LONDON — The British government is considering a ban on cryptocurrency donations to political parties — in a move that could set off alarm bells in Nigel Farage’s Reform UK. Farage’s populist party — surging ahead in U.K. opinion polls — opened the door to digital asset donations earlier this year as part of a promised “crypto revolution” in Britain, and has already accepted its first donations in the digital assets. A clampdown by the British government was absent from a policy paper outlining its upcoming Elections Bill, which is being billed as a plan to shore up British democracy. But officials are now considering measures to outlaw the use of crypto to fund U.K. politicians, according to three people familiar with recent discussions on the bill. The government did not deny that the move was under consideration, saying it would “set out further details in our Elections Bill.” Reform UK became the first British political party to accept crypto donations earlier this year. Farage told Reuters in October that his party had received “a couple” of donations in the form of crypto assets after the Electoral Commission — which regulates U.K. political donations — confirmed it had been notified of the first crypto donation in British politics. Reform has set up its own crypto donations portal and promised “enhanced” controls to avoid any misuse. Reform has set up its own crypto donations portal and promised “enhanced” controls to avoid any misuse. | Dan Kitwood/Getty Images Farage, who holds some long-term crypto assets, has told the sector he is the “only hope” for Britain’s crypto business as he seeks to emulate his long-term ally U.S. President Donald Trump’s wide embrace of digital currencies. Farage has stressed he was “way before Trump” in publicly backing cryptocurrencies. HARD TO TRACK Despite the absence of a clampdown from initial public plans for the government’s elections bill — which included measures ranging from lowering the voting age to 16 to strengthened powers for the electoral commission — the British government, which is trailing Reform in the polls, has been under pressure to adopt a ban on the practice. Among those who have floated a clampdown are then-Cabinet Office Minister Pat McFadden, Business Select Committee Chair Liam Byrne, and Phil Brickell, the Labour MP who chairs the All-Party Parliamentary Group (APPG) on Anti-Corruption and Fair Tax. Transparency experts have warned that the source of cryptocurrency donations can be difficult to track. That raises concerns that foreign donations to political parties and candidates — banned in almost all circumstances under British law — as well as the proceeds of crime and money laundering could slip through the net. Labour’s elections bill is also expected to place new requirements on political parties and their donors. It is set to include a clampdown on donations from shell companies and unincorporated associations, and could force parties to record and keep a risk assessment of donations that could pose a risk of foreign interference. Crypto is an emerging battleground of foreign interference, with Russia and its intelligence services increasingly embracing digital currencies to evade sanctions and finance destabilization — such as in Moldovan elections — after being cut off from the global banking system following Moscow’s full-scale invasion of Ukraine. Russian involvement in British politics has come under fresh scrutiny in recent months after Nathan Gill — the former head of Reform in Wales who was also an MEP in Farage’s Brexit Party — was jailed last month for over 10 years after being paid to make pro-Russian statements in the European Parliament. Farage has strongly distanced himself from Gill, describing the former MEP as a “bad apple” who had betrayed him. Nevertheless, Labour has since gone on the offensive, with Prime Minister Keir Starmer urging Farage to launch an internal investigation into Gill’s activities. According to a spokesperson for the Ministry of Housing, Communities and Local Government, which has responsibility for the bill, “The political finance system we inherited has left our democracy vulnerable to foreign interference.  “Our tough new rules on political donations, as set out in our Elections Strategy, will protect U.K. elections while making sure parties can continue to fund themselves.”

