Wallets are Overrated and Norway's Final Nail in the Coffin

As Friday descends on us, our contributing editors once again divert their attention away from the hectic newsdesk with some of their favourite stories from the press during the past week, this time relating to money matters.

Victor Golovtchenko kicks off with a focus on Norway's sovereign wealth fund...

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The Final Nail in the Coffin?

Norway’s sovereign wealth fund is preparing to buy $130 billion worth of stocks. The move shifts the country’s coffers heavily into higher risk territory with its stocks portfolio to amount to 75 percent of the $860 billion total.

The move is yet another nail in the coffin of the long-running sovereign bond market bull run.

With an average return of 8.25 percent over the past 10 years, Norway can afford two consecutive years of withdrawals to fill the country’s budget hole that opened due to lower oil prices.

Wallets are Overrated

For many this holiday season, a new wallet may be the perfect gift idea for your friend, son, or man in your life – not so in Venezuela, where the rampant inflation of the bolivar is forcing individuals to walk around with a flush stock of cash on hand.

The oil-dependent country has faced a pretty tough year with its economy nearly cratering on the falling prices of crude. For much of the world, the word Venezuela invokes images of runs on grocery stores, bare shelves, and stacks of worthless cash. 100 bolivars are worth approximately $0.05 in the country, with inflation slated to reach 720% by year’s end.

With such an inflated currency, it’s a tall order to find individuals using wallets in the streets of Caracas. According to a recent article on the Washington Post, the new medium of transport for carrying around cash has become handbags, money belts, and in most cases backpacks.

Such a devalued currency also has further reaching consequences, namely in regard to executing even basic purchases, such as food and cigarettes, as well as the impracticality of such services as taxis. Even a trip to a local ATM has become a logistical nightmare, with only $5 from the machine producing at least 100 notes.

This is also sure to be an issue in a country already known for its crime, with visible stacks of cash no doubt presenting the perfect motivation for would-be criminals or thieves.

A Game Changer for the Unbanked?

Around 2 billion people worldwide, more than a quarter of the global population, don’t own a bank account. The reason for this is obviously the lack of infrastructure and technological solutions to establish banks in some parts of the developing world.

However, in many cases, it’s also a matter of creditworthiness. Assessing the creditworthiness of a lender is a key feature in the financial industry, not to mention the banking sector.

In the developing world, creditworthiness is a very complicated assignment. The main reason for it is the lack of documentation on the financial activity of a person or a small business.

Recently, another form of credit scoring has emerged – analysis of one’s mobile activity.

According to an article published on Bloomberg this week, your "relationship” with your mobile phone says a lot about your attitude towards lending, and most importantly repaying. Apparently, there is a correlation between economic activity and mobile usage which may be good news for both the developing world and the financial industry.....read the full story here.

We conclude another week of stories that our editors are reading. Feel free to share your views in the comment section and any recommendations of your own. We look forward to hearing your opinions!

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