The Coming Banking Crisis that will reshape the world

A number of years in the past, 6 years in the past to be extra exact, Christine Lagarde, the IMF director, was predicting the demise of the present banking system and the triumph of cryptocurrency. Not was she solely suggesting simply that however she was additionally making some astonishing predictions like the tip of fractional reserve banking, and nationwide monies – which to me sounded just like the lack of nationwide central banks sovereignty.

“In the long term, the expertise itself can exchange nationwide monies, standard monetary intermediation, and even “places a query mark on the fractional banking mannequin we all know in the present day.”

WOW. Was {that a} easy guess or extra like a plan? I’m saying “plan” as a result of in my evaluation right here i’m going to attempt to see if this “plan” has any foundation in actuality in the present day, or what the IMF director stated was pure hypothesis on her half at the moment.

In numerous paperwork launched by the IMF (and never solely) in latest occasions, the identical concepts haven’t solely resurfaced however particulars of the structure of the “new monetary system” emerged. For instance in a paper launched on March third of this yr titled “Belief Bridges and Cash Flows: A Digital Market to Enhance Cross-Border Funds” they make the case that the present banking system has change into out of date and might not serve the needs of a contemporary monetary system, that the present design and belief relationships that should exist between world monetary establishments to ensure that the present system to work are inefficient, costly, liable to monetary shocks, and make up a extremely centralized system. In distinction to highlighting the shortcomings of the present banking system, the paper involves current the “advantages” of the brand new blockchain primarily based system that comes to resolve all these failings.

The query then involves “have concrete steps to deal with these points and transfer in the direction of the adoption of a extra environment friendly and clear system been made”? Sure they’ve, however almost certainly you will have heard nothing about them. In actual fact in recent times intense efforts have been directed in the direction of implementing a brand new blockchain primarily based SWIFT API standardized as ISO20022. After a string of postponements, the banking system had March 20 of this yr of 2023 as a deadline to complete their backend integration with the brand new APIs. Not solely banks, however different main establishments have already completed the transition. For instance the DTCC have launched “Mission Ion” to manufacturing months in the past.

One might ask “so what, how is that this a giant deal”? It might not sound like a giant deal till you realise that the enhancements don’t come to merely “improve” the present banking system, though the banks are at the moment utilizing this new expertise, however to “exchange” it. Perhaps not simply but, however what’s essential to notice is that banks as establishments are NOT NEEDED for the brand new system to function. The Banks have certainly now change into out of date, and it’s not me saying it, it’s them saying it not as soon as however a number of occasions. Right here is the most recent instance:

“Banks can connect SWIFT Codes and financial institution accounts to a UMU digital foreign money pockets and transaction SWIFT-like cross-border funds over digital foreign money rails fully bypassing the correspondent banking system”.

What’s new this time is that is the primary time i hear them speak concerning the new world foreign money … the “Unicoin” – will come again to this later.

So, the place are we at now? We’re on the level when the present system is inefficient, liable to monetary shocks and reliant on medieval establishments which can be a part of the issue – the banks. Get the thought? To finish the image I’m going to throw a couple of extra parameters into the equation to assist “make clear” what I consider comes subsequent.

First we see the turmoil in monetary markets coming again with a vengeance. After 2008 the banking system appeared to had been mounted till it began shaking once more with the collapse of SVB and Credit score Suisse. The speak of the day popping out of the mouths of many monetary authorities is that we should always count on extra to come back. That is all occurring on the again of a system that has the US Greenback on the core in an inflationary setting.

Till lately, the greenback has had a comparatively steady worth with low inflation and served the position of a world reserve foreign money properly. However with the approaching of inflation, the world realised that the design will deliver everybody down by way of “greenback inflation export”. That is the way it works: if the FED has to lift charges due to inflation, all different Central Banks must comply with swimsuit as a result of in the event that they don’t the inflation in their very own economies (attributable to the inflation within the reserve foreign money of the world that everybody makes use of to commerce with one another) could be exacerbated by the devaluation (vs the USD) of their very own respective currencies.

And identical to that, voila – the system is damaged once more and this time it will possibly’t be mounted. Hastily the speak on the town is all a couple of new world monetary disaster coming our manner accompanied by what some economists say could be a “extreme recession”. However Janet Yellen stated previously that “there received’t be one other monetary disaster in our life time”. I’m wondering if she nonetheless holds true to her phrases. In any case.

So if we’re to imagine that the present banking and monetary system is heading for collapse, who’s then going to avoid wasting the system this time and the way? One factor is definite, cash printing received’t minimize it this time. What if, then, … they’ll say “simply let all of it fail”, the banks aren’t actually wanted any extra? Do you assume that could be a risk? And if that which ought to had been allowed to occur in 2008 now occurs, what comes subsequent then? What if the banks and the greenback system do certainly collapse?

In line with reviews, the UN is already looking for to be given “emergency powers” over dealing with of “future financial crises”. Quote:

“The United Nations is looking for huge new powers and stronger “world governance” instruments to cope with worldwide emergencies reminiscent of … financial crises”.

We now have already seen how the UN has already sought to be granted authority to deal with a world pandemic, overriding the authorities of member nations. Why would the UN search authority to deal with a world financial disaster? Hmmm … is that this what Christine Lagarde was referring to when she stated all these years in the past that ultimately cryptocurrency would “exchange nationwide monies”?

Nicely it seems the UN has not been sitting idle all this time. Within the case of a “native disaster” generated by the invasion of Ukraine, it simply occurs that they’re already utilizing this new expertise to supply monetary assist to the Ukrainian refugees …

What would then be the UN’s position within the case of a world financial disaster, attributable to a greenback system collapse, which might make all of us “monetary refugees”? Perhaps simply use the identical monetary rails they use in the present day in Ukraine, exchange the USDC with Unicoin and voila – world is saved! I simply marvel, moreover requiring each soul on Earth to have a digital ID to function within the new system, what else will they ask for?