17/06/2016 BBC Business Live


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This is Business Live from BBC News, with me, Sally Bundock,


Are banks set to become a thing of the past?


We take a look at Blockchain, the disruptive new technology


that could revolutionise the way we move our money.


Live from London, that's our focus on Friday 17th June.


Blockchain is already at the heart of the Bitcoin network,


but major financial companies are catching on fast.


So how does it work, and is it the right tool that will


We will make sense of this latest idea.


Also in Business Live, Japan on edge about


Finance Minister Taro Aso said today he's "deeply concerned


about the speculative moves", so will we see


The European trading day has been underway for half an hour, the FTSE


100 is almost up 1%. We will talk you through the winners and losers.


And from the biggest event on the gaming calendar


through to Microsoft buying LinkedIn, we'll be taking a look


at the week in technology with our very own Rory Cellan-Jones.


Today, we want to know, as Rolls-Royce announces plans


to produce an all-electric car, would you ditch petrol for electric?


Or is a throaty exhaust note all part of the romance of driving?


Let us know, just use hashtag #BBCBizLive.


Later we will show you pictures of the new Rolls-Royce vehicles, it's


quite something, even with a silver throne. The mind boggles. We will


get to that later. We start in the fast-moving world


of financial technology. This week the City of London


has been hosting the Global Digital Banking Conference,


ahead of London Technology Week One word that's on everyone's


lips, Blockchain. that was developed to underpin


the digital currency Bitcoin. Its fans believe it could soon


revolutionise global finance Under the traditional system,


banks act as a trusted middleman, processing transactions


and recording them If I want to pay money to you,


they process the transaction and record it in a single


centralised ledger. Under the new system,


there is no middle man. The ledger of transactions


is effectively shared across thousands or even millions


of computers around the world. When a transaction is made


between the two parties, it is broadcast to everyone


else in the network. Everyone's ledger is updated -


that shared record is what's Some banks are believing that this


is the future. Santander estimates


the technology could dramatically cut infrastructure costs for banks


by up to $20 billion by 2022. A number of banks are now testing


Blockchain technology. Warren Mead is global head


of FinTech at KPMG and joins me now. Sally has done a brilliant job of


explaining how it works but will it actually worked in practice and will


it save all of this money that banks are talking about. There is a


healthy dose of scepticism? There is and the reality is that nobody knows


yet. We are at least five years ago and maybe ten from a wide scale use


of block chain which will change the way customers transact. That is a


long time in terms of tag, why will it take so long to get this up and


running? At the moment most banks are just experimenting with


Blockchain. There is still a long way to go because this is about


transact in with customer money and you have to be making sure that is


secure before you can do that. How do customers benefit from


Blockchain? Why does it make a difference to me if my transaction


goes through Blockchain the normal routes? Transacting money is only


one of the uses that people are thinking about. They'll also about


using it as a way to identify who you are and cut down on the


time-consuming processes when you open a bank account or apply for a


mortgage. You won't have to do that any more? You would have to do it


once but not every time you take a new financial product from a new


provider. It could also reduce the costs of transactions and in the


end, that will benefit customers. What about security and


transparency? Where is it in terms of those aspects? The view is that


when it is fully developed it will be more secure and resilient from


things like cyber attacks. How will it be more secure because lots of


different banks are getting involved in one transaction? Because today,


if you have data it is on one database and if you want to change


that you have two breakthrough one firewall and change the data in one


place but hate you have to change it in 20, 30, 40 places and it makes it


really tough for cyber terrorists. Interesting. Who knows whether we


will see Blockchain coming out in the coming years. Thank you. Let's


take a look at some other business stories.


The gap between the rich and poor in the US is getting wider


despite its recovery from the global recession.


The Organisation for Economic Co-operation


and Development says US economic output has jumped 10%


past its pre-crisis peak in 2008, outstripping other major economies


But the gains are not being evenly shared -


with women and minorities "faring less well" according to the OECD.


It suggests raising the minimum wage, boosting income tax credit


and helping people back to work through skills programmes.


Volkswagen plans to launch 30 all-electric models


to reposition itself as a leader in "green" transport.


Matthias Muller, chief executive of Europe's biggest car-maker,


said huge investments would be needed as the firm moves


He hopes that by 2025, all-electric cars would account


for about 20 to 25% of the German car-maker's annual sales.