LONDON — Britain’s financial watchdogs have been on a crypto journey — with a little help from Donald Trump.  The Bank of England publishes its long-awaited rules for stablecoin Monday. Two years after the central bank’s Governor Andrew Bailey dismissed the virtual currency — a theoretically more stable form of crypto — as “not money,” its rulebook is now expected to get a cautious welcome from an industry that’s been lobbying hard for a rethink. It would mark quite a shift from the U.K. central bank. Stablecoins “are not robust and, as currently organized, do not meet the standards we expect of safe money in the financial system,” Bailey told a City of London audience in 2023.  Now his top officials herald a “fabulous opportunity.”  The Bank chief’s initial position — that he doesn’t see stablecoins as a substitute for commercial bank money — has put him at odds with the U.K. Treasury, which is on an all-consuming mission to get the sluggish British economy moving. Chancellor Rachel Reeves wants the U.K. “at the forefront of digital asset innovation.”  The United States crypto lobby, fresh from several wins stateside, spied an opportunity. Exploiting those divisions — and pointing to a more gung-ho approach from Trump’s U.S. — has allowed firms to push for a British regime that more closely aligns with their own.  Monday could be a very good day at the office.  TREADING CAREFULLY Stablecoins are a type of cryptocurrency pegged to a real asset, like the dollar, with the largest and best-known offering being Tether. They’re seen as a more palatable version of crypto, and are used by investors to buy other cryptocurrencies, or allow cross-border payments.  The pro-stablecoin camp says their development is necessary to improve payments and overseas transactions for businesses and consumers, particularly as cash usage declines and sending money abroad remains clunky and expensive. If done well, a stablecoin could maintain a reliable store of value and be a viable alternative to cash.  Stablecoins (USDT) are a type of cryptocurrency pegged to a real asset. | Silas Stein/picture alliance via Getty Images Those more cautious, including the BoE, warn there are risks for the wider financial system including undermining public confidence in money and payments if something goes wrong.  And stablecoins are not immune to things going wrong: In 2022, the Terra Luna token lost 99 percent of its value, along with its sister token TerraUSD, a stablecoin which went from being pegged to the dollar on a $1-1 TerraUSDbasis, to being valued at $0.4. Tether also fell during that time to $0.95.  Other central bankers seem to agree with Bailey’s early caution. The Bank for International Settlements, a central bank body, issued a stark warning on stablecoins in June, saying they “fall short” as a form of sound money.  There are also concerns such coins are used to skirt money-laundering laws, with anti-money laundering watchdog the Financial Action Task Force, warning that most on-chain illicit transactions involved stablecoins. The EU has tough regulation in place for digital assets. The bloc prioritizes tighter control over the market than the U.S., with stricter rules on capital and operations.  That’s in stark contrast to the U.S., which passed its own stablecoin regulation — the GENIUS act — earlier this year, which is much more industry-friendly. Donald Trump, whose family is building its own crypto empire, has described stablecoins as “perhaps the greatest revolution in financial technology since the birth of the Internet itself.”  That’s put post-Brexit Britain in a bind: align with the EU, the U.S., or go it alone?  “The U.K. is a bit caught,” a former Bank of England official who now works in digital assets said. They were granted anonymity, like others in this article, to speak freely. “It doesn’t have the luxury of completely creating a bespoke regime. It can do, but essentially, no one’s going to care.” AMERICAN PUSH For a Labour government intent on deregulating for growth, aligning with the U.S. was immediately a more attractive proposition.  Warnings came from the City of London, Britain’s financial powerhouse, that the government would need to embrace crypto and stablecoin for the U.K. to become a global player. Domestic financial services firms wrote to the government calling for it to align its regime with the U.S., talking up “once-in-a-generation opportunity” to establish the future rules for digital assets.   “Securities are getting tokenized,” said one former Treasury official, now working in the private sector. “Bank deposits are getting tokenized. If we don’t build a regime that is permissive enough [to make the U.K. attractive], then the City’s relevance will diminish as a consequence.”  For the pro-crypto brigade, the BoE has been the main hurdle in achieving a U.S.-style, free-market stablecoin rulebook. Reform UK leader Nigel Farage, whose party is currently leading in the polls, accused Bailey of behaving like a “dinosaur.  For the pro-crypto brigade, the BoE has been the main hurdle in achieving a U.S.-style, free-market stablecoin rulebook. | Niklas Helle’n/AFP via Getty Images “The Bank’s really got itself into a twist on this one. From what I understand from people who have been at the Bank, this is coming from the top,” said the former BoE employee quoted above.  “Andrew Bailey has made it publicly clear for some many months now that he is sceptical about the two new alternative forms of money, which is stablecoins and central bank digital currencies,” said a financial services firm CEO.  In recent weeks, however, Bailey and his colleagues have softened their rhetoric as well as indicating a relaxed policy is forthcoming.  Sarah Breeden, Bailey’s deputy governor for financial stability, has repeatedly said any limits on stablecoin will be temporary, and recent reports suggest there will be carve-outs for certain firms. Other BoE officials have also backed away from tougher rules on the assets which must be used to underpin the value of a stablecoin.  A second former BoE employee, who now works in the fintech industry, said Bailey was “under a huge amount of pressure, from the government and the industry. He is worried about looking like he is just anti-innovation.”  The BoE declined to comment. The Treasury did not respond to a request for comment. US interest  A state visit by Trump to the U.K. this fall appeared to help shift the debate.   In late September, the Trump administration and the British government agreed to explore ways to collaborate on digital asset rules.  Treasury Secretary Scott Bessent and Reeves announced that financial regulators and officials from the U.S. and U.K. would convene a “Transatlantic Taskforce for Markets of the Future.”  During Trump’s visit, Bessent held a financial services roundtable in London with key figures from industry. “There was a steady slate of crypto attendees there, and the discussion predominantly focused on stablecoins,” said the former Treasury official.  “Rachel Reeves met Scott Bessent and seems to have been told, actually, we’d like you to be much more supportive of … digital assets,” the financial services CEO added.   The U.K. Treasury has been “pretty proactive” in taking meetings with crypto firms and traditional finance firms interested in crypto, in the New York consulate and British embassy in Washington, added the former Treasury official.   The BoE too met with the crypto industry and U.S. politicians, with Breeden at the helm of discussions while she was in the U.S. in October for IMF-World Bank meetings, in an effort to better understand U.S. stablecoin rules.  Last month saw a major olive branch.  A Bailey-penned op-ed in the Financial Times saw the Bank chief recognize stablecoins’ “potential in driving innovation in payments systems both at home and across borders.”   Going further still, Breeden told a crypto conference just this month that synchronization between the U.S. and the U.K. on stablecoin marks a “fabulous opportunity.”  She has heavily indicated there will be more than a slight American influence when she announces the proposals on Nov. 10. “It’s a fabulous opportunity, to reengineer the financial system with these new technologies,” Breeden told the Nov. 5 crypto conference.  “I think a lot of people have observed that it was the U.S. crypto firms that really pushed the dial on getting political will, whereas British firms haven’t been able to secure that,” the former Treasury official said.

