Four More Mega-Banks Join The Anti-Dollar Alliance

Tyler Durden's picture

Submitted by Simon Black via SovereignMan.com,

That was fast.

Yesterday I told you how a consortium of 15 Japanese banks had just signed up to implement new financial technology to clear and settle international financial transactions.

This is a huge step.

Right now, most international financial transactions must pass through the US banking system’s network of correspondent accounts.

This gives the US government an incredible amount of power… power they haven’t been shy about using over the last several years.

2014 was one of the first major watershed moments when the Obama administration fined French bank BNP Paribas $9 billion for doing business with countries that the US doesn’t like– namely Cuba and Iran.

It didn’t matter that this French bank wasn’t violating any French laws.

Nor did it matter that only months later the President of the United States inked a sweetheart nuclear deal with Iran and flew down to Cuba to attend a baseball game with his new BFFs.

BNP had to pay up. A French bank paid $9 billion because they violated US law.

And if they didn’t pay, the US government threatened to kick them out of the US banking system.

$9 billion hurt. But being kicked out of the US banking system would have been totally crippling.

Big international banks in particular cannot function if they don’t have access to the US banking system.

As long as the US dollar remains the world’s dominant reserve currency, major banks must able to clear and settle US dollar transactions if they expect to remain in business.

This means having access to the US banking system… the gatekeeper of the US dollar.

But having watched BNP Paribas get blackmailed into paying an absurd $9 billion fine to the US government, the rest of the world’s mega-banks knew instantly that their heads could be next ones on the chopping block.

So they started working on contingency plans.

Blockchain technology provided an elegant solution.

Instead of passing funds through the US banking system’s costly and inefficient network of correspondent accounts, blockchain technology provides an easy way for banks to send payments directly to one another.

I cannot understate how important this technology is.

Blockchain may very well be what neutralizes the US government’s domination of the global financial system.

And while there’s been a lot of momentum in this direction (hence yesterday’s letter to you), even I’m surprised at how fast it’s moving.

Today, four of the world’s largest banks announced a brand new joint venture to create a new financial settlement protocol built on blockchain technology.

Deutsche Bank from Germany, UBS from Switzerland, Santander from Spain, and Bank of New York Mellon have joined together to launch what they’re naming the very un-sexy “utility settlement coin”.

Like Ripple, Setl, Monetas, and several other competing technologies, Utility Settlement Coin has the potential to end the reliance on the US banking system for cross-border payments and financial transactions.

Banks will be able to send payments to one another directly without having to transit through the Wall Street financial toll plaza.

(Global consulting firm Oliver Wyman estimates that the cost of clearing and settling international financial transactions at up to $80 billion annually.)

This has enormous implications, especially for US banks.

The Federal Reserve, for example, has already warned that financial technology could pose stability risks to the US financial system.

And they’re right.

If foreign banks are able to transact directly with one another without having to go through the US banking system, then why would they need to park trillions of dollars in the United States?

They wouldn’t.

Adoption of this technology could cause a gigantic vacuum of deposits out of the US banking system.

US banks would take a big hit. And the US government would have far fewer foreign buyers to sell its ever-expanding piles of debt.

Make no mistake, the adoption of this technology is a game-changing development with far-reaching implications. And it’s happening very quickly.

If these mega-banks can hit their milestones, they’ll launch commercially in eighteen months.

Mark it on your calendar– that may be the end of peak US financial dominance.

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CrazyCooter's picture

The headline was grabbing ... I was WTF ... then I clicked through ... and its Simon Black.

Nothing to see here, move along.

Regards,

Cooter

P.S. ZH, please stop posting this douche bag - unless he pays for hamster chow and keeps the wheel turning.

George the baby crusher's picture

Don't think the messenger is important here, it's the message. Block chain tech is going to ruffle some feathers.

aurum4040's picture

It already has w bitcoin. Read about ethereum, its going to be much bigger then bitcoin in my opinion. 

CrazyCooter's picture

I don't buy into e-currencies.

Thanks guys/gals for your vots of confidence.