Latest figures show that sales growth of Volkswagen-branded cars


continues to fall behind European rivals.


Ultra-luxury car-maker Rolls Royce is also planning


The brand - which is owned by Germany's BMW -


has unveiled the zero-emission Rolls of the future.


You can see it here, what do you think? Send your answers on Twitter.


The 103 EX is almost six metres long and will drive itself


using artificial intelligence - but won't be available until 2040.


The CEO says in the future - not everyone will want to sit


And it has a silver throne. It looks like the Batmobile. It looks


enormous. I don't think I will ever get to sit in one of those. Let's


move on to Japan. In Japan, the yen has


been on the rise. The currency moves have caused


concern for the country's Christine Hah has been


following the story from Singapore. It's nice to see you, Christine.


More voices coming from Japanese authorities about the yen, and they


are concerned? Yes. We heard some strong words from Japan's finance


minister Taro Aso on Friday. He called it one-sided and speculation


driven and he would act more firmly than before if the yen continues to


appreciate. This is after hitting multiyear highs against the dollar


and euro on Thursday. They left rates unchanged. It is the finance


ministry that decides on policy, they do it through the bank of Japan


but they decide whether to intervene or not. Some people are reading this


as an indication that Japan may directly interfere with the yen if


it continues on this trajectory. The last time they did that was in late


2011. Taro Aso's stance was consistent with the Group of seven


and group of 20 countries and that is certainly true, but it's worth


noting that those two groups specifically spoke out against any


kind of currency intervention. I remember it well. Thank you very


much, Christine. We will be keeping an eye on what Japan or what it


chooses to do. The main stock market had a better day, up over 1% but


let's not forget it lost quite a lot of ground this week so 1% is not


much in the light of losses that it made during the week. The yen


weakened a little today, so that really helped. As you can see, at


the moment we have games across the board in Europe, certainly 1% or


more, which is interesting. The markets are taking a pause from some


of the concern and uncertainty about what may happen next week with the


UK referendum. We will talk more about Europe in a second but first


let's hear from Samira Hussain. Investors in America's auto industry


will have their eye on a Manhattan General Motors is due


to make its case to judge Jesse Fuhrman is that dozens


of lawsuits on behalf of customers who had cars recall for safety


reasons should be dismissed. The vehicles were recalled


to replace a faulty ignition switch that GM used in some


models for years. The lawsuits that GM wants dismissed


are seeking billions of dollars Also on Friday, America's biggest


mobile phone carrier Verison communications is hoping unions


will formally ratify the deal to end the strike that saw 40,000 workers


walk off the job for seven weeks. investment director


at Rathbone Investment Management. Good morning. You have been keeping


an eye on the European markets and they have somewhat rebranded today?


Yes, we are going through a period of pre-random nerds and the markets


are trying to work out what's going on and the polls are indicating a


move towards Leave on one hand but the bookies are still indicating


Remain. It's a confused picture. There is a lot of positioning ahead


of that referendum next week. Also a lot going on with the currency


markets. We are hearing from Christine about the Japanese yen and


lots of voices error in their views in the Japanese government, they are


really concerned about this? They are. The Japanese finance ministry


is likely to wait until the referendum is over because this is a


sort of short-term period of adjustment. It seems that it would


be such a distorting short-term event that it would be difficult to


override that. Otherwise, yes, if the strength continues afterwards we


may well see intervention. The pound has ranked and a bit as well? Yes,


the main effect, most commentators think the main effect of Brexit will


be weakness in the sterling between 7-12%. Something like that. We have


already seen some of that and currency traders are beginning to


say, should I be buying yen or dollar? Should I be buying Swiss


francs? A lot of trade and positioning ahead of the referendum.