SOFIA — The euro is more than just a currency: it’s a geopolitical insurance policy in a fragmenting world. That was the message the EU’s most senior economic leaders sent to a skeptical Bulgarian public during a pro-euro charm offensive in Sofia on Tuesday. Bulgaria is due to adopt the euro on Jan. 1, 2026, but only about half the population supports joining the single currency. Fears about inflation and centralization of power in Brussels and Frankfurt — exacerbated by alleged Russian disinformation campaigns — have turned many against the project. In a push to ease these concerns, Economy Commissioner Valdis Dombrovskis and European Central Bank President Christine Lagarde each stressed the geopolitical benefits of joining the euro. “Bulgaria is joining the euro … at a point when there is more volatility, at a time when we have more shocks, one after the other, compounded, and at a time where the global order, as we have known it, is more fragmented, and when friends are probably fewer,” said Lagarde, adding: “It’s important to close ranks and to be together.” Lagarde said that during the financial crisis, the single currency had proved a defensive shield against shocks and depreciation. Dombrovkis said that, in itself, the adoption of the euro could help Bulgaria compensate for growing geopolitical risks in investors’ eyes. “In Baltic countries, despite being geopolitically exposed, the borrowing costs were lower than in Poland, and to a large extent investors assessed that [the euro] is a stabilizing factor,” he said. Bulgaria’s accession to the euro has been planned for more than a decade, but as the date got nearer, it has spawned conspiracy theories and populist politics, alongside more justified concerns about the currency changeover. Investigative reports have identified Russian-funded social media campaigns to undermine support for the euro. Last April, the far-right party Revival, which arranged several anti-euro protests over the last year, signed a deal with Vladimir Putin’s Russia United. The percentage of Bulgarians who support the euro has slightly increased in the last few months. | Nikolay Doychinov/Getty Images Asked about Russian influence on public opinion about the euro, Dombrovskis said: “It is not a secret that Russia is waging a hybrid war against Europe and European member states. It is provocation, acts of sabotage, violation of European airspace, meddling in political processes in the European Union, also in other countries, and it is spreading disinformation.” The percentage of Bulgarians who support the euro has slightly increased in the last few months, reaching 51 percent according to a survey cited by Finance Minister Temenuzhka Petkova — up from 45 percent earlier in the year. European Stability Mechanism chief Pierre Gramegna highlighted risks coming from Washington’s new approach to monetary policy and cryptocurrencies: “The U.S. administration is changing its position on so many topics, including on finance and currency, that being part of a large bloc is a huge advantage,” he said, adding people in Bulgaria are not fully conscious of this. “The risk entailed in the digital currencies can be faced better if we are in the euro area,” he said.

BRUSSELS — Global finance regulators’ failure to impose sufficient rules on cryptocurrency could threaten the world’s financial stability, global risk body the Financial Stability Board has warned. Reviewing the rollout of a global framework for crypto rules, the FSB said there are “significant gaps and inconsistencies” in implementing the rules, which could “pose risks to financial stability and to the development of a resilient digital asset ecosystem.” On the regulation of stablecoins, which are virtual currencies pegged to real-world assets, the FSB said regulation is “lagging.” Because of the international, decentralized nature of financial technologies like crypto, having gaps in global rules is an issue as providers can go wherever the rules are the most lax, which “complicates oversight,” the review said. It added that global cooperation on regulating the currencies is “fragmented, inconsistent, and insufficient” to address their global nature. The FSB also flagged gaps in oversight of crypto service providers, saying supervision of “potentially higher risk activities, such as borrowing, lending, and margin trading, is often lacking” and enforcement can “lag behind regulatory development.” The review recommended that governments implement the global crypto framework fully. It also said they should “conduct an assessment of the scale and nature of cross-border crypto-asset activities into and out of their jurisdictions” at the “appropriate time.” Earlier this week, FSB chair Andrew Bailey warned G20 finance ministers and central bank governors that stablecoins are a potential area of vulnerability for the financial system.