Regards,

Cooter

jeff montanye's picture

obama generally seems to use the residual powers of the u.s. in such a way as to make the residue dissolve as quickly as possible.

with g. w. bush, these last sixteen years have brought the empire into plain sight and, rapidly, into decline, faster than someone trying to do it would have dared.

a Smudge by any other name's picture

The significance is that "blockchain beat bitcoin". Bitcoin still hasn't achieved acceptance as a currency (although it remains a psuedocommodity/store of value). Blockchain is gonna be used to facilitate transactions throughought commerce in ways...

Settlements is one pretty hefty way.

commander gruze?'s picture

This "blockchain beat bitcoin" tune has been played for a while now with little evidence. For TPTB the painful dillema is:

- blockchain that is private, locked down, and tightly controlled is not secure
- blockchain that is secure cannot be controlled by any governing body

After Ethereum developers dicided they want to commit platform's suicide, Bitcoin's blockchain is the only one that is secure enough and has sufficient acceptance and computing power behind it to be trustworthy for everyone: from Joe the stacker to the Too Big To Fail.

And there's another problem. We, the crypto community, have not yet found a good enough solution for crypto keys security (as shown by occasional bitcoin exchange hacks). There is Tresor and the likes, there is paper wallet, then there is brain wallet, but there is no convenient, credible, and safe way to organize keys management, keys revocation and replacement key issuance for multisignature addresses, in distributed - not centralized - fashion. I bet it won't be long before a major leak or loss of keys happen at those banks and they will be screwed. Like big time. Like seriously fucked. And it will happen sooner or later beause security in their corporate computer networks is usually a joke.

Finally, I think they'd be better off ditching their pre-alpha state software in favour of Bitcoin's OpenAssets protocol to create customized tokens on top of the biggest and safest blockchain out there. Two birds with one stone: security, and controll over keys used to generate assets. Hell, they could even build themselves a dapp (distributed application) on Ethereum network to manage keys issuance, revocation and replacement.

But that would legitimize Bitcoin, so it must suck to be a banker these days.

new game's picture

digital fiat on a server; fucken eh, that's real money...

commander gruze?'s picture

One sure way to publicly humiliate oneself is to talk about cryptocurreny/blockchain in terms of client-server architecture.

White Mountains's picture

Yeah, I always get a great laugh when I see people talking about (and usually bad mouthing) BitCoin and the BlockChain when they obviously haven't the least clue what they are!  Too f'in funny.

indygo55's picture

One serious power outage and the whole blockchain idea will be re-thought.

 

commander gruze?'s picture

Few realize how resilient blockchain-based systems are.

If half of the world's energy grid goes to shitter, the funds are still safe and can be accessed again when 1) power is back, 2) you move to a place when the electricity is flowing.

If entire world's energy grid goes poof it is still possible, albeit hard, to sign transactions with pen and paper. Once that happens I'm pretty sure there will be people able to do SHA256 in their brains in exchange for bread, eggs, and poultry.

ejmoosa's picture

"If entire world's energy grid goes poof it is still possible..."

At that point ALL of our transactions will be done in person.  Now what hard currency works in both the best cases and the worst cases?

Keep on Stackin'!

Slomotrainwreck's picture

I'm sure that you have a good point but my mind says "WYF?" ... no capiche.

Nonetheless, I understand the concept of considering gold and silver.

RaceToTheBottom's picture

Blyth Masters telegraphed this maneuver a long time ago. The creator of the exploding CDO has moved into this field as well. Not a good sign.

Theosebes Goodfellow's picture

~~It already has w bitcoin. Read about ethereum, its going to be much bigger then bitcoin in my opinion."~

~"The Federal Reserve, for example, has already warned that financial technology could pose stability risks to the US financial system."~  

This is block chain at a new level. It's if you will, a banking private currency bypassing the Fed, the Treasury and the U$D. The jig is up. And for the Fed to say that financial technology is going to wreck their monopoly is laughable. No one, and I mean no one, could have done more damage to the US financial system than the Fed has. Any one care to hazard what's the buzz at J-Hole is today?

