-line in that case and we have to self-defense ourselves," Rhee said at the conference. His Japanese peer Kazuo Ueda emphasised the importance of regional swap lines, such as the Chiang Mai Initiative of the Association of Southeast Asian Nations (ASEAN), as an additional safety net. One European central banker speaking on condition of anonymity said pooling dollar and gold reserves across countries could also serve as a stopgap, although it was unlikely to be sufficient to plug major shortfalls. These fears fed a broader debate about the dollar losing its status as the world's currency of choice for saving and trading, with a lack of viable alternatives in sight. Seeking to reassure colleagues, Powell said the Fed retained its legal authorities and was "still prepared to use" them. STABLECOINS Stablecoins - crypto tokens pegged to an official currency - were a new entry among Sintra's topics of debate, even keeping some central bankers up late in informal discussions at the conference venue's bar. While some recognised stablecoins' efficiency as a means of exchange, their proliferation in recent years - and especially since Trump threw his weight behind them as a way to extend the dollar's global reach - was seen as alarming by many central bankers. They fear stablecoins may be prone to "runs" if investors suspect the issuing company does not have enough currency to back outstanding tokens, as happened to TerraUSD in 2022. Bank of England Governor Andrew Bailey said stablecoins must show they can "hold their nominal value" if they are to be treated as a legitimate means of exchange. The ECB's Lagarde went as far as saying stablecoins amount to "a privatisation of money", taking the supply of currency away from central bankers and undermining their capacity to conduct monetary policy. Rhee was even more specific, saying stablecoins denominated in South Korean won - one of President Lee Jae Myung's election pledges - could undermine the domestic currency by making it easier to switch to dollars. https://www.reuters.com/business/finance/sintra-getaway-central-bankers-mull-threats-their-domain-2025-07-03/