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Bitcoin Climbs to Record High

Bitcoin is back. Again.Nearly three years after it went on a hair-bending rise and hit a peak of $19,783, the price of a single Bitcoin rose above that for the first time on Monday, according to the data and news provider CoinDesk. The cryptocurrency has soared since March, after sinking below $4,000 at the outset of the coronavirus pandemic.Bitcoin’s latest climb is different from its last spike in 2017, which was driven largely by investors in Asia who had just learned about cryptocurrencies. Back then, the digital token soon lost momentum as people questioned what it could do other than …

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Brexit Is Nipping at London’s Role as a Financial Powerhouse

LONDON — For Britain, its exit from the European Union is supposed to be the start of a new era as a “Global Britain,” an open, inviting and far-reaching country. For the European Union, Brexit is an opportunity to repatriate some business from across the English Channel and further bolster the continent’s economic standing in the world.And for the City of London, a large hub for international banks, asset managers, insurance firms and hedge funds, Brexit is a political headache. Britain’s financial center has been caught in the middle of these two agendas, leaving the future of the …

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James D. Wolfensohn, Who Led the World Bank for 10 Years, Dies at 86

James D. Wolfensohn, who escaped a financially pinched Australian childhood to become a top Wall Street deal maker and a two-term president of the World Bank, died on Wednesday at his home in Manhattan. He was 86.His daughter Naomi Wolfensohn confirmed the death.Mr. Wolfensohn was a force on Wall Street for years, helping to rescue the Chrysler Corporation while working for Salomon Brothers and running his own thriving boutique firm, before President Bill Clinton nominated him to lead the World Bank, the world’s largest economic development institution.But he was more than a financier. He led fund-raising efforts …

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Janet Yellen Set to Lead Treasury Department Under Biden

WASHINGTON — Janet L. Yellen became an economist at a time when few women entered the profession and fewer still rose in a male-dominated environment. She is now poised to become the first female Treasury secretary and one of few people to ever have wielded economic power from the White House, the Federal Reserve and the president’s cabinet.

Her expected nomination would come as rebuilding a U.S. economy battered by the coronavirus pandemic and saddled with high unemployment presents a central challenge for President-elect Joseph R. Biden Jr.’s administration.

While Ms. Yellen is not the type of firebrand nominee some progressives might have hoped for — she has warned that the United States is borrowing too much money, a fact that some liberals count against her — she has paid consistent, careful attention to inequality and labor market outcomes, even when doing so earned her backlash from lawmakers.

As the chair of the Federal Reserve from 2014 to 2018, Ms. Yellen also oversaw an extremely slow set of interest rate increases as she and her colleagues tested whether unemployment could fall further without leading to higher prices. Her patience drew criticism from inflation-wary economists at the time, but the policies laid the groundwork for a strong labor market and a record-long expansion that drove unemployment to its lowest rate in 50 years before the pandemic turned the world upside down.

Senator Elizabeth Warren of Massachusetts, one of the most prominent progressive Democrats in Congress, wrote on Twitter that Ms. Yellen “would be an outstanding choice for Treasury Secretary.”

But she faces a steep challenge: As Treasury secretary, Ms. Yellen will be at the forefront of navigating the economic fallout created by a pandemic that continues to inflict damage. While growth is recovering from earlier coronavirus-related lockdowns, infections are climbing and local governments are restricting activity again, most likely slowing that rebound.

Ms. Yellen has been a clear champion of continued government support for workers and businesses, publicly warning that a lack of aid to state and local governments could slow recovery, much as it did in the aftermath of the Great Recession, when Ms. Yellen was leading the Fed.

“While the pandemic is still seriously affecting the economy, we need to continue extraordinary fiscal support,” she said in a Bloomberg Television interview in October. She called fiscal support early in the crisis “extremely impressive” but noted that key provisions had lapsed.

Unlike the independent Fed, Ms. Yellen as Treasury secretary would find herself in a much more political role — one that is likely to require negotiating with a Republican-controlled Senate. With Mr. Biden expected to push for additional economic aid, Ms. Yellen would be central to brokering a stimulus deal in a politically divided Congress that has so far failed to agree on another round of aid.

Ms. Yellen declined to comment on her expected nomination, which was reported earlier by The Wall Street Journal.