 

Right-on Left-off's picture

Block chain tech is going to ruffle some feathers.

No, I think the 'term' is ... the vacuuming of money out of bank accounts ... is going to hurt.

new game's picture

dolla days numbered and it will be tyme to bring fwd the real guns of war...

the lost econ advantage will bring out a euro style print fest to paper over the obvious insolvency of the u s of merica.

plan for some bada bom as in no fiat credit deposit or card empty for the wally world trip...

ejmoosa's picture

I agree....folks believed in the Confederate dollar until they couldn't.  But those were mostly Confederates.

Now why does the rest of the world continue to help prop up the US dollar at their expense.

Are they just baiting the rest of us for the Grand Finale blowoff?

 

MontgomeryScott's picture

CYPRUS and GREECE were simply BETA-TESTS of the ability to take control of their internal banking systems and SCREW EVERONE that had DEPOSITS WITHIN THEM.

Think of this 'next step in financial services' as 'USAPATRIOT' and the rollout of 'WINDOWS 10', all in one big happy package. It's like a BOOT ENDLESSLY STOMPING ON YOUR FACE as you lay on the ground, disarmed, helpless, and prostrated (IF you were one of the ones that 'trusted' your financial SYSTEM GLOBALIST MASTERS). Think of ULTIMATE FASCISM, but with a ROBOT in control, on a GLOBAL SCALE (or larger).

 

FORTH HORESMAN stuff.

YOU AIN'T SEEN NOTHING YET!

https://www.youtube.com/watch?v=AH6H7mSvsvg

 

 

Bear's picture

Crazy ... You are crazy if you don't believe that this will someday come to pass. This is just another fulfillment of:

"Dreams of (his) Father"

Bopper09's picture

Love or hate Jim Willie, he's eerily correct.  The world is going to ignore the dollar.  And the U.S. will come up with the shit dollar.

Dead Canary's picture

I tuned JW out when he started talking about the US earthquake machine that caused the Fukushima tsunami.

MontgomeryScott's picture

If you weren't such an ignorant and arrogant ass, you would also be aware of THIS:

US Air Force wants to plasma bomb the sky using tiny satellites

 

The technology is quite real, and is in use already.

The abovementioned headline story is HERE, at 'New Scientist' magazine:

https://www.newscientist.com/article/mg23130871-000-us-air-force-wants-t...

It's all right. take the BLUE PILL, and keep hoping for the change of the hope for the change; and everything will get BETTER.

 

I started watching/listening to/reading  Mr. Jim Willie, C.B., back in late 2005, when he was talking about the upcoming real estate subprime market crash, and he has slightly more credibility than YOU. Of course, back then, Steve Quayle and Stan Deyo were the only places I could actually read his analytics... this was 'pre-ZH'.

YOU are a DOUCHE, eh, 'DC', when you arbitrarily state that such actions are 'impossibru'.

The HAARP facility is giving a 2-day public tour of this historical site, I believe on the 27th and 28th of this month (it's now in control of some college in Alaska, having served it's DARPA USGOVMIL 'research' purposes).

DEAD CANARIES can't fly, ever again (unless they are carried off in the talons of EAGLES).

PERHAPS you are suffering from a syndrome such as 'NORMALCY BIAS'. I understand that this particular malady can be damaging, even to the point of MORTALITY.

Of course, Mr. Willie is a financial analyst, and not a 'rocket scientist', so his impression and description of SCALAR WEAPONRY AS IT NOW EXISTS may leave one with the wrong impression.

Should I leave you, 'DC', with the video of the 'dance of death' performed when the CERN LHC actually managed to do what they (the physical scientists) were trying to ACHIEVE (they THINK the opened a 'stargate', but instead they opened the portal to HELL)?

NO. YOU are a SMART BOY, so you should be able to retrieve THIS video on your OWN.

DAMN, SKIPPY, I have NEVER seen ignorance AND arrogance on display before in such a fashion as YOURS.

Your choices appear to be 'incorrect' in tuning out 'The Golden Jackass'.

 

NO <S> tag, here. Don't shoot the messenger. LISTEN INSTEAD to the TRUE MESSAGE.

