Wednesday, September 23, 2020

The most important bank you have never heard of - but you belong to

 The most important bank you have never heard of – but you belong to

Don’t want to be part of an international banking scheme that allows the too-big-to-fail banks in Canada to just help themselves to your funds should any of the big banks discover they are insolvent? In the midst of a second wave COVID-19 threat? Where do I get this information about bank bail-ins?  Well, first check out The CDIC (Canada Deposit Insurance Corporation) web site which explains, more or less, how many central banks – mostly in the western world – get together from time to time in exclusive fancy places like Davos Switzerland, and decide, more or less, how the world is to be run.  There’s a whole bunch of these central banks Sixty-two in fact. And yes, Canada is one of them.

The Bank for International Settlements (BIS) is the central bank of central banks, owned by 62 central banks representing countries that account for 95% of the world’s GDP. The chairman of the BIS is Jens Weidmann. Mr. Weidmann is also chairman of The Deutsche Bundesbank (Deutsche Bank), which is one of the most important banks in the western world. The Deutsche Bank is in a pile of trouble right now for being accused of money laundering several trillions of dollars through their banking system. But that’s another post.  The BIS states their mission as: “To serve central banks, in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks”.  Oh, how lovely that sounds.

This Bank of International Settlements squeezed the life blood out of countries such as Greece and Cyprus with insistence on austerity for the people in order to repay the loans they didn’t make. However, the BIS was sensitive to the mass anger of the people in countries who saw their tax money given over to the too-big-to fail banks and this time have come up with something different. Instead of bail-outs, they are saying, let’s do bail-ins as the first line of rescue.  As defined by the Canadian Deposit Insurance Corporation (CIDC), “In contrast to a bail-out, a bail-in is intended to rescue a failing bank by making its creditors and shareholders (depositors) bear the cost of recapitalizing the bank through the conversion through some of or all of the bank’s bail-in debt into common shares”.  In other words, the banks can just take a portion of depositor’s money out of their account without their permission and give them shares of the failing bank in return. Why would anybody want shares in a failing bank?

The CDIC report continues: “The Canadian financial system remained resilient throughout the global 2008 financial crisis, with no Canadian bank failures. The strength of the Canadian financial sector should not be taken for granted, however, and the bail-in tool is a recommended international standard”. This means that the Canadian financial sector considers bail-ins as the first-line best practice ‘tool’ for any potential threat of bank failures, and that our domestic economic policy is being determined by international interests over our own.

More next time.

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