She would be the first woman to hold a job that has been dominated by white men — like Alexander Hamilton — throughout its 231-year history and would have held the government’s top three economic jobs, including leading the White House Council of Economic Advisers during the Clinton administration.

A former academic who taught at the University of California, Berkeley, Ms. Yellen was also the president of the Federal Reserve Bank of San Francisco, a Fed governor and the Fed vice chair before becoming the central bank’s first female chair.

Ms. Yellen said she wanted to be reappointed when her term as Fed chair ended in 2018, but President Trump, eager to install his own pick, decided against renominating her.

By replacing Ms. Yellen, Mr. Trump broke with precedent. The previous three Fed chairs had been reappointed by presidents of the opposite political party.

Instead, Mr. Trump chose Jerome H. Powell, the Fed’s current chair, with whom Ms. Yellen could soon be working closely as Treasury secretary. The two still talk, and Ms. Yellen has consistently praised Mr. Powell’s performance at the Fed, suggesting they would have a good relationship.

Born in Brooklyn in 1946, Ms. Yellen was raised in Bay Ridge, a middle-class neighborhood across the waterfront from Staten Island. Her mother was a teacher who stayed home to raise Ms. Yellen and her brother. Her father was a family doctor. She was both valedictorian and editor of the newspaper at her high school.

She attended Brown University and went on to receive a doctorate from Yale. In an interview in 2013 with Simon Bowmaker, an economics professor at New York University, Ms. Yellen explained her rationale for becoming an economist, saying she had always liked the rigor of math but economics offered something more.

“I care about people,” she said. “I discovered that economics was of enormous relevance to our lives and had the potential to make the world a better place.”

She met her husband, George A. Akerlof, an economist who is now a Nobel laureate, while working in a research position at the Fed in 1977.

Ms. Yellen has spent her post-Fed years at the Brookings Institution, occupying an office close to Ben S. Bernanke, who preceded her as Fed chair, and other former Fed officials. They call their corridor the “F.O.M.C., Former Open Market Committee,” a play on the central bank’s rate-setting Federal Open Market Committee.

Ms. Yellen is a Keynesian economist, which means she believes markets have imperfections and sometimes need to be rerouted or kick-started by government intervention.

As Fed chair, she gave important speeches — including one at the storied annual conference in Jackson Hole, Wyo. — advocating continued watchfulness and wariness when it came to financial overhauls instituted after the 2008 crisis. She has struck a concerned tone about regulatory rollbacks under the Trump administration.

“It is certainly appropriate to simplify regulations that impose unnecessary burdens, particularly on small community banks,” she said in 2019. “But I’m greatly concerned that the regulatory work needed to address financial stability risk has stalled. There have been some worrisome reversals.”

She is relatively moderate on many topics, including trade. Mr. Akerlof recalled in a biographical note in 2001 that when he met her: “Not only did our personalities mesh perfectly, but we have also always been in all but perfect agreement about macroeconomics. Our lone disagreement is that she is a bit more supportive of free trade than I.”

Ms. Yellen has been a major influence on leading officials at the Fed. John C. Williams, who worked for her in San Francisco, now leads the Federal Reserve Bank of New York. Mary C. Daly, who now leads the San Francisco Fed, cites Ms. Yellen as a key mentor.

That, along with Ms. Yellen’s experience working with Mr. Powell, could help facilitate the kind of close relationship needed between the Fed and Treasury, which are collaborating on a variety of crisis response programs.

Henry M. Paulson Jr., who served as Treasury secretary under President George W. Bush, praised the selection. He said Ms. Yellen “will have a tough job ahead of her, but she has the experience, talent, credibility and relationships with members of Congress on both sides of the aisle to make a real difference.”

While the other leading contenders for the job also had extensive experience that spanned fiscal and monetary policy, Ms. Yellen was seen as well placed to make it through Senate confirmation, even if Republicans maintain control of the chamber.

Lael Brainard, another top candidate for the role, is the only remaining Fed governor from the Democratic Party on the seven-member board, which currently has two open slots. She might have been difficult to replace at the Fed: Nominees have been hard to confirm over the past decade, and the Senate may remain under Republican control.

While leading the Fed, Ms. Yellen at times had a testy relationship with congressional Republicans. In one instance, Representative Mick Mulvaney, then a South Carolina Republican, said Ms. Yellen was overstepping her boundaries by talking about inequality.

