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China could globalize the yuan to challenge USD dominance

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Former Chairman of Goldman Sachs Asset Management, Jim O’Neill, said China could use its currency to gain an edge over the U.S. — but not by devaluing the yuan.

Beijing can consider expanding the role of the yuan globally to challenge the dominance of the U.S. dollar, he told CNBC’s Tanvir Gill in an interview which aired Thursday.

While the greenback — the reserve currency of the world — is dominant today, the “only way that can ever change” is if there’s a genuine, “long-term alternative” to the U.S. currency, O’Neill said.

China has already made some strides in internationalizing the use of its currency.

Chinese A-shares — those traded in mainland China — were included in index provider MSCI’s global and regional indexes. The A-shares, as well as Chinese bonds in the Bloomberg Barclays index, are traded in yuan.

As Chinese assets are increasingly traded in global markets, more foreigners will need to trade in the yuan, which is the intent of the internationalization drive.

“Some people would say, of course, the ultimate weapon would be for China to start selling very large numbers of U.S. bonds … but it would probably hurt, of course, the value of Chinese investments, ” O’Neill said.

China is currently the largest holder of U.S. government debt, owning roughly $1.12 trillion in U.S. Treasury bonds. Analysts have debated on whether Beijing will consider the so-called “nuclear option” in its trade fight with the U.S. — defined as selling off its holdings of U.S. Treasurys and triggering a rise in interest rates, which could hurt the American economy.

A weaker yuan has been a key source of contention between U.S. and the China, with U.S. President Donald Trump accusing Beijing of intentionally letting its currency slide lower in order to make its exports cheaper.

But a weak yuan will also reduce investor confidence.

“I don’t think a renminbi … devaluation makes a lot of sense at all,” he said, referring to another name for the yuan — the renminbi.

The other way China could strengthen its global position is to tap on the growing power of its consumers, O’Neill said. Currently, domestic consumption makes up only 40% of the country’s GDP, versus 70% in the U.S., he pointed out.

“Over the next decade to 20 years, there’s no way the U.S. consumer can continue to be the dominant share … of the U.S. economy … Whereas for China to reach the BRIC-type dream … the Chinese consumers got to continue to rise,” said O’Neill.

O’Neill famously coined the term BRIC — an acronym referring to the economies of Brazil, Russia, India and China. He had predicted those four emerging countries were on their way to reshaping the world economy.

— CNBC’s Yen Nee Lee contributed to this report.

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Trump expected to sign executive order cracking down on Facebook, Twitter

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President Donald Trump plans to sign an executive order Thursday cracking down on online platforms such as Facebook, Google and Twitter, vowing “a Big Day for Social Media and FAIRNESS!”

The move comes days after Twitter began fact-checking some of his tweets.

The order would push the Federal Communications Commission to write rules on when and how platforms can remove content from their platform and still maintain liability protection granted them under Section 230 of the Communications Decency Act. The law as it stands largely exempts those publications from being held liable for much of the content on their websites.

The working order, which cites Twitter by name, would encourage the Federal Trade Commission to take action against companies that engage in “deceptive” acts of communication.

The order would also create a working group of state attorneys general to review relevant state statutes.

“This will be a Big Day for Social Media and FAIRNESS!” Trump tweeted.

Without congressional action,  there are limits to what Trump can do with an executive order. Still, his words seemingly weighed on social media companies’ share prices Thursday morning. Shares of Twitter were down 5% in premarket trading, while Facebook was down more than 3% and Google was down more than 1%. 

Section 230 has become a lightning rod in the debate over online content. Online publishers have defended the statute as necessary to allow people to express their opinions, while their detractors have argued it gives companies like Twitter a way to sidestep regulations imposed on traditional publishers, despite the crucial role they play in disseminating news. 

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Cyprus to pay for the vacation of tourists who catch the coronavirus

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Kyrenia Harbor, Cyprus.

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The Cypriot government has said it will cover the vacation costs of any tourists who contract the coronavirus while holidaying in the country. 

Officials pledged to pay for travelers’ accommodation, food, drink and medication if they test positive for Covid-19 after entering the country. It said travelers will only need to foot the bill for their airport transfer and return flight. 

A “Covid-19 hospital” with 100 beds will be provided exclusively for foreign visitors who contract the virus and additional beds can be made available if needed, the government said. 

For travelers who show critical symptoms, it plans to offer an additional 112 intensive care units for treatment, with 200 respirators. 

And 500 rooms in dedicated “quarantine hotels” will be offered to close contacts of the person infected with the coronavirus, with more to be made available if necessary. 

“This will not only ensure that they are properly taken care of, but it will also provide peace of mind to other travelers, that their accommodation is free of Covid-19,” the Cypriot government said in a letter to its tourism partners dated Tuesday. 

It also said that the room in a hotel where the tourist who contracted the virus has stayed in will undergo a deep clean and disinfection before being used again. 

Cyprus has confirmed 939 cases of Covid-19 and 17 deaths from the virus, according to data compiled by Johns Hopkins University. 

Cyrpus started to ease its lockdown on May 4, with the government saying it expects the “full containment of the virus” by May 31. Its hospitality businesses are due to open on June 1 and international air travel will resume on June 9. 

Initially, all visitors will be required to take a coronavirus test in their own country within 72 hours before traveling to Cyprus. 

The government then plans to lift travel restrictions for a number of countries by June 20, with a list provided on its Ministry of Foreign Affairs and Deputy Ministry of Tourism websites, updated weekly from this point forward. 

Countries it has so far assessed as “low risk” include Germany, Greece, Norway, Finland and Denmark among others. 

Though it said people from places on its second list of higher risk countries, which currently includes Switzerland and Poland, would still need to take the coronavirus test in advance of traveling to Cyprus from June 20. 

Nearly 4 million tourists visited Cyprus last year, bringing in revenues of 2.7 billion euros, according to government data. Tourism reportedly accounts for 13% of the country’s economy. 

In the letter, the government said that its ratio of intensive care unit beds per 100,000 people was higher than the EU average. It claimed to have had one of the lowest ratios of coronavirus cases per capita in Europe and to have tested more than 10% of the country’s inhabitants. 

Social distancing and hygiene rules for tourists and Cypriot businesses were also outlined in the government letter, including a limit of 10 people in a group in restaurants, bars, cafes, pubs and nightclubs.

Check out: Will your travel rewards expire if you ‘wait it out’ during the coronavirus pandemic?

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English Premier League to restart on June 17, BBC reports

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Fans wear disposable face masks prior to the Premier League match between Burnley FC and Tottenham Hotspur at Turf Moor on March 07, 2020 in Burnley, United Kingdom.

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The Premier League season will restart on June 17, the BBC reported on Thursday.

A spokesman for the Premier League, which stopped play in March, declined to comment as the meeting of 20 club officials was ongoing.

The season will get under way on the Wednesday date with Aston Villa v Sheffield United and Manchester City v Arsenal, which are both games in hand.

A full fixture list would then be played on the weekend of June 19-21, the report said. All games will be behind closed-doors.

The Premier League was suspended on March 13 due to the coronavirus pandemic but teams returned to small group training last week.

On Wednesday clubs agreed to move to Phase Two of the comeback with players working in larger groups and closer to each other.

The next step would be full contact training and preparation for the return to action.

Liverpool, searching for their first league title in 30 years, lead the standings by 25 points.

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