Nigel Farage and co. are taking aim at the Bank of England in a way that may help Chancellor Rachel Reeves out of her budget woes — if she dares go along with it. The Reform U.K. leader and his deputy Richard Tice dropped in on Bank Governor Andrew Bailey on Thursday to press him into changes in monetary policy that could help trim the public sector’s interest bill, but which could also unnerve investors.  The Reform U.K. leader and his deputy Richard Tice said they had urged Bailey at their meeting to stop paying interest on the excess money created by the Bank during a decade of ‘quantitative easing.’ That money is now largely held on deposit back at the BoE by commercial banks, which earn a risk-free return of 4 percent on it at the current Bank Rate. Critics on both right and left wings of the political spectrum argue that amounts to a massive taxpayer subsidy to the banks. The Reform duo also urged the Bank to stop the active selling of the gilts it bought during the QE period, something that several analysts and investors have argued is putting unnecessary upward pressure on the government’s borrowing costs. Tice told POLITICO on Thursday that stopping gilt sales alone could have taken around £1.5 billion off the government’s bill for debt interest this year. The Bank argues that the taxpayer wouldn’t end up paying any less in the long run, though. Reform is now seeking a full parliamentary debate on ‘quantitative tightening’, or QT, when MPs return from their recess, something he may get in the second half of next month if the Leader of the House of Commons is sympathetic. “It’s much more powerful as a debate in government time, as opposed to a backbench business debate,” Tice argued. The political argument is simple. “If Parliament via the Chancellor of the Exchequer gave a different steer to the Bank of England, this could significantly reduce the need for tax rises at the Budget,” Tice said in a statement released after the meeting. Reeves can ill afford to ignore anything that will raise money at a time when sluggish growth and productivity and constant increases in spending have made it all but impossible for her to stick to her own self-defined fiscal rule. And left-leaning think-tanks such as the Institute for Public Policy Research and Positive Money have already come to much the same conclusions. Yet Reform’s high-volume handling of a meeting that the Bank styled as a routine meeting with elected politicians represents something of a break with convention. Since Tony Blair’s government granted the Bank independence in 1997, party leaders have refrained from appearing to give instruction to the Bank on how to conduct monetary policy. Tice, however, in comments to POLITICO, argued that the issue is essentially a fiscal one, since the losses incurred by the Bank through QT have to be picked up by the taxpayer. “Parliament has failed in its duty to give the Bank more direction and support in this area,” he said. “It’s left the Bank to make its own decision and sort of … swing in the wind.” A spokesperson for the Bank said the Governor “had a productive meeting with Reform U.K. | Jordan Pettitt/Getty Images Reform’s intervention comes at a time when U.S. President Donald Trump is putting heavy pressure on the Federal Reserve to cut interest rates to support flagging growth. By contrast, talking to POLITICO, Tice said he and Farage had “absolutely not” put any pressure on Bailey to lower rates. A spokesperson for the Bank said the Governor “had a productive meeting with Reform U.K. on Thursday as part of the Bank’s engagement with political representatives,” but declined to elaborate.  Tice and Farage said the meeting also covered cryptocurrency and stablecoins, an issue where the MP for Clacton has called the Bank “out of touch” and “behaving like a dinosaur.” Farage was particularly incensed by the Bank’s proposal to put a limit of £10,000 on the amount of stablecoins that investors can hold. The Bank expects to publish formal proposals on stablecoin regulation by the end of 2025. 

