Australia is first country to ban social media for children

0:02Good morning from the Financial Times. Today is Wednesday, December 10th, and this is your FT News briefing. The EU is racing to get around Hungary for a Russian asset plan. And there's a widening gulf between U.S. interest rates and the rest of the world. Plus, Australia has implemented the first ever social media ban for children. I'm Mark Filippino, and here's the news you need to start your day.

0:33The European Union plans to fast-track legislation that would indefinitely freeze up to 210 billion euros in Russian assets. The legislation looks to protect the Europeans' leverage in U.S.-led peace talks over the war in Ukraine, as according to officials familiar with the plans. So, what's the rush? Well, diplomats want to separate this idea of freezing assets from the debate about raising loans for Kiev backed by those Russian funds. The lending question will be picked up at a summit next week. It's worth noting that the EU is prepared to pass this without Hungary's support. Most EU legislation requires buy-in from all 27 member states, but Brussels is invoking emergency powers to get around Hungary, which has close ties to Russia and other countries who would oppose the measure.

1:19Meanwhile, sources tell the FT that U.S. President Donald Trump is pressuring his Ukrainian counterpart, Vladimir Zelensky, to respond to a peace plan, that plan would accept territorial losses in exchange for unspecified U.S. security guarantees.

1:40The Federal Reserve meets today and is expected to cut interest rates by a quarter point. But more largely, investors seem to be sensing a growing divide between the Fed and other central banks around the world. Here to tell us more about what that would mean for global markets is the FT's Ian Smith. Hey, Ian. Hi there. So what exactly are investors betting will happen to interest rates around the world next year? Traders are starting to bet that in some big economies, interest rates might start to rise next year. So if you look at derivatives markets, you can see that for countries like Australia and Canada, traders are now fully pricing in at least one quarter point rate hike by the end of next year and for the european central bank though the pricing is more knife edge a hike next year is now seen as more likely than a cut so this looks like it's going to be an increasing divergence with the us it is expected to cut interest rates today and at least two more quarter point rate cuts are expected by the end of next year.

2:44And that'll be a really interesting divide and a big market theme as we go into next year. Yeah. Why are traders expecting these interest rate increases, Ian? So a big reason here is that the trade war impact has not been as bad on economic growth as feared. So you've seen economic data coming out of Australia, as I mentioned, in Canada in recent days. In Australia, you had better consumer spending data. And then the Reserve Bank of Australia, as they held interest rates, said that inflation was also showing a bit of an uptick. And in Canada, they had strong jobs data. So you have this mixture of stronger economic data in these economies, the kind of trade hit not being as bad as had been feared, but also some areas of sticky inflation.

3:30And that's the case in the euro area too, where services inflation has remained elevated. And we also saw ECB board member Isabel Schnabel say in the recent days that she was rather comfortable with market bets on rate hikes. So you're getting that signaling as well from rate setters. Why is it such a big deal for investors if the US is an outlier? So interest rates have broad ramifications across financial markets, obviously for government borrowing costs, where interest rates feed through to the price of our interest payments, but also for currency. So the dollar is already down more than 8 % this year against a basket of its peers.

4:08And if the Fed continues to cut rates at a time when other central banks are either holding them steady or increasing them, that should pull down on the attractions of the dollar. Low interest rates typically weigh on the attractiveness of a currency to investors. So you could see further declines for the dollar next year if we continue down this path. You could also see that diverging impact, as I say, on kind of borrowing costs and the broader economy as the interest rate transmission plays through. I want to hit on something that you mentioned there. If the Fed keeps lowering interest rates, that's a big if going into next year that a lot of people think might happen.

4:46It is a big if. If there is a rise in inflation in the U.S. next year, some people are predicting that could make it harder for the Fed to cut to the level that markets are anticipating. We have, obviously, a change in leadership next year at the Fed, which could mean that a new leader of the Fed comes in and pushes for lowering borrowing costs but that's only one vote and it could be that what we're seeing at some of these other central banks tells us a little bit about what the direction might be for the Fed or even the Bank of England towards the end of next year where the rate cutting cycle starts to bottom out.

5:20Ian Smith is the FT Senior Markets Correspondent. Thanks Ian. Thank you.

