Deutsche Bank Seeking Alternatives, Reforms to SWIFT

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Duetsche Bank Seeking Alternatives, Reforms to SWIFT A Deutsche Bank logo adorns a wall at the company’s headquarters in Frankfurt, Germany June 9, 2015.

 

Deutsche Bank is calling for a reform of SWIFT, the global financial messaging system which has faced criticism since February’s $81 million heist at Bangladesh Bank.

  • Germany’s flagship lender – which the International Monetary Fund has branded as the world’s systemically most risky bank for its numerous links to other lenders – is one of the biggest users of SWIFT. It is one of the first large banks to publicly urge changes.
  • SWIFT is only as strong as its weakest member, Deutsche Bank’s Chief Information Security Officer Hinrich Voelcker said on Wednesday, adding the bank was in discussions with SWIFT about the consequences of the Bangladesh heist.
  • “If trust in this system breaks down we all have a problem,” he said, without saying which specific reforms he believes are needed.
  • SWIFT is a member-owned cooperative, dominated by large Western banks, including lenders such as Citi , JP Morgan and BNP Paribas , which built the network decades ago.
  • It now connects more than 10,000 different financial firms and industry experts have said all of its users should have to meet a minimum security standard to continue accessing it. Continue reading

Deutsche Bank CEO calls for cross-border bank mergers in EU

Deutsche Bank CEO John Cryan has called for cross-border bank mergers in Europe.

  • John Cryan: “We need more mergers, at a national level, but even also across national borders.”
  • “Scattered regionalism among banks placing unacceptable squeeze on bank profits and long-term sustainability.”
  • Top executives of Deutsche Bank and Commerzbank held talks on a potential combination in early Aug.
  • Source: “There was a round of talks in late August in which (Deutsche Bank Chief Executive) John Cryan and (Chief Financial Officer) Marcus Schenck were present.”
  • Deutsche and Commerzbank combined market value 26 billion euros ($29 billion), half of France’s BNP Paribas.
  • Both Deutsche and Commerzbank slipping down the rankings of the continent’s top banks.
  • Georg Fahrenschon, savings bank association head: “Recent demands for fundamental consolidation among banks are not appropriate.”
    Continue reading

Barack Obama may have finally destroyed America’s #1 advantage

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In July 1944, just weeks after the successful Allied invasion of Normandy, hundreds of delegates from around the world gathered in Bretton Woods, New Hampshire to determine the future of the global financial system.

The vision was simple: America would be the center of the universe, and every other nation would revolve around the US.

This arrangement ultimately led to the US dollar being the world’s dominant reserve currency which still remains today. Continue reading

Deathblow to the Dollar

The future is sealed, and it’s not a matter of ‘if’ but ‘when’. If you’ve been paying attention to the news of lately, you will have noticed a lot of predictions for September, 2015. Could the experts be on to something? As far as a specified date is concerned, we’ll soon see.

 

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The world is entering a new economic era—one that won’t be defined by America.

This past March marked a radical turning point for the global economy, particularly the United States’ economic dominance.

China proposed the launch of the Asian Infrastructure Investment Bank (aiib)—a new, Chinese-run international bank specifically designed to challenge U.S. global economic leadership. America tried to convince other nations not to agree to join. But it failed—even with its closest allies.

For the U.S., it was an unmitigated disaster.

It should be a “wake-up call,” to a “new economic era,” wrote former Treasury Secretary Larry Summers.

Continue reading

Russia Just Pulled Itself Out Of The Petrodollar

Back in November, before most grasped just how serious the collapse in crude was (and would become, as well as its massive implications), we wrote “How The Petrodollar Quietly Died, And Nobody Noticed“, because for the first time in almost two decades, energy-exporting countries would pull their “petrodollars” out of world markets in 2015.

We added that in 2014 “the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations.”

The problem was compounded by its own positive feedback loop: as the last few weeks vividly demonstrated, plunging oil would lead to a further liquidation in foreign  reserves for the oil exporters who rushed to preserve their currencies, leading to even greater drops in oil as the viable producers rushed to pump out as much crude out of the ground as possible in a scramble to put the weakest producers out of business, and to crush marginal production. Call it Game Theory gone mad and on steroids. Continue reading

Russia faces ‘perfect storm’ as reserves vanish and derivatives flash default warnings

BNP Paribas says Russia no longer has enough reserves to cover external debt and enters this crisis ‘twice as levered’ as it was before the Lehman crash

Central bank data show that a blitz of currency intervention depleted reserves by $26bn in the two weeks to December 26, the fastest pace of erosion since the crisis in Ukraine erupted early last year.