As bronzed Eurocrats return from summer holidays to face the usual September onslaught of lobbyists in Brussels, this year they’ll find an unlikely interest group waiting at their doors: the European Central Bank. The hot topic on the ECB’s agenda is the digital euro — a proposed electronic version of the physical euro that has banks and right-leaning politicians fuming. The debate is heating up as European Union member countries try to reach a final agreement on how the digital euro should work by the end of this year. But the European Parliament also needs to approve it, with serious talks likely to heat up over the fall. At its core, the digital euro is a new payment method with an undertone of geopolitics. Without virtual banknotes and coins, the ECB fears its monetary authority will disintegrate in a digital age where cash payments are declining. It’s pushing the digital euro because it argues that sitting idle makes the European Union too reliant on U.S. credit card giants Mastercard and Visa to handle cross-border transactions. Worse yet, data-hungry tech companies such as Meta, Apple or X could try for a piece of the payments pie, leaving Europe at the mercy of foreign interests. The arrival of United States President Donald Trump has only heightened anxieties, especially since the White House has shown little restraint in pressuring companies to achieve his goals. Trump also signed the Genius Act, which aims to turbocharge certain crypto assets called stablecoins. Stablecoins differ from wildly fluctuating cryptocurrencies like Bitcoin because their value is pegged to a fiat currency, in most cases the U.S. dollar. This makes stablecoins far more … well, stable, than other cryptocurrencies, meaning they represent a genuine threat to old-fashioned currencies like the euro — particularly for cross-border payments. The pressure is on. The ECB is ramping up its lobbying program, participating in a series of seminars for members of the European Parliament in September — followed by a visit from the central bank’s chief cheerleader for the project, Piero Cipollone. ECB executives will also have the chance to champion the digital euro later this month when EU finance ministers and central bankers gather in Copenhagen. But for once, EU finance ministers are not the ECB’s main concern; its chief target is a Spaniard by the name of Fernando Navarrete. A central banker-turned-center-right EU lawmaker, Navarrete is in charge of negotiating the digital euro’s legal framework through the Parliament. The problem for the ECB is that Navarrete is seriously skeptical. Here are four things you need to know about the looming fight over the digital euro. WHAT IS THE DIGITAL EURO? Simply put, the digital euro is a virtual extension of the EU’s single currency.  The concept of central bank digital currencies, or CBDC, has existed for many years, although it has rarely made it past the conceptual phase. The ECB got serious about creating one in 2019 after Facebook owner Meta tried and failed to introduce its own global virtual currency for its 3 billion users in the form of a stablecoin. The digital euro would be backed by the ECB and would hold the same value as real money, complementing cash and cards. People would use the virtual money to pay for goods and services, or lend it to friends. The difference is that digital euros would most likely be stored on a wallet-like application on smartphones. The ECB would also keep its own record of the virtual money people hold, making it impossible to lose. HOW IS THAT DIFFERENT FROM TODAY’S DIGITAL PAYMENTS? The big difference is that the digital euro would be central bank-issued legal digital tender that, in theory, doesn’t require a commercial bank’s involvement — which is quite revolutionary. Money held in a commercial bank account is not sitting in a vault waiting for you to claim it. Most of it has actually been lent out in the form of mortgages and other types of loans, with only a small portion of it sitting in cash reserves. The money you think you have in your bank account isn’t actually there; it’s really just the bank’s promise to pay you that money, should you decide to claim it. But banks are counting on customers not claiming it — at least not all at once. Without safeguards in place, a bank would collapse if all its customers demanded all their cash at once. But for once, EU finance ministers are not the ECB’s main concern; its chief target is a Spaniard by the name of Fernando Navarrete. | David Zorrakino/Europa Press via Getty Images The proposed digital euro is entirely different. It is sitting in a (digital) vault waiting for you. No one else will have borrowed it to buy a house or start a business. One digital euro in your digital wallet would be as legally real as one physical euro in your pocket. And because the ECB would have a record of how many digital euros you possess, this makes it even more secure than physical cash — which can more easily be stolen, lost or destroyed. Payments by digital euro would therefore (theoretically) be simpler than today’s digital payments. Rather than your bank having to settle a mind-bendingly complex and behind-the-scenes transaction with the vendor’s bank using third-party payments companies (like Visa or Mastercard), you would simply send the digital euros from your digital wallet directly to the vendor’s digital wallet. It would be just like handing over cash. On paper, no banks or payment companies need be involved — although in practice, they would need to participate in the digital euro’s distribution. In other words, a digital euro would break the private sector’s hold on digital payments. WHERE IS THE PROPOSAL AT? Stuck in Brussels. Although the digital euro is the ECB’s baby, EU governments and members of the European Parliament are the ones tasked with putting the project’s legislative framework together. That has blended politics into the debate, muddying the waters from the perspective of technocrats. MEPs, for example, have heeded concerns that governments could use the digital euro for snooping on people’s payments — a notion the ECB has trashed.  Many within the banking and financial industry, meanwhile, have branded the project “a solution looking for a problem” amid fears they’ll foot the bill for implementing the infrastructure needed to run the digital euro. Its introduction could also stifle future innovation by dictating the future direction of the EU’s payment industry, they argue. Industry lobbying has paid off. Navarrete has called the digital euro “a last resort” and “a nuclear threat” that will force the industry to develop a cross-border payment system before the bill is ready. WILL THE ECB SUCCEED? The Parliament is only one beast the ECB has to contend with. Government officials in the Council of the EU, which represents the various member countries of the bloc, aim to finalize their negotiating position on the digital euro bill by year’s end. Their involvement has the ECB on edge as well — especially as the Council wants to have the last say on how many digital euros a citizen can hold at any one time, to placate lender fears of a bank run. Another ongoing debate is whether banks should get a cut for distributing digital euros and ensuring their payment rails accept and profit from transactions with virtual banknotes at the cashier’s till. Privacy-minded governments, such as Germany and the Netherlands, want the highest safeguards against payment surveillance; while the Belgian government has made it clear that it will not support the digital euro if it can’t be used offline. Central bankers have long relied on lofty speeches and fireside chats to influence policymaking. But that hasn’t worked with the digital euro. And with Trump back in office, the ECB has been forced to climb down from its ivory tower and enter the political ring. All that presages a fierce political debate over the coming months — though the Parliament doesn’t plan to reach a final position until next May, meaning it’s unlikely you’ll be able to actually start buying things with digital euros until at least 2028.