 

erk's picture

Ripple shill post again two days in a row.

bjax's picture

To me it's just another step towards the cashless society. Then they will have total control over the people. I'm all for taking the banks down, but electro currency don't work without power, and it means they can just shut countries down on a whim.

Latitude25's picture

Take down the USD huh?  How long till it's hacked?

saldulilem's picture

i don't understand, these new techs seem to aim at facilitating transactions, but what are they settling the transactions in? dollars, bitcoins? it seems that the big deal is not the technology but the buying into the agreed-upon electronic token and its controvertibility to currency.

CrazyCooter's picture

On track with your thinking. The FOREX mindset is 100% on with regards to bitcoin (or whatever-coin) being settled in dollars - thus having some value in dong, dinars, or god knows what - not because folks desire the e-currency.

The ASSUMPTION with e-currencies is that the units in circulation are either (1) limited or (2) change with a very predictable pattern. This will prove to be untrue - and each incident of mass devaluation undermining further adoptions. The only end game around this final outcome is a mandatory - er, fiat - decree with regards to e-currencies where the govy takes ownership of "printing".

And - at that point - exactly what the fuck was accomplished?

But, all that aside, if you are really earning wages, facilitating trade, acquiring resources - why is an e-currency better/worse than anything else? Am I more likely to get "Russian hacked" or "mugged" on my way home from the bar? What is the upside of my loss in said situation? If I do a three month trade deal over the Pacific, is an e-currency a better way to fund raw materials, pay for labor, and receive finished product?

Fuck Simon Black - I would rather hear from Lloyds of London with their "OMFG e-currency is the shiznit" - let us prove it with lower rates for transactions in e-currency!

I will wait with baited breath for a straight up Tyler post with regards to Lloyds offering lower rates for insuring international trade transactions in e-currencies as opposed to any standing government fiat currencies.

Bitch tards.

The vast majority of the publlc has no idea how computers work - and so are fat targets for getting screwed on technology based transactions. Ain't nothing free - including the post you read and my comments - that said, I prefer cash.

Regards,

Cooter

sirik's picture

No, bypassing international treaties.

The French were building two helicopter vessels for Russia.

They weren't allowed to do so.

So they sold one, already finished to... Egypt.

And then we had Charlie Hebdo.

Boondocker's picture

I predict nailguns in use for those banks soon.

sirik's picture

2014 was one of the first major watershed moments when the Obama administration fined French bank BNP Paribas $9 billion for doing business with countries that the US doesn’t like– namely Cuba and Iran.

It didn’t matter that this French bank wasn’t violating any French laws.

Nor did it matter that only months later the President of the United States inked a sweetheart nuclear deal with Iran and flew down to Cuba to attend a baseball game with his new BFFs.

BNP had to pay up. A French bank paid $9 billion because they violated US law.

And if they didn’t pay, the US government threatened to kick them out of the US banking system.

$9 billion hurt. But being kicked out of the US banking system would have been totally crippling.

Big international banks in particular cannot function if they don’t have access to the US banking system.

 

And thats very funny !

In the 17th century European banks did their international payments via giro-banks. Not the gold coins were transported by carriage and horse but the paperwork. coded ofcourse.

Islamic terrorists have their own version of transporting information secretly. They write some info on a paper, tear it apart and send it to the receiver using several, secret, transporters. No computers, no network. just by foot or by plane. By family, by pregnant women,grannies, children.

Thats blockchain technology.

 

Why are banks from sovereign countries being forced, highway robbery, to do business with banks in 'the land of the free'?

Has nothing to do with technology problems, but all with 'who has the biggest fleet'.

So the 'land of the free' having the strongest muscles, made itself into an addicted junkie.

Doesn't want to play the game by the rules and hence hollowing itself until final breakdown, implosion.

Unable to compete in the free market.

That doesn't bode well for the american civilians, taxpayers.