That is what Taro Aso was talking about, the Japanese finance


minister, it is speculative behaviour that is exacerbating


things. Short-term gains or losses depending on whether they get it


right or not. See you soon. We'll take a look at Microsoft's


biggest-ever acquisition. Our technology correspondent


Rory Cellan Jones will joins us on set to explain why the software


giant wants to join forces with the professional


network site LinkedIn. You're with Business


Live from BBC News. Let's give you some more detail on


the story we mentioned earlier, the gap between the rich and poor in the


US is getting wider and wider despite the fact the economy has


recovered rather well. Absolutely. from the Organisation for Economic


Co-operation and Development. Joining us to discuss the report


is Jane Foley from Rabobank. Jane, you have been looking at this


report in detail, let's start with what it tells us about inequality in


the US, this is not just a US story, this is a story that reverberates in


the UK, to? That's exactly right, the UK and Australia and many


countries, we are seeing worsening income inequality and wealth


inequality, it is worsening. In terms of income inequality we have


heard a lot in recent years about productivity growth, that just means


output per head, and that has been very low in recent years and that is


true in many countries and it means that people don't get decent wage


rises and without that they don't see in comes going up, their wealth


going up etc. This is one of the reasons so it is worrying that we


are seeing not even the richest 1% but the richest 0.01%, something


like 10% of the wealth in the US. This is perhaps part of the reason


why voters are so disgruntled, what we have seen in Europe and the US


are moves towards the far left and far right, voters wanting strongmen


politics. It is becoming embedded in society. It is interesting as well


because when I looked at the report I immediately thought about other


stories that we often cover about company bosses and what they are


earning, and the revolts we have seen at AGMs, and the fact that even


company wages are getting further and further away from those they


employ. You are right, and in fact many economists think that as we get


more robots this will make it even worse and some economists say that


the owners of the technology and the robots will get them in huge slice


of income and wealth that comes from that, and the rest of us will have


much lower paid jobs. Not all economists agree with this but this


topic is up for debate and has been for the last couple of years and


clearly we won't hear the end of it yet.


If you have any stories you would like to discuss with us or you want


to see the latest stories, go to the BBC Business website.


You're watching Business Live, our top story:


Global finance experts have been meeting in London to talk about an


upcoming technology called blockchain. Some experts predict


this could cut banking costs by some $20 billion by 2022.


And it has been a busy week in technology.


There's been the E3 gaming expo in the US, where software firms


have released their latest offerings in the battle of the consoles.


Apple's developer conference saw new releases,


including bringing Siri, its digital assistant, to Macs.


the professional networking site LinkedIn for %26 billion.


Our technology correspondent Rory Cellan-Jones is with us.


You have been covering every twist and turn, shall we start with


Microsoft and LinkedIn? Such a huge deal, $26 billion. Now, LinkedIn is


very popular, I hesitate to use that word, because it is also massively


unpopular with people being bombarded with e-mails asking to be


endorsed for broadcasting skills - that is the one I send out every


time, nobody replies! But only a quarter of its members, about 106


million, visit every month. Most people hardly ever go there, and


when you do the maths, Microsoft has paid $247 for each one of those


active users. So the big question is, what kind of value will they get


out of them? The bear case is that this is a bad Microsoft deal,


another Nokia. But I have been reading some convincing stuff about


how vital this is to their mission due maintained their self as a tea


software and services supplier to the corporate world. -- their


mission to maintain their position as a key software. Facebook is


trying to do some of that networking for business, what it does for all


of us in our personal stuff, but Microsoft might think that the data


embedded in LinkedIn might be worthwhile. I know they are totally


different business models in a sense, but LinkedIn, you said


monthly active users was 100 million, Facebook is at 1 billion.


1.6 billion. It gives you a sense of the scale. Very different business


models, LinkedIn makes most of its money from recruitment advertising.


Let's talk about the gaming conference in LA, what with a big


beans? Exactly the same theme as last year, virtual reality, except


that last year it was all a bit theoretical, this is going to be


huge. -- what were the big themes? This year we got to see some games,


we have got some big stuff out already, Oculus Rift, and the HTC


Vice. What is the take-up like? It is early days, it is very expensive.


The thing that everybody is waiting for is Sony showed off a whole bunch


of games at E3, they are bringing out a headset in the autumn. Have


you tried it? I have tried all sorts, and the first time you do it,


it is amazing! Do you feel a bit sick? The key advance they have made


is that it doesn't usually make you feel sick. You do feel completely


immersed in a different world. My slight concern is that is the first


time, the second time, you think that is good, and the third time,


what am I doing here plans? But there is an enormous amount of money


being bet on this being a huge thing, not just in games, but in all


sorts of areas of life. We have to get onto the polite Google story, I


missed this one. At a time with a lot of depressing news about hate


speech on the internet, I am old-fashioned, I don't like to see


people using foul language. There is a lot of very nasty stuff on the


internet. This was wonderful, a young man on Twitter posted the


fact, look what my Nana has posted. Please translate these Roman


numerals, thank you. She put please and thank you in the Google search.