Credit defaults swaps (CDS) measuring bankruptcy risk for Russia spiked violently on Tuesday, surging by 100 basis points to 630, before falling back slightly.

Markit says this implies a 32pc expectation of a sovereign default over the next five years, the highest since Western sanctions and crumbling oil prices combined to cripple the Russian economy.

Continue reading

CEO of French oil giant Total dies in jet crash at Moscow’s Vnukovo Airport

The CEO of France’s oil and gas giant Total, Christophe de Margerie, was among four people killed in a business jet crash at Vnukovo Airport in Moscow after the aircraft hit a snowplow on take-off.

Total’s chairman and CEO was the only passenger in the Falcon 50 business jet besides three crewmembers who were also French citizens.

“Total confirms with deep regret and great sadness that Chairman and CEO Christophe de Margerie died just after 10pm (Paris time) on October 20 in a private plane crash at Vnukovo Airport in Moscow, following a collision with a snow removal machine,” the company said in a statement. Continue reading

The Alliance of the Threatened

BERLIN/WASHINGTON/MOSCOW (Own report) – The EU and USA have expanded their sanctions against Russia and – in addition to individuals – have now also placed important Russian companies on their lists. Washington has restricted dealings, for example, with Rosneft and the Gazprombank. Brussels has announced the possibility of preventing EU companies from doing business with Russian companies and is planning to list them by the end of July. German business circles are protesting. They have already suffered billions in losses. Experts are warning that, with its sanctions against Russia, the West may experience, in the economic arena, an overreach similar to that experienced by the US in the military arena with its war on Iraq. With the power of the West obviously waning, it has already become noticeable that even close allies are defecting. Observers explain this with the Crimea conflict: NATO countries had been unable to retain the Crimea within the reign of its allied Ukrainian government; therefore it seems that an alliance with NATO countries would no longer be a reliable assurance against ones enemies. Defections can be noticed in Asia and Latin America, not least of all because of the recent founding of the BRICS development bank, rivaling the US-dominated World Bank. Russia and China are among the founders of this bank. Continue reading

France hits out at dollar dominance in international transactions

France’s political and business establishment has hit out against the hegemony of the dollar in international transactions after U.S. authorities fined BNP Paribas $9 billion for helping countries avoid sanctions.

Michel Sapin, the French finance minister, called for a “rebalancing” of the currencies used for global payments, saying the BNP Paribas case should “make us realize the necessity of using a variety of currencies”.

He said, in an interview with the Financial Times on the sidelines of a weekend economics conference: “We [Europeans] are selling to ourselves in dollars, for instance when we sell planes. Is that necessary? I don’t think so. I think a rebalancing is possible and necessary, not just regarding the euro but also for the big currencies of the emerging countries, which account for more and more of global trade.”

Christophe de Margerie, the chief executive of Total, France’s biggest company by market capitalization, said he saw no reason for oil purchases to be made in dollars, even if the benchmark price in dollars was likely to remain. Continue reading

BRICS is morphing into an anti-dollar alliance

On June 10th, Sergey Glaziev, Putin’s economy advisor published an article outlining the need to establish an international alliance of countries willing to get rid of the dollar in international trade and refrain from using dollars in their currency reserves. The ultimate goal would be to break the Washington’s money printing machine that is feeding its military-industrial complex and giving the US ample possibilities to spread chaos across the globe, fueling the civil wars in Libya, Iraq, Syria and Ukraine. Glaziev’s critics believe that such an alliance would be difficult to establish and that creating a non-dollar-based global financial system would be extremely challenging from a technical point of view. However, in her discussion with Vladimir Putin, the head of the Russian central bank unveiled an elegant technical solution for this problem and left a clear hint regarding the members of the anti-dollar alliance that is being created by the efforts of Moscow and Beijing: Continue reading

China cuts US debt holdings amid Fed taper

China reduced its holdings of US Treasury debt in December by the most in two years as the Federal Reserve announced plans to slow asset purchases.

US government bonds held by China – the biggest US creditor – fell by US$47.8 billion, or 3.6 per cent, to US$1.27 trillion, the largest decline since December 2011, Department of the Treasury data released on Tuesday shows. At the same time, international investors increased holdings by 1.4 per cent, or US$78 billion, in December, pushing foreign holdings to a record US$5.79 trillion. Continue reading

World top bankers warn of dire consequences if U.S. defaults

(Reuters) – Three of the world’s most powerful bankers warned of terrible consequences if the United States defaults on its debt, with Deutsche Bank chief executive Anshu Jain claiming default would be “utterly catastrophic.”

“This would be a very rapidly spreading, fatal disease,” Jain said on Saturday at a conference hosted by the Institute of International Finance in Washington. Continue reading