“You’re sticking your nose in places that you have no business to be,” Mr. Mulvaney said at a hearing in 2015.

But in many ways, those conflicts underline how much Washington has changed over the past five years. Fed officials now regularly talk about inequality, entirely unchallenged. The central bank has formalized policies much like Ms. Yellen’s patient approach to interest rate-setting as its official stance, which it explicitly hopes will foster more inclusive growth.

“It seems like a pretty subtle shift to most normal human beings,” Ms. Yellen said of that move. But “most of the Fed’s history has revolved around keeping inflation under control. This really does reflect a decisive recognition that we’re in a very different environment.”

Reporting was contributed by Michael D. Shear, Jim Tankersley, Alan Rappeport and Thomas Kaplan.

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PNC Strikes $11.6 Billion Deal to Buy U.S. Operations of Spanish Bank BBVA

PNC Financial Services said on Monday that it would acquire the U.S. business of the Spanish lender BBVA for $11.6 billion.

The transaction, one of the biggest banking deals since the 2008 financial crisis, would create the nation’s fifth-largest retail lender, with more than $550 billion of assets. BBVA USA Bancshares, which is headquartered in Houston, has about $86 billion in deposits and $66 billion in loans.

For PNC, it would be the latest in a string of acquisitions it has used to grow its national footprint. It expanded its foothold in the Southeast with its $3.45 billion acquisition of Royal Bank of Canada’s U.S. retail banking in 2011, and bought National City bank, based in Cleveland, in 2008. With its acquisition of BBVA’s business, PNC will expand into Arizona, California, Colorado, New Mexico and Texas, giving it a presence in 29 of the country’s 30 biggest markets.

“This transaction is an opportunity to navigate our future from a position of strength, accelerating PNC’s national expansion strategy while drawing on our experience as a disciplined acquirer,” William S. Demchak, PNC’s chairman and chief executive, said in a statement.

BBVA’s shares rose by 15 percent in early trading in Madrid.

PNC, which is based in Pittsburgh and has a market capitalization of about $50 billion, serves eight million consumers and small businesses. Its sale this year of its stake in BlackRock, the world’s largest asset manager, for about $17 billion freed up cash to do another deal. Mr. Demchak had said he would use that capital to buy regional banks struggling to compete against larger rivals that have money to pour into technology and investment.

PNC said it expected the takeover to “substantially” replace the profit that the lender reaped from its stake in BlackRock.

The deal follows a spate of consolidation within the financial services industry. First Citizens BancShares said in October that it planned to buy CIT Group for about $2.2 billion, while BB&T and SunTrust announced plans to combine last year in a deal that valued the new lender at $66 billion.

PNC’s acquisition is expected to close by the middle of next year, pending approval by regulators and other closing conditions.

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PNC Nears $11 Billion Deal to Buy U.S. Operations of Spanish Bank BBVA

PNC Financial Services is in talks to acquire the U.S. business of the Spanish lender BBVA for more than $11 billion, a person briefed on the matter said.

The sale, which could be announced as soon as Monday, would be one of the biggest banking deals since the 2008 financial crisis. It would create the nation’s fifth-largest retail bank, with more than $550 billion of assets, said the person, who spoke on condition of anonymity because the discussions were confidential. The person cautioned that the deal was not yet complete and that it might still fall apart.

For PNC, it would be the latest in a string of acquisitions it has used to grow its national footprint. It expanded its foothold in the Southeast with its $3.45 billion acquisition of Royal Bank of Canada’s U.S. retail banking in 2011, and bought National City bank, based in Cleveland, in 2008. With its acquisition of BBVA’s business, PNC would expand into Arizona, California, Colorado New Mexico and Texas.

PNC, which is based in Pittsburgh and has a market capitalization of about $50 billion, serves about eight million consumers and small businesses. It has branches and A.T.M.s across the Mid-Atlantic, the Midwest and the Southeast.

Its sale this year of its stake in BlackRock, the world’s largest asset manager, for about $17 billion freed up more cash to do yet another deal. PNC’s chief executive, William S. Demchak, has made clear that he would use that capital to buy regional banks struggling to compete against larger rivals that have money to pour into technology and investment.

“We know tech expense has to go up,” Mr. Demchak said in September. “And we know credit costs are going to be elevated. And whether they put somebody at risk or not, what all of that suggests is that a bank that doesn’t have fee-based products built today is really going to struggle.”