5:31The FT's learned that Germany will throw its weight behind two of its candidates for the European Central Bank's top job, even though the effort might not be successful. ECB board member Isabel Schnabel, who we just heard about from Ian, has thrown her hat into the ring to succeed Christine Lagarde. Lagarde's term as the Central Bank's president ends in October 2027. The second German who's vying for that job is Bundesbank Governor Jaheim Nagel. But sources told the FT that this push from Berlin could fail because another German national, Ursula von der Leyen, holds the presidency of the European Commission until 2029.

6:06One source said it would be near, quote, impossible to have the two most important EU jobs in German hands during a two-year period. Spokesperson for the German government declined to comment on the speculation, but said it, quote, will form an opinion in due course and actively participate in the process. Nagel and Schnabel declined to comment.

6:32Australia is now the first country in the world to restrict social media access for kids under the age of 16. Legislation went into effect today that makes technology companies responsible for enforcing the ban. If they don't, they'll face fines for breaching the law. The FT's Nick Files joins me now from Sydney to talk about how the public and tech companies in Australia feel about the ban. Hey, Nick. G'day. So what exactly is banned under this groundbreaking legislation?

7:26You can still access them. You know, if you need to look something up on YouTube and you're 15 for homework, you can still do that. What you can't do is have an account. And the reason they've done that is so that you are then not creating a sort of data stream for those companies to serve you with content which can take a lot of children down a rabbit hole and to some very dark places. That at least is what the Australian government has argued. So that's why they've taken this quite seemingly draconian step to introduce a blanket ban on these specific apps. Yeah, what kind of dark places is this ban supposed to keep children from finding themselves in?

8:03The ban is designed to protect children, basically. So there has been a growing wave of research that children are being damaged by access to these apps. The feeling is that these have become very addictive for children and it's just generally not a positive thing for them to be using. So pressure was building for this. Some of that came from parents through grassroots organisations that were concerned about screen time, various other things. That has been through bullying online and also content being promoted that has caused them harm. So I interviewed a father from the east of Melbourne called Rob Evans.

8:40He very sadly lost his daughter, Liv. He bought her a phone when she was 13. She was playing around, watching videos. but before he knew it she was being served content around weight loss saying you can live on 200 calories a day and tragically for Liv she took that message on board and developed an eating disorder she was hospitalized almost 40 times in the next two years and then unfortunately she took her own life again Rob says because she was able to look up how to do that. Wow Nick has there been any pushback against this new law? Broadly it has been very popular a lot of parents have said this will help them have conversations with their children.

9:20The other side of the coin is there is concerns about whether this is an infringement on young citizens' rights. But more broadly, people are saying, how is this going to work? Kids are just going to game the system and get these accounts anyway. They're very determined. They're very tech savvy. And that's right. I think nobody's expecting this to be foolproof. Nobody's expecting this to work from day one. This is a long-term plan. There will be cracks in the system. However, the government has said, we will adapt. It's more about moving the responsibility of the technology companies and saying, for future generations, you've got to get this right.

9:53And have tech companies responded? They've been fairly resistant, but also most have said they will comply. There was a report that Reddit may be thinking about suing. They're arguing they're not a social network, that don't have a lot of kids using them. We're also looking at YouTube, but there is some concern that they may legally challenge this and say this shouldn't apply to us. Because again, they argue we are not primarily a social network. We are a video sharing website. The technology companies have also warned there may be unintended consequences. They've spent a lot of time and effort in putting in parental controls, safety measures, and that banning children from actually having those accounts could force them into other parts of the internet where those projections simply do not exist.

10:35Nick, if you think this ban is successful, do you think something like this could catch on in other parts of the world? Absolutely. The Australian government has said they're leading by example. Here we are a mid-sized country, so we're a good test bed for this sort of regulation. Other countries, including Malaysia, New Zealand, Denmark, they've all sort of started talking about implementing similar measures. So I think going first enables the world to sort of look at how Australia did it, whether it worked, how kids have reacted, how technology companies have reacted, and then tailor their own sort of methods to do it.

11:09Nick Files is the FT's Australia and Pacific correspondent. Thanks so much, Nick. No problem. You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.