 

CrazyCooter's picture

Mr Piñata,

Banks lend money they don't have. It is how banking works. In fact the model was adopted when, frankly, there was limitless investment opportunties to be had which were constrained by a more conservative monetary/banking policy. They are not supposed to lend "past certain perameters", and that didn't matter for 100s of years, but no one really pays close attention these days so violations get ignored. On rare occasion, things get very serious and banks blow up.

Let me  be clear - two hundred years ago, continents were being discovered and needed investment to produce cash crops, havest resources, and expand industry. That is the same monetary policy we have today - when our planet is more or less choking on idiots and growth is pretty much a joke.

The fact that a bank was fined, or not fined, is immaterial. Asshole. What is material is the amount of the fine, relative to the business unit that generated the fine, their profit/loss, and so forth. I get fined by the government for working - they call it an income tax - but it doesn't mean I am not successful, nor does it mean I am not profitable. Asshole.

Banks participate in networks because the network provides business - and if it doesn't produce profit the bank should bail, but if they net a profit, why not stick around, even if fined? Because at the end of the day, it was worth the investment, despite the costs/overheads.

So, according to your history, there is some clever coding, about banks, gold, and receipts, that helped them avoid fraud - so god bless, "block chain" must be mana from heaven.

What might be more appropriate is a real definition of block chain - why BS folks here on ZH, right?

A blockchain is a distributed database that maintains a continuously growing list of data records secured from tampering and revision. It consists of data structure blocks that may contain data or programs — with each block holding batches of individual transactions and the results of any blockchain executables. Each block contains a timestamp and a link to a previous block.

Now, that is from wiki and is infinitely more useful than the dribble you posted. Really, what is says is, a block chain is like a set of books, except there are many copies of the books, so if one asshole edits the books, the holders of the other copies of the same books know they are an asshole. Oh, and the books grow - presumably because the business with the books is selling something people want and generates new transactions and everyone else thinks they aren't lying.

By the way, there is no anonymity, only obfuscation - so at some point someone will figure out who the major actors are - and WHAMO - tax time.

Asshole.

Regards,

Cooter

Wahooo's picture

Of course they'll be taxed by the nation they do business in, they always are. But this is about avoiding outright theft by the US government.

OverTheHedge's picture

"A blockchain is a distributed database that maintains a continuously growing list of data records secured from tampering and revision. It consists of data structure blocks that may contain data or programs — with each block holding batches of individual transactions and the results of any blockchain executables. Each block contains a timestamp and a link to a previous block."

About that "secured from tampering and revision": to me that sounds as though theft is impossible. If someone steals your bitcoin, you just refer to the transaction and prove its yours from within the blockchain.

And yet, bitcoins are stolen all the time, and never recovered, so the blockchain means nothing, except that fraudulent, counterfeit coins are difficult to create out of thin air. Allegedly.

You can see my ignorance by this post, and I freely admit that I don't understand bitcoin, but I also don't understand why banks can't transact with each other, without going through a US clearing house. Lack of trust? It would make sense, given that bankers are involved.....

 

tricorn teacup's picture

If I can obtain the cryptographic key identifying your wallet, I can use it to transfer coin from your wallet to another.  And nobody can then prove that you didn't make the transfer.  Also, I'm given to understand that many bitcoin thefts occur at exchanges which perform transactions outside the blockchain.

Right-on Left-off's picture

What I get from every and all posts here is ....  No one really knows how 'secret' technology with money is really going to work or how it really works in the 'REAL' world.

Someone is always trying to come up with a new definition for money that is oh so much more elegant than just using money in its simplest form.  Looks to me like a race into the biggest con job possible.  Or, is that a race into the most elegant con job that no one will ever know is a con job, it's just too elegant to know what it is.

We'll just have to implement it in order to know if it works!  Where have I heard that before?

