Most people are unaware that the major international banks cannot operate without unrestricted access to the U.S. banking system. This is because the dollar is the world’s major reserve currency.
In order for the multinational banks to perform transactions internationally, they must have the ability to settle these transactions in dollars. Otherwise, they are out of business.
The U.S. banking system functions as the gatekeeper for the U.S. dollar in this way. Yet thanks to actions of the Obama administration, this system is under assault today. In 2014, the U.S. administration fined the French banking giant BNP Paribas a hefty $9 billion because it was working with nations the U.S. was against like Iran and Cuba.
The French bank had not broken any of France’s laws. Yet still, they had to pay this punishing fine because they had transgressed against U.S. laws. BNP Paribas attempted to resist the fine but was warned by the American government that they would be rejected from the U.S. banking system if they did not comply.
Needless to say, they paid because they could not afford to be cut off from the U.S. dollar as a settlement currency. The $9 billion was a stiff penalty. Losing access to U.S. dollar settlement would have ruined them though.
Under the Obama administration, other banks have suffered similar fates. British banking giants HSBC, Standard Chartered, and Barclays have also been fined billions as well. Swiss banks Credit Suisse and UBS paid billions in fines for helping U.S. taxpayers evade taxes. This was also not a crime in Switzerland, but it did not matter.
The end result of this aggressive persecution of foreign banks is that the banks quietly began looking for a way to get around U.S. bank and dollar settlement. They found blockchain technology as the answer to their problems. It offers banks a simple and effective means for sending payments to each other directly.
This idea saves them the costs of moving money inefficiently around the U.S. correspondent accounts. More than that, it frees them from having to keep trillions of dollars of funds in U.S. accounts. Soon it will end their dependence on the U.S. banking system and U.S. dollar settlement entirely.
How serious a threat is this? Four of the biggest banks on the planet have just revealed a brand new combined effort to develop a means for settling transactions based on this blockchain technology. Swiss UBS, Spanish Santander Bank, German Deutsche Bank, and American Bank of New York Mellon call this Utility Settlement Coin.
And these major players are not the only ones committed to this type of project. Another group of 15 different Japanese banks has signed on to implement rival technology Ripple backed by Google Ventures. It will similarly allow them to settle their financial transactions directly.
This is not something that will only shake up the U.S. banking system and dollar reserve currency status years from now. The Ripple system is already up and running. Dozens of more banks will be participating within 6 months. As for the new Utility Settlement Coin technology, the goal is for it to launch commercially in only 18 months.
International banks will finally achieve their independence from the U.S. regulators who abused their power. Wall Street banks will lose their lucrative foreign correspondent accounts and financial tolls. Foreign banks will no longer need to keep trillions of dollars in the U.S. and purchase American government debt with it.
The Federal Reserve is aware of the threat and has issued a warning that this type of financial technology could create instability in the American financial system.
Protect your portfolio
You can protect yourself from attacks on the U.S. banking system and the dollar. By using a part of your assets to purchase gold, you gain the protection of the greatest financial and currency hedge of all time. Consider acquiring some now before the Utility Settlement Coin and competing technologies reduce dependence on and the value of the U.S. dollar.
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I hope you found this short post to be helpful, as always if you got any questions I will be more than happy to answer them below!
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I wish you success!
Investor, Student, and team member on Gold Retired
Wow there is a lot of information in this article! I am not very well versed in the financial situation around the world and I had no idea that foreign banks had to use the US dollar to settle transactions. It seems like you’ve scratched the surface and I’m sure this is a pretty complicated issue. But your post really covered the basic situation. Thanks for the great info!
Happy to hear you liked the post and that it opened up your eyes to this, if only a bit :o)
/All the best
Thank you for this article Michael.
I have heard of bitcoin, but not block chain and this article enlightened me. I didn’t realize that the technology was such a threat to the US banking system.
Is there a fix for this or are we doomed to worry about the stability of the US currency?
Glad you liked the article and found it interesting!
Well, my fix would be to invest into Cryptocurrency, I make sure to invest pretty much every month into both Crypto and Gold.
I strongly believe we are still in the early stage of Bitcoin (and other cryptos) and it haven´t even begun yet, I hear people daily that still have no clue about Bitcoin.
/All the best
Hi Michael – that’s really interesting and somewhat ironic as blockchain technology and bitcoin were developed as a means to circumvent the traditional banking system 🙂 I follow ‘busines’ news at a shallow level and don’t recall anything about these massive fines. But no one loves a bully 🙂
I’ve known about bitcoin for many years but always considered it too risky as an investment. Apart from the enormous currency fluctuations, wasn’t one of the exchanges hacked resulting in massice customer losses?
The newer crytpos seem a bit of a punt. Who knows what’s going to take off? Skip a bottle of wine a month, invest in a few cryptos instead and see what happens 🙂
What’s your process or methodology for investing in cryptos?
Thanks for an elightening read,Ian
First of all, thank you for your comment.
Yes, that is correct, actually, more than one exchange have been hacked, that is also why I never recommend anyone to keep more than they are willing to “risk” at ANY exchange… Instead you keep your Bitcoins (and other cryptos) in a cold storage (meaning offline).
Like you said, skip some bottles of wine, and invest in cryptos instead, I invest pretty much monthly, sometimes more than once… I focus (and recommend) mainly on Bitcoin and Ethereum, but also into some of the altcoins that I strongly believe in… Make sure to read how to avoid the scams though, got a very important article on that located in the Bitcoin menus here on this website.
Thank you again for your comment.
/All the best
Very interesting article. The truth did not know the dependence that foreign banks had for the dollar with the banking system of the United States.
I am happy to know that thanks to the “Blockchain” technology banks can send payments to each other.
Avoiding the correspondent bank of the United States.
I consider a very good way to protect ourselves from buying gold to have a better financial coverage, recommended by many professionals in the financial sector.
Thank you very much and greetings!
Thank you for you comment Claudio!
/All the best