That, he added, “gives us a lot of opportunity to deploy this capital.”

The deal follows a spate of consolidation within the financial services industry. First Citizens BancShares said in October that it planned to buy CIT Group for about $2.2 billion, while BB&T and SunTrust announced plans to combine last year in a deal that valued the new lender at $66 billion.

The Wall Street Journal first reported the talks on Sunday.

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Lael Brainard’s Steady Rise Could Culminate in Treasury Secretary Post

WASHINGTON — When the Federal Reserve voted to “tailor” post-crisis financial regulations for all but the largest banks in October 2019, Gov. Lael Brainard cast the lone “no” vote.

At the long oval table in Fed’s board room, Ms. Brainard laid out — point by detailed point — why she thought the changes risked leaving relatively big banks with too little oversight. It was not an unusual dissent.

Ms. Brainard, a leading contender to be President-elect Joseph R. Biden Jr.’s Treasury secretary, has opposed the Fed’s regulatory changes 20 times since 2018. As the sole Democrat left at the Fed board in Washington, Ms. Brainard has used her position to draw attention to efforts to chisel away at bank rules, creating a rare public disagreement at the consensus-driven central bank.

Yet Ms. Brainard’s position has not relegated her to the role of Fed gadfly. Jerome H. Powell, the Fed’s chair, often praises Ms. Brainard’s intellect in private conversations and has placed her in key roles at the central bank, including tapping her to play a major part in devising and overseeing the Fed’s emergency lending programs. Ms. Brainard joined calls with staff members and Treasury Secretary Steven Mnuchin, the Fed’s partner in planning those efforts, 21 times in April alone.

Mr. Powell, who was appointed by President Trump, even sided with her over the Republican comptroller of the currency when Ms. Brainard argued that a key community banking rule was being rewritten too hastily and based on too little data.

Ms. Brainard’s data-driven approach and quiet persistence have allowed her to maneuver effectively even while staking out a minority position at the Fed. That skill could make her an attractive pick for the Treasury’s top job. So could her experience as a former Treasury official who played a leading role in European debt crisis and Chinese currency deliberations. Negotiating chops would come in handy as the new administration tries to cut pandemic relief deals with what could be a Republican Senate.

But her status as a Washington insider brings its own vulnerabilities. Part of the progressive wing of the Democratic Party paints Ms. Brainard as a centrist who has been timid on climate change and soft on China — too much the good soldier, too little the maverick.

Ms. Brainard has been rumored as a Treasury-secretary-in-waiting for years, and her friends and former colleagues have been out in force praising her qualifications, suggesting that she wants the job. Yet the competition is stiff.

Others rumored to be under consideration include Sarah Bloom Raskin, a former Fed governor who served as deputy Treasury secretary during the Obama administration, and Janet L. Yellen, the former Fed chair. Also circulating on informal lists are Roger Ferguson, the president and chief executive of the retirement financial manager TIAA, who was the first Black vice chair of the Fed; Mellody Hobson, the co-head of Ariel Investments, an asset manager; and Raphael Bostic, the president of the Federal Reserve Bank of Atlanta.

Any of those choices would bring a significant change to the Treasury Department, which has been run by a white man throughout its 231-year history.

No decisions have been made yet, several people close to the Biden transition team said. But Ms. Brainard’s position in Washington’s establishment, and her centrist label, could help her chances of winning confirmation if Republicans retain control of the Senate.

Ms. Brainard, 58, has been steeped in international relations from childhood. The daughter of a Foreign Service officer during the Cold War, she was raised in Communist Poland and Germany before reunification. She wrote her senior undergraduate thesis on utopia, dystopia and social planning — motivated, in part, by her childhood — and then went on to an economics doctorate at Harvard University.

An early foray into government policy came in the 1990s, when she worked for the National Economic Council during the Clinton administration. She then served as the Treasury’s under secretary for international affairs under President Barack Obama. At the Treasury, Ms. Brainard forged a reputation as a perfectionist and a savvy negotiator as she tried to pressure China to allow market forces to guide its currency, and to persuade Europe to pursue a more ambitious economic rescue during the depths of its debt crisis.

