Wealthiest 1% will soon own more than rest of us combined, Oxfam says

Wealthiest 1% will soon own more than rest of us combined, Oxfam says

By Faith Karimi, CNN

Updated 5:19 PM ET, Mon January 19, 2015

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Story highlights

• Overall wealth of the richest 1% will outpace that of the other 99% by next year
• "The scale of global inequality is quite simply staggering," Oxfam director says

(CNN)Turns out, the rich really are getting richer. And they'll soon own more than the rest of us put together.

So says a new report, which estimates that the richest 1% will have as much wealth as the other 99% combined by next year.

"The richest 1% have seen their share of global wealth increase from 44% in 2009 to 48% in 2014," Oxfam says in a report Monday.

At that rate, the wealthiest will own more than 50% by next year, according to the report.

"Do we really want to live in a world where the 1% own more than the rest of us combined?" asked Winnie Byanyima, executive director of the international aid agency.

'Global inequality ... simply staggering'

Byanyima will co-chair the annual World Economic Forum in Davos this week.

She plans to use the platform at Davos to call for urgent action on the rising inequality.

The 80 richest people on the planet have the same wealth as the poorest 3.5 billion people, the report says.

"The scale of global inequality is quite simply staggering; and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast," she said.

"It is time our leaders took on the powerful vested interests that stand in the way of a fairer and more prosperous world."

Call for action

While 1% of the population owns 48% of the world's wealth, a majority of the remainder follows the same trend.

"Of the remaining 52% of global wealth, 46% is owned by the rest of the richest fifth of the world's population," the report says.

The remainder of the population only possesses 5.5% of global wealth.

Their wealth last year? An average $3,851 per adult, the report says.

'Global elite'

Meanwhile, the "global elite" members had an average wealth of $2.7 million each last year, it says.

The report comes a day before President Barack Obama is expected to unveil proposals that close tax breaks on the wealthy.

Obama will discuss his plans to help the middle class during his State of the Union Address on Tuesday.

Bitcoin a Threat and Opportunity for Retail Banks

KPMG: Bitcoin a Threat and Opportunity for Retail Banks

Yessi Bello Perez (@yessi_kbello) | Published on January 19, 2015 at 14:45 GMT

'Big four' auditing firm KPMG has published a report identifying bitcoin as both a threat and an opportunity to the banking sector.

The report, titled The Changing World of Money, outlines the factors threatening established retail banks, whilst discussing the potential of cryptocurrencies as viable payment solutions.

It states:

"New challenger organisations, from banks to peer-to-peer lenders to PayPal and bitcoin are smaller, more agile and quicker to respond to changing trends."

The document goes on to explain that these emerging forms of payments have "greater responsiveness to customer needs", attracting "affluent, intelligent and profitable customers".

The issue, KPMG says, is that banks are unable to respond to their customer's needs quickly. "Their legacy systems, data management, increased costs of regulatory controls and the increasing focus on remediation" hamper their response speed, it explains.

By considering the three fundamentals of retail banking – lending, deposits and payments – and identifying some of the threats, challenges and opportunities that lie ahead in each case, the report makes a series of tough points for bank leaders regarding the sort of organisations that will thrive in the short and long run.  

The biggest issue raised, arguably, is whether the growth of electronic payments, cryptocurrencies and local trading exchanges will eventually eradicate traditional money.

'Giant ledger in the cloud' 

Having recognised the potential of cryptocurrencies, the paper encourages economists, policymakers and businesses to start thinking differently about money, whilst highlighting the shortcomings of bitcoin. 

"[Cryptocurrencies] need to operate as a medium of exchange, a store of value and a unit of account", the report states before adding that:

 "As a medium of exchange bitcoin is constrained by the fact that so few outlets accept it in payment. It is not yet a reliable store of value because its price against national currencies can fluctuate as much as 20% a day."

Describing bitcoin as a "giant public ledger in the cloud," Jon Matonis, former founding director at the Bitcoin Foundation, is cited claiming that there is no reason why the major banks could not tap into the increasing demand for peer-to-peer cryptocurrency.

Banks could look into operating bitcoin retail transactions and setting up the required systems of escrow, he is quoted as saying.

Payments in a heartbeat

The fact that the future of payment is likely to include all kinds of clever new technologies, many of which are still in the very early stages of development, does not come as news to many.

As an example, the KPMG report describes a recent offering from Canadian firm Bionym, which has developed what it describes as 'the world's first biometrically authenticated wearable payment solution'. 

That solution, the Nymi, is a wristband that reads the wearer's unique individual cardiac rhythm, which are unique to each individual. Once authenticated, the device can largely be used with existing contactless payment systems. 

Bank speculates on cryptocurrencies

The publication of the report comes after KPMG issued an ISAE 3402 accreditation – a global standard for financial reporting – to digital currency storage device Elliptic, earlier this month.

The Bank of England's Quarterly Bulletin 2014 report, titled The Economics of Digital Currencies, also speculated about the emergence of a banking system based on a digital currency.

The report said:

"An important question that would then emerge is whether banks could be constrained in their creation of broad money without regulatory oversight or central bank involvement in the management of the underlying base currency."

BankingBitcoin FoundationJon MatonisKPMG

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