The European Union needs to close a loophole in its legislation governing stablecoins or risk importing a major risk to financial stability, European Central Bank President Christine Lagarde said on Wednesday. In opening remarks to the European Systemic Risk Board’s annual conference, Lagarde urged legislators to improve its current regulation on digital currencies to address risks posed by so-called multi-issuance schemes, under which an EU entity and a non-EU entity jointly issue fungible stablecoins. “In the event of a run, investors would naturally prefer to redeem in the jurisdiction with the strongest safeguards, which is likely to be the EU,” Lagarde said. The EU’s Markets in Crypto-Assets Regulation (MiCAR) requires immediate and cost-free redemption at par, which is not the case in the United States. “But the reserves held in the EU may not be sufficient to meet such concentrated demand,” Lagarde cautioned, adding that new stablecoins create very familiar liquidity management risks. “That is why we must take concrete steps now,” Lagarde said. “European legislation should ensure that such schemes cannot operate in the EU unless supported by robust equivalence regimes in other jurisdictions and safeguards relating to the transfer of assets between the EU and non-EU entities … We know the dangers. And we do not need to wait for a crisis to prevent them.” Outsiders have also warned of the risks latent in the current setup. In a recent op-ed, London Business School Professor Richard Portes said: “This is like allowing depositors in a bank outside the bloc to redeem their deposits held in the third country through its EU subsidiary. This would mean the European supervisors of an EU subsidiary of a large global banking group would be responsible for the solvency and liquidity of the entire group.”

City leaders are getting cozy with Reform UK. Just don’t tell anyone.  Senior figures in banks, asset managers and other financial services businesses feel they can no longer ignore Nigel Farage’s U.K. populist party, which has maintained a strong lead in opinion polls for months.  The figures glimpse an opportunity to influence the young party, which — if those polls are to be believed — could be leading Britain in a few years’ time. Reform UK, set up by Farage in 2016, counts four MPs in Westminster. Its flagship policies include pledging to cap the number of migrants coming to the U.K. and implementing vast tax cuts. But other than strongly pro-crypto policies, the party hasn’t made its view on financial services clear, and the City sees the chance to influence a broadly blank slate as too tempting to ignore. Still, financial institutions, which are happy so far with what they’re getting from the Labour government, are cautious to admit they’re making a deal with the devil.  “When I’ve been speaking to people, they say ‘we’re really interested in what’s going on, but don’t tell anyone we asked’,” Farage’s former right-hand man Gawain Towler said.  This taboo against being seen as actively engaging with Reform UK, even while wanting to understand the party, seems to be permeating the City. Banks and asset managers attending Reform’s party conference at the start of next month are reluctant to actively speak about the matter.  One senior trade body executive, granted anonymity to speak freely, said they had already met one-on-one with a Reform MP months ago, as well as with some party officials on a separate occasion.  However, Reform has since postponed any meaningful conversations about policy until after the conference, they said.  “I was not sure whether I should go to [the] party conference, and then I heard that the big boys of the City are going,” the figure added. “The traditional finance people that I would have thought ‘well, maybe it’s premature’ … they are going.”  Those City types will be joined by scores of British businesses at the upcoming conference, which are also getting flirty with Farage’s party. REFORMING THE STATUS QUO  Along with its conference, Reform has been working to build the necessary ties with the financial industry. Farage and deputy leader Richard Tice have recently been attending various breakfasts with the business community, which often involve members of the City. Reform even poached John Gill, a policy and communications exec from City trade group UK Finance, to work on its external affairs team.  