“Her breadth of knowledge is just really wide,” said Paige Gebhardt Cognetti, the mayor of Scranton, Pa., and Ms. Brainard’s former aide at the Treasury. “When she sits down, it’s like the U.S. is there, to negotiate hard, but also to listen.”

Ms. Brainard was always “the most prepared person in the room” during her Treasury years, said Austan Goolsbee, who was working as an economic adviser to Mr. Obama at the time.

Colleagues recall her perched at a meeting table in the Treasury Department during Chinese Strategic and Economic Dialogue meetings, surrounded by thick books of briefing material that she had evidently read in full. When she entered a room for such negotiations, several said, the atmosphere would shift. Nobody questioned that she meant business.

Mr. Obama nominated Ms. Brainard to the Fed in 2014 — a posting that some saw as a temporary stop on her way to Treasury secretary. She was floated as a likely candidate during Hillary Clinton’s 2016 presidential run. Ms. Brainard had donated the $2,700 personal maximum to Mrs. Clinton’s campaign, drawing scrutiny and criticism to the politically independent Fed.

Credit…Cliff Owen/Associated Press

But after Mrs. Clinton lost and Mr. Trump replaced Ms. Yellen, Ms. Brainard found herself as the last Democrat sitting on the powerful board.

Her moves to counter the Trump administration’s regulatory rollbacks have earned praise from progressive groups. But it has not been enough to mollify their concerns that she was too easy on China during her time at the Treasury. They point to the Obama administration’s decision not to label China a currency manipulator while she was the under secretary for international affairs.

“It was her bailiwick and nothing happened,” said Jeff Hauser, the founder and director of the Revolving Door Project. While Mr. Hauser would make it on the record, his complaint is echoed by a small but vocal group on the more liberal side of the Democratic Party.

People who were privy to the negotiations said such criticisms were unfair, noting that Ms. Brainard pushed hard to secure commitments against the devaluation of China’s currency behind the scenes. She also lacked unilateral power to name China a manipulator — while she could weigh in, that decision ultimately falls to the Treasury secretary and the president. But progressives have argued that Ms. Brainard should have pushed publicly for the Obama administration to take a louder stance.

Mr. Hauser said that if she is nominated, it is imperative that her husband, the former Obama-era diplomat Kurt Campbell, divest himself from the Asia Group, the Asia-Pacific-focused advisory firm that he founded. While it would be legal for him to retain his position, it could arguably put him in place to profit from his wife’s high-ranking government role.

Despite her decades in Washington, Ms. Brainard is hardly a household name. She has kept a relatively low media profile at the Fed. She rarely discusses her visits to Capitol Hill, and her community outreach trips often include press-free stops. She did not agree to be interviewed for this profile.

The quiet approach lines up with her low-key and matter-of-fact demeanor, based on more than a dozen interviews with former colleagues who have worked with her across government agencies. During Europe’s rapidly escalating debt crisis, she and an aide took a flight to Brussels before they had time to firmly establish meetings with European finance ministries, setting them up over espressos at the airport coffee shop.

Maintaining a degree of privacy could turn out to have been a good strategy. Ms. Brainard has managed to remain relevant even as the Democratic Party evolves to become more skeptical of globalism and free markets.

But Ms. Brainard can be outspoken when it suits her goals. In addition to criticizing the Fed’s deregulatory bent, she has made speeches and statements about climate risks to the financial system in recent months and years — countering a liberal complaint that she has not been aggressive enough in that domain. The Fed assessed climate change risks in detail in a financial stability report this week, a first for the twice-yearly document, and she put out a statement alongside the release.

“Climate change poses important risks to financial stability,” she wrote, and addressing such concerns “is vitally important.”

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Ant Group’s I.P.O. Is Halted by Shanghai Stock Exchange

Ant Group challenged China’s state-dominated banking system by bringing easy-to-use payments, borrowing and investing to hundreds of millions of smartphones across the country. On Tuesday, Chinese officialdom reminded the company who was really in charge.

In a late-evening announcement that stunned China, the Shanghai Stock Exchange slammed the brakes on Ant’s initial public offering, which was set to be the biggest stock debut in history with investors on multiple continents and at least $34 billion in proceeds.

The stock exchange’s notice to Ant said that the company’s proposed offering might no longer meet the requirements for listing after Chinese regulators had summoned company executives, including Jack Ma, the co-founder of the e-commerce titan Alibaba and Ant’s controlling shareholder, for a meeting on Monday.