GoldIsMoney's picture

Fact is we no not have money any more we do have IOYs, that's nearly all we have. There are a few exceptons but they are fought by any means from the defrauders of the central banks. There will be no peace as long as central banks do exist and as long as fractional reserve is a valid and honorable option. It's force all the way down. In the end it means. Accept what we tell you is money or die. And we do have died in terrible quantities, just seldom the "right" ones.

geekz_rule's picture

I have a friend that keeps suggesting I look at One Coin. of course it's selling point is "look at the success of Bitcoin" but all my best efforts at looking into One Coin from serious, reputable sites, analysts, block chain enthusiasts, suggest One Coin is PURE FRAUD.  Proprietary, centrally owned and controlled, not tradable for anything - only within one coin's back office bullshit.

anyone here have any solid reason to trust one coin isn't a scam? at least Bitcoin etc is tradable. all One coin offers is promises it seems to me...

Husk-Erzulie's picture

There are many "Alt Coins", the list grows every day.

http://listofaltcoins.com/index.php/Main_Page

It's not difficult to implement.  As with any break out resource, there are a lot of actors in a fast moving field.  Lots of opportunity, lots of scammin'.  If you aren't comfortable making, and trusting, your own analysis, then this kind of game ain't for you (the general you, not you personally, geekz_rule).  Most sheep will want to wait until the dust settles and the nanny state is there to hold their hands while explaining everything in terms "adopted to the meanest understanding".  Then, of course, the time of grand opportunities will have past.

Fortune is Bald Behind, Bitchez

CatsPaw's picture

If its true that those banks are about to bypass Swift, this is enough to be the reason WWIII starts.

It wont be the reason told in history books of course, but the US went to war with many countries that wanted to leave the petrodollar.

What would they do if the mayor banks of Europe leave the dollar all togheter?

doctor10's picture

It would be Putin's fault! of course.

With these tyros its always somebody else's fault.

LoveTruth's picture

US is abusing greatly its power. Arm-twisting everybody to submission. For example US forced Bulgaria to stop South Stream, because they didn't want Russia to sell more gas to Europe. How would you feel if your country was on the receiving end?

Why in the world US cares what business the Bulgarians are doing with Russia? Leave them freely to do business with whomever they want. They are not telling US with whom to do business and with whom not to do right?

 

RabbitOne's picture

No one ever writes these articles in plain words. It would go something like this:

U.S. politicians are out of control creating debt. The U.S. politicians can create all the debt they want today as long as the U.S. has the worlds reserve currency status.  Until debt ceases to be money that simply pays interest, the dollar will not vanish as a reserve currency. There is no replacement as of yet. Even when China becomes the largest economy, that will not displace the “reserve” status of the dollar until there is a deep market to park cash used as part of international trading. 

This is a critical point to understand for this goes to the heart of the debate about the dollar and its “reserve” status. There are two primary points. (1) The dollar is used in international trade more than any other currency, and (2) its “reserve” status is where money simply “parks” so it can be used for future trades.

Most nations hate the U.S. reserve currency status as “the” trade currency which requires them to buy U.S. bonds in order to trade so they are always looking for an alternative. One alternative is presented by Bitcoins for example that  is the computer technique of block chaining that could replace the dollar as the “currency” in the trade mechanism. So if block chain replaced the U.S. currency in trading the economy would collapse due to the loss of our #1 export: the dollar. The U.S. has not had a positive balance of trade (exports minus imports) since 1976. That means since 1976 other countries have been exporting goods and services to us and we have been exporting "the dollar" to them in return. 

Our economic system will continue only so long as the dollar is viewed as a stable currency. If that perception evaporates from international trading using block chains, so will the reserve status, and the U.S. will have a MUCH harder time borrowing and importing. Without demand for the dollar, the end result would be a major currency devaluation and a drastic standard of living adjustment for those living in the U.S..

PleasedToMeatYou's picture

"'Active dialogue with central banks and regulators will continue to ensure a regulation-compliant, robust and efficient structure within which the USC can be deployed,' Deutsche Bank said in the statement about the Utility Settlement Coin project." 

Sounds more evolutionary than revolutionary.  I'm not sure this counts out the American Fed's reserve currency status, so much as moving to restructure the nature of it.  More like another move toward Sauron knowing who and where you are, what you are spending on, and controlling whether you can digitally spend/trade at all. 

Deutsche quote is from: http://www.investors.com/news/deutsche-bank-ubs-others-mull-blockchain-b...