The rise of Reform isn’t without precedent. | Adam Vaughan/EPA “People like Farage and Richard Tice and others are intensely at ease in that community, because it’s essentially their people. Once the City have got over their squeamishness, they find that they get on with the people involved. But there is squeamishness,” Towler acknowledged.  The party even has the view that “the City is going to be in some ways easier” to win over than the broader business community, thanks to Farage’s existing relationships with the financial world, Towler added.  Reform has also taken a keen interest in cryptocurrencies, mirroring U.S. President Donald Trump — and making some parts of the City very happy. In May, Reform became the first party in Europe to accept political donations via Bitcoin and has proposed the creation of a new government reserve of digital currencies.  There have already been some issues between the party and broader financial institutions, however. Bank of England Governor Andrew Bailey lashed out at Farage in June after he proposed scrapping interest on the central bank’s reserves, while Tice has suggested that the Treasury should be allowed to contribute to the Bank’s interest rate decisions.  Banks especially are more cautious about engaging with the party. A saga around Farage having his account closed by private bank Coutts in 2023 due to his political views led to the resignations of two CEOs and to the party leader strongly condemning the wider banking industry for the practice.  “If you’re a high-street bank, the whole specter of debanking hasn’t really gone away,” admitted one Reform official, granted anonymity to speak freely. “That sort of issue was kind of ‘of the moment.’ It’s not something that Nigel is continuing to push on.”  Nevertheless, the party is expecting several banks to head to its conference next month, offering an opportunity to repair the relationship in the event of a general election win by Reform UK.  NOT EASY BEING GREEN  Still, the party’s strong anti-renewables stance is also making some across the City nervous, given the long-term plans of financial firms and the billions they have pumped into the sector.  Bernard Fairman, executive chair of FTSE 250 investment firm Foresight Group, said he was set to meet with Tice imminently, having previously met Rupert Lowe (who is no longer a member of the party and now sits as an independent MP).  “The reason I’m seeing [Tice] is he sent a letter out to people like me, saying you manage lots of renewable energy assets … we’re against that and we may not stand behind the contracts” that the government has already signed, Fairman said.   In addition, the one thing that markets hate is uncertainty. The rotating carousel of Reform MPs, coupled with the potential risks that come with a brand-new party set up only six years ago, means some feel more concern than opportunity.  “It is a risk in the background at the moment,” said Anna Rosenberg, head of geopolitics at Amundi. “There’s so many more pressing short-term issues that are here already.”  However, the rise of Reform isn’t without precedent. Similar political waves have occurred across Europe, without causing a complete fracturing between the government and the financial industry.  “The populist government in Italy has been a lot more pro-business and moderate than what was feared,” Rosenberg noted. “There is a real risk in these parties coming into power, but they face a lot more constraining factors than, say, in the U.S.”  “Once the squeamishness is got over, once they’ve just looked at the numbers and said come on, guys, we really need to get it, then I think they’ll find a very productive relationship,” Towler added.   “The quicker the institutions of the City wrap their head around that, the better for everybody, because we’re not going away.” 

Listen on * Spotify * Apple Music * Amazon Music Vom CEO-Posten ins Kabinett: Deutschlands erster Digitalminister Karsten Wildberger im Interview mit Gordon Repinski. Er verspricht die digitale Brieftasche für alle Bürger – und nennt einen konkreten Zeitplan, wann der Personalausweis aufs Handy kommt. Außerdem erklärt Wildberger seinen 4-Punkte-Plan zur Entbürokratisierung des Staates, warum er mehr Begeisterung für Künstliche Intelligenz in Deutschland fordert und und der Minister spricht über politische Botschaften, seinen Umgang mit dem Beamtenapparat und weshalb er Altersgrenzen für Social Media unterstützt. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski.