Neither the regulators nor Ant have said in detail what was discussed at the meeting. But the timing of the conversation, mere days before Ant’s shares were expected to begin trading concurrently in Shanghai and Hong Kong, suggested discord with the company or with Mr. Ma, who spun Ant out of Alibaba in 2011.

Though he is not part of Ant’s management, Mr. Ma has been a spirited champion for the company’s mission of bringing financial services to small businesses and others in China who he says have been ill-served by stodgy, government-run institutions.

Shortly after the Shanghai exchange’s announcement, Ant said it was suspending the Hong Kong leg of its listing as well. The company apologized to investors “for any inconvenience.”

“We will keep in close communications with the Shanghai Stock Exchange and relevant regulators,” the company said, “and wait for their further notice with respect to further developments of our offering and listing process.”

Shares of Alibaba, a major Ant shareholder, fell more than 6 percent on the New York Stock Exchange on Tuesday morning after news of the delay.

Over the past decade, Ant has transformed the way people in China interact with money. The company’s Alipay app has become an essential payment tool for more than 730 million users, as well as a platform for obtaining small loans and buying insurance and investment products.

Credit…Mark Schiefelbein/Associated Press

But competing against China’s politically connected financial institutions always came with risks. Regulators have looked warily upon Ant’s fast growth in certain areas, fearful it might become too big to rescue in the event of a meltdown.

Ant has pivoted in response. Instead of using its own money to extend loans, the company now primarily acts as an agent for banks, introducing them to individual borrowers and small enterprises that they might not otherwise reach. It describes itself as a technology partner to banks, not a competitor or a disrupter.

This business model works just fine for many of Ant’s investors, evidently. The company’s expected market valuation after the dual listing, of more than $310 billion, would make it worth more than many global banks. Mr. Ma, who is already China’s richest man, would become even richer.

Still, Ant’s future remains at the mercy of Chinese regulators, whose views on the melding of tech and finance are still evolving.

“The regulators have long been looking at the risks in this area and how it should be regulated, but it’s all suddenly coming out at this specific time,” said Yu Baicheng, head of the Zero One Research Institute, a think tank in Beijing focused on finance and tech. “It’s definitely a statement of the regulators’ attitude.”

An article on the website of Economic Daily, an official Communist Party newspaper, praised the decision to suspend Ant’s share sale, calling it in the best interest of investors.

“Every market participant must respect and revere the rules — no exceptions,” the article said.

Besides Mr. Ma, the meeting on Monday with the regulatory agencies also included Ant’s executive chairman, Eric Jing, and its chief executive, Simon Hu. “Views regarding the health and stability of the financial sector were exchanged,” Ant said in a statement.

In another sign of the continuing scrutiny, the nation’s banking regulator, the China Banking and Insurance Regulatory Commission, on Monday issued new draft rules for online microfinance businesses. Among them were higher capital requirements for loans and tighter controls on lending across provincial lines.

The Shanghai exchange’s suspension of the Ant I.P.O. appeared to take note of the draft rules, saying that recent changes in the regulatory environment had affected Ant significantly. Bai Chengyu, an executive at the China Association of Microfinance, said the new rules could cause the entire microfinance industry to shrink.

The famously outspoken Mr. Ma did not ingratiate himself with the authorities when he said, in a recent speech in Shanghai, that financial regulators’ excessive focus on containing risk could stifle innovation.

“We cannot manage an airport the way we managed a train station,” he said. “We cannot use yesterday’s methods to manage the future.”

The head of consumer protection at China’s banking regulator, Guo Wuping, slapped back on Monday, calling out two popular features in Alipay by name in a sharply critical article in 21st Century Business Herald, a government-owned newspaper.

Mr. Guo argued that online finance products were not fundamentally different from traditional ones, and that financial technology companies should therefore be regulated in the same way as established institutions.

Huabei, a credit function in Alipay, is no different from a credit card issued by a bank, Mr. Guo wrote. And Jiebei, an Alipay loan feature, is no different from a bank loan. Ant has called Huabei and Jiebei the most widely used consumer credit products in China.

Loose regulation has allowed financial technology companies to charge higher fees than banks, Mr. Guo wrote. This, he said, “has caused some low-income people and young people to fall into debt traps, ultimately harming consumers’ rights and interests and even endangering families and society.”