I wonder what the search came back with! I think it worked. But to see


somebody... We are moving into an age where we will be interacting


with software, and robots a lot more, and maybe we should say... I


think we should be polite to robots, and this lady has actually showed us


the way, shown us the way to a better, kinder way of speaking on


the internet. And a nicer way of interacting with machines. Rory,


thank you very much indeed. It has been an enormous pleasure, I can't


express how marvellous it has been. You are welcome!


From computer code to something a bit more organic now -


not to mention controversial - because we are also


Since it was legalised for medicinal use in 25 US states,


marijuana has entered the world of high finance.


Last year, sales surged to almost $5.5 billion.


This Friday, we have seen Microsoft tying up


with Kind Financial, a tech start-up


that helps regulators track sales of legalised marijuana.


But investors are still cautious about wagering on the weed.


Samira Hussain took a trip to the Cannabis World Congress


since the days of rolling a joint in your mom's basement.


In the US, legal marijuana has grown into a multibillion-dollar industry.


But the sector is hungry for recognition and cash.


This woman has come to the Cannabis Expo with her son.


After using marijuana to treat her pain,


I used all of the tinctures and the bongs,


I was able to work and move and do things


I could not even imagine getting up and doing anything.


The challenge for many of these companies is getting funding.


Because the law has not caught up to these new businesses many big


investors like pension funds and banks are not legally


allowed to put their money anywhere near here.


Over the next five years, you are going to see federal


prohibition go away, and this industry will be devolved,


and if you look at the trajectory of the last five years,


people on that trajectory, this will all be cleaned up in five years.


Rob Hunter agrees - he runs one of the largest


private-equity funds dedicated to cannabis.


He has been in the business 16 years.


And he knows just how much money there is to be


This past year, the United States saw $5.8 billion


That is expected to be over $10 billion this year.


It is expected to be as much as $20 billion by 2020.


you are watching the industry mature at a very rapid rate as a result.


As others get a whiff of marijuana's potential,


early investors hope to continue riding high.


We asked not to live that story on that occasion, didn't we? Health and


safety and all that! Jane Sydenham is to talk us through some of the


stories of the day, thank you for your tweets, James said, I would not


switch to Rolls-Royce and electric if they came looking like that, but


as the have made electric cars cool again. Are you a petrol head? Or an


electric egg? I am electric, I am going to save the planet! Let's go


through the stories, HSBC, interesting light of the share price


movement, it has agreed to pay more than ?1 billion to settle a


securities fraud class action. We were expecting them to pay more.


Yes, we were. This is all to do with the finance business that they


bought, and which arguably was the first evidence we saw of the


problems caused by the financial crisis, or in the run-up to it. But


yes, it is good for them to be in the clear. The story had gone away


for a while, banks, fines, slapping on the wrist. It just shows you how


complicated these things up. Rumbling on in the background all


the time. Let's talk about Uber, apparently launching a UK food


delivery service, this is in the Financial Times. This will be


interesting, because a lot of companies already do just this. It


looks like they are looking for every avenue where it can get a


piece of the action. It is trying to capitalise on its brand, and it will


be direct competition to companies like Deliveroo. The indication is it


will be broadly similar, the same kind of model, so it is more


competition, which make cut prices. Whether or not it will boost the


market remains to be seen. More traffic, more people on the roads,


in bikes or cars or whatever. I know that when I ordered delivery from


other delivery services, they do use bicycles. Yes, they do. The


suggestion with Uber is not that they will put food in a cab, it is


still going to come on a bike. Let's talk about national grid, needs to


be overhauled, so says the energy committee in the UK. For those of


you watching overseas, that is the system through which we get


electricity. Yes, there is an inherent conflict of interest


between private ownership of that, and also the actual distribution


across the marketplace. We will have to see what happens, but the market


needs reform. Good morning. There should be drier


weather around for most of us through the course of the weekend,




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