TIRANA, Albania — In a country where cash is king, Prime Minister Edi Rama’s ambition to make Albania go without by 2030 would turn society on its head. For years, Albanians have preferred to keep their cash under the mattress — next to their AK-47, as the national joke goes — rather than in banks. But if Rama gets his wish, Albania would become the world’s first cashless economy. Much of the reason for this is that at the moment so many transactions happen under the counter. The elimination of cash “is an absolute priority for countries with high informality and destabilizing amounts of illegal money in the financial system,” said Selami Xhepa, professor of economic science at the University of Tirana. The trouble is, the banking system and society may not be ready to take the leap. The majority of Albanians prefer to manage their savings outside of the banking system, stashing banknotes away out of sight and insisting on physical cash payments whenever possible. Even in tourist guides for Albania, the phrase “cash is king” often crops up as advice to visitors. Although most chain stores or larger restaurants accept cards, cafés, beauty salons, boutiques, telecom companies and grocery stores don’t. In a clothes store in central Tirana, when POLITICO tried to pay with a digital card, the teller looked confused and asked, “cash?”  It was a similar story in a taxi and on the bus ― the conductor scoffed and repeated louder, “40 lek.” The center-left government wants to free Albania from what the European Commission’s 2024 country report described as a “large informal economy” that impedes business and competition (not to mention diminishing tax revenues).  Estimates put the gray economy — the portion of the economy not accounted for in official statistics — at between 29 percent and 50 percent of gross domestic product. Spiro Brumbulli, secretary general of the Albanian Banking Association, told POLITICO that the government and institutions would establish a plan to pave the way to go cash-free, with next steps including a ceiling for purchases made with physical currency, integrating with the EU’s SEPA payment system by October, and rolling out SEPA instant payments soon after. OVERCOMING ALBANIAN BANK TRAUMA One of the problems is that Albanians simply don’t like banks. A recent survey from the Albanian Association of Banks found that just 34 percent of the population trusted them. The World Bank reported that less than 50 percent of Albanians have a bank account. Going cashless is a policy being considered by many developed countries, such as Sweden, Estonia and Ireland. | Sascha Steinbach/EPA The Bank of Albania says that 78 percent “have access” to a bank account, less than the European average of 96 percent. Not everyone is convinced the plan makes sense. Genc Pollo, co-founder of the opposition Democratic Party and a former deputy prime minister, told POLITICO that trying to close the economy’s gray areas  by banning cash was “like killing chickens using artillery.” He called the idea an “attack on the personal freedom of legitimate banknote holders.” While he agreed Albanian banks can be “clumsy and expensive,” smarter regulation and more competition from online money platforms and crypto would be a better route than a cash ban. He had little hope that a cashless society would reduce money laundering.  Erald Kapri, a newly elected member of parliament for the center-right Opportunity Party, told POLITICO, he suspected politics was at play.  “It’s just one of those ideas of Rama to get attention and distract from the country’s real issues, such as corruption or the high cost of living,” he said. POST-COMMUNIST TRAUMA Going cashless is a policy being considered by many developed countries, such as Sweden, Estonia and Ireland. Albania is a different matter however and public skepticism is understandable.  After communism fell at the start of the 1990s, banks and financial institutions, along with “investment companies,” started popping up and promising implausibly high interest rates of up to 19 percent on deposits. A few firms quickly ballooned into more than 25, and at the peak of the craze, one in six Albanians had sunk money — in many cases, their entire life savings — into the pyramid-style schemes. Early investors received generous payouts, but these grew smaller and less frequent as the system buckled under its own weight. By January 1997, the first firms began to collapse, prompting Albanians to attempt to withdraw their funds en masse, creating a vicious cycle of further collapse. By March, the country was in chaos, and rebellion had begun. Soldiers and police deserted their posts, and crowds of angry, broke Albanians accused the government of failing to stop the scams and even profiting from them. Some 2,000 people were killed in clashes between citizens and the authorities, and by gangs armed with more than a million weapons looted from state armories. Overall, about $1.2 billion was lost — equivalent to half of the GDP at the time. This period triggered waves of migration, set the country back years in terms of its development, and shattered citizens’ trust in banking institutions and the state. EXPENSIVE BANKS Over the almost three decades since, banks have missed the mark when it comes to rebuilding trust. Part of the problem, Xhepa, the professor, said, is that banks offer little in the way of benefits and are expensive to use. That discourages people  from opening accounts and using bank cards and digital transfers.  Although the Bank of Albania has studied such currencies and stablecoins ― a type of cryptocurrency ― as potential tools, no official roadmap exists. | Robert Ghement/EPA Most “have maintained discriminatory interest rates,” he said. “High for lending and very low for savings.” He added: “International payments have also carried high fees, discouraging transfers from emigrants.” Domestic digital payments between Albanian banks incur high transaction charges (the cost of sending €500 was as much as €50 for this POLITICO reporter), while rates for other forms of transactions can be equally cost-prohibitive. Bank exchange rates between the lek and the euro are also notoriously uncompetitive. On the shopfloor, too, businesses object to having to pay up to 3.5 percent per transaction for card processing. Brumbulli, of the banking association, said that some businesses even charge customers extra for paying with a card. Doing so helps businesses avoid taxes, as cash payments are often not rung up through the register.  The governor of the Bank of Albania, Gent Sejko, declined to comment. While the ambition to go cashless by 2030 is bold, success still hinges on the introduction of low-cost, easy-to-access digital payment infrastructure — potentially including a central bank digital currency or national instant payment platform. Although the Bank of Albania has studied such currencies and stablecoins ― a type of cryptocurrency ― as potential tools, no official roadmap exists. Without a laid-out plan for such mechanisms, Rama’s plan risks remaining aspirational.