Ant declined to comment on Mr. Guo’s article.

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How the Wealthy World Has Failed Poor Countries During the Pandemic

LONDON — Like much of the developing world, Pakistan was alarmingly short of doctors and medical facilities long before anyone had heard of Covid-19. Then the pandemic overwhelmed hospitals, forcing some to turn away patients. As fear upended daily life, families lost livelihoods and struggled to feed themselves.

On the other side of the world in Washington, two deep-pocketed organizations, the World Bank and the International Monetary Fund, vowed to spare poor countries from desperation. Their economists warned that immense relief was required to prevent a humanitarian catastrophe and profound damage to global prosperity. Emerging markets make up 60 percent of the world economy, by one I.M.F. measure. A blow to their fortunes inflicts pain around the planet.

Wages sent home to poor countries by migrant workers — a vital artery of finance — have diminished. The shutdown of tourism has punished many developing countries. So has plunging demand for oil. Billions of people have lost the wherewithal to buy food, increasing malnutrition. By next year, the pandemic could push 150 million people into extreme poverty, the World Bank has warned, in the first increase in more than two decades.

But the World Bank and the I.M.F. have failed to translate their concern into meaningful support, say economists. That has left less-affluent countries struggling with limited resources and untenable debts, prompting their governments to reduce spending just as it is needed to bolster health care systems and aid people suffering lost income.

“A lost decade of growth in large parts of the world remains a plausible prospect absent urgent, concerted and sustained policy response,” concluded a recent report from the Group of 30, a gathering of international finance experts, including Lawrence Summers, a former economic adviser to President Barack Obama, and Treasury secretary in the Clinton administration.

The wealthiest nations have been cushioned by extraordinary surges of credit unleashed by central banks and government spending collectively estimated at more than $8 trillion. Developing countries have yet to receive help on such a scale.

The I.M.F. and the World Bank — forged at the end of World War II with the mandate to support nations at times of financial distress — have marshaled a relatively anemic response, in part because of the predilections of their largest shareholder, the United States.

During a virtual gathering of the two organizations this month, the U.S. Treasury secretary, Steven Mnuchin, urged caution. “It is critical that the World Bank manage financial resources judiciously,” he said, “so as not to burden shareholders with premature calls for new financing.”

The World Bank is headed by David Malpass, who was effectively an appointee of President Trump under the gentlemen’s agreement that has for decades accorded the United States the right to select the institution’s leader. A longtime government finance official who worked in the Trump administration’s Treasury Department, he has displayed contempt for the World Bank and the I.M.F.

Credit…Erik S Lesser/EPA, via Shutterstock

“They spend a lot of money,” Mr. Malpass said during congressional testimony in 2017. “They’re not very efficient. They’re often corrupt in their lending practices.”

Under his leadership, the World Bank has required that borrowers deregulate domestic industry to favor the private sector as a condition for loans.

“There is an ideological attitude here, a more conservative attitude of, ‘Well, it’s going to be money that goes to waste,’” said Scott Morris, a senior fellow at the Center for Global Development. In the midst of a crisis caused not by profligacy but by a pandemic, he added, “that’s a very wrongheaded attitude.”

World Bank officials said the institution had expanded lending at a historic pace, while defending Mr. Malpass’s demand for tighter conditions on loans as responsible stewardship. “He wants to have good country outcomes,” said Axel van Trotsenburg, the World Bank’s managing director of operations. “He wants to make sure that the programs reach people.”

The I.M.F. is run by a managing director, Kristalina Georgieva, a Bulgarian economist who previously worked at the World Bank. She is answerable to the institution’s shareholders. The Trump administration has resisted calls to expand the I.M.F.’s reserves, arguing that most of the benefits would flow to wealthier countries.

In April, as worries about poor countries intensified, world leaders issued elaborate promises for help.

“The World Bank Group intends to respond forcefully and massively,” Mr. Malpass said. At the I.M.F., Ms. Georgieva said she would not hesitate to tap the institution’s $1 trillion lending capacity. “This is, in my lifetime, humanity’s darkest hour,” she declared.

But the I.M.F. has lent out only $280 billion. That includes $31 billion in emergency loans to 76 member states, with nearly $11 billion going to low-income countries.

“We have really stepped up in terms of quick disbursement to be able to support countries that are in need,” Ceyla Pazarbasioglu, director of the I.M.F.’s Strategy Policy and Review department, said in an interview.


Credit…Fayaz Aziz/Reuters

The World Bank more than doubled its lending over the first seven months of 2020 compared with the same period a year earlier, but has been slow to distribute the money, with disbursements up by less than a third over that period, according to research from the Center for Global Development.

The limited outlays by the I.M.F. and the World Bank appear to stem in part from excessive faith in a widely hailed initiative that aimed to relieve poor nations of their debt burdens to foreign creditors. In April 2020, at a virtual summit of the Group of 20, world leaders agreed to pause debt payments through the end of the year.

World leaders played up the program as a way to encourage poor countries to spend as needed, without worrying about their debts. But the plan exempted the largest group of creditors: the global financial services industry, including banks, asset managers and hedge funds.

“The private sector has done zilch,” said Adnan Mazarei, a former deputy director at the I.M.F., and now a senior fellow at the Peterson Institute for International Economics in Washington. “They have not participated at all.”


Credit…Francis Kokoroko/Reuters

Concerns about developing countries’ debts rested atop the reality that many were spending enormous shares of their revenues on loan payments even before the pandemic.

Since 2009, Pakistan’s payments to foreign creditors have climbed to 35 percent of government revenues from 11.5 percent, according to data compiled by the Jubilee Debt Campaign, which advocates for debt forgiveness. Ghana’s payments swelled to more than 50 percent of government revenues from 5.3 percent.

As the pandemic spread, Pakistan raised health care spending but cut support for social service programs as it prioritized debt payments.

The debt suspension was at best a short-term reprieve, delaying loan payments while heaping them atop outstanding bills.

Some 46 countries, most of them in sub-Saharan Africa, have collectively gained $5.3 billion in relief from immediate debt payments. That is about 1.7 percent of total international debt payments due from all developing countries this year, according to data compiled by the European Network on Debt and Development.

Mr. Summers recently described the debt suspension initiative as “a squirt gun meeting a massive conflagration.”

But the program has proved powerful in one regard: It conveyed a sense that the troubles of the poorest countries have been contained.

“Part of the reason why so little has been done is that there was a misguided expectation that you could provide all the support low-income countries needed simply by deferring payments on their debts,” said Brad Setser, a former U.S. Treasury official and now a senior fellow at the Council on Foreign Relations in New York.

This month, the G20 extended the program into the middle of next year. Ms. Georgieva has chided private creditors for remaining on the sidelines.

Private creditors have been reluctant to offer debt suspension in part because of uncertainty over who will reap the benefits. Many developing countries have borrowed aggressively from Chinese institutions in a process both opaque and uncoordinated. If American or European institutions forgo collecting on their debts, the money may simply be passed on to a Chinese lender rather than lifting health care spending.


Credit…Saiyna Bashir for The New York Times

Private creditors maintain that poor countries have not requested relief, recognizing that credit rating agencies may treat debt suspension as a default — a status that jeopardizes their future ability to borrow.

“They don’t want to lose the market access,” said Clay Lowery, executive vice president of research and policy at the Institute of International Finance, a trade association representing financial companies around the world.

But that fear has been actively fomented by creditors, discouraging poor countries from seeking relief.

“The private sector is often highly misleadingly aggressive in suggesting that debt restructuring will cut countries off forever, and that complying with its wishes will get them new money very soon,” Mr. Summers said in an interview.

Some argue that anything short of debt restructuring, in which terms are renegotiated and creditors absorb losses on loans, merely extends the pain — for borrowers and lenders alike.

Critics of the I.M.F. say its handling of the pandemic has displayed the same trait that has long defined its mission — a bias toward ensuring that creditors get paid, even at the expense of wrenching spending cuts in poor countries.

Since the pandemic began, the I.M.F. has allocated $500 million to cover the costs of debt suspension, while handing out more than $100 billion in fresh loans. More than $11 billion from the loan proceeds has paid off private creditors, according to a report from the Jubilee Debt Campaign.

“International financial institutions are going to leave countries in much worse shape than they were before the pandemic,” said Lidy Nacpil, coordinator of the Asian Peoples’ Movement on Debt and Development, a Manila-based alliance of 50 organizations. “Their interest is not primarily about these countries getting back on their feet, but to get these countries back into the business of borrowing.”

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.