Wow. Is this a simple guess or more like a plan? I say “plan” because in my analysis I will try to see if this “plan” has any basis in reality today, or if what the IMF chief said was pure speculation on her part at the time.
In some recent documents issued by the IMF (and not only), the same idea has not only resurfaced, but details of the architecture of the “new financial system” have also emerged. For example, in their paper entitled “Bridging Trust and Financial Flows: Improving Digital Markets for Cross-Border Payments”, published on 3 March this year, they argue that the current banking system is outdated and no longer adequate for a modern financial system, and that the current design and trust relationships that must exist between global financial institutions for the current system to work are inefficient, costly, and unsustainable. However, it is inefficient, costly, vulnerable to financial shocks and constitutes a highly centralised system. Contrary to highlighting the shortcomings of the current banking system, the
The next question is “have concrete steps been taken to address these problems and move towards the adoption of a more efficient and transparent system”? Yes, they have, but it is likely that you know nothing about them. In fact, there has been a huge effort in recent years to implement the new blockchain-based SWIFT API standardised to ISO20022. After a series of delays, the banking system has set 20 March 2023 as the deadline for completing back-end integration with the new API. Not only banks, but also other major institutions have already completed the transition. The DTCC, for example, put ‘Project Ion’ into production a few months ago.
One might ask “so what, what’s the big deal”? It may not sound like a big deal until you realise that these improvements are not just to ‘enhance’ the current banking system, although banks are currently using this new technology, but to ‘replace’ it. Maybe not yet, but it’s important to note that the new system works without the bank as an institution. It is true that banks are now obsolete, not that I am saying that, but they are saying it not once but many times. This is the latest example:
“Banks can attach SWIFT codes and bank accounts to UMU digital currency wallets and make SWIFT-like cross-border payments via the digital currency track, bypassing the correspondent banking system altogether”.
What’s new this time is that this is the first time I’ve heard them talk about the new world currency …… “Unicoin” – more on that later.
So, where are we now? We are at the point where the current system is inefficient, vulnerable to financial shocks and dependent on medieval institutions (part of the problem) – the banks. Got it? To complete the picture, I will add more parameters to the equation to help ‘clarify’ what I think will happen next.
Firstly, we see a resurgence of turmoil in the financial markets. after 2008, the banking system seemed to have fixed itself until it started to falter again with the collapse of SVB and Credit Suisse. The talk of the day coming out of the mouths of many financial authorities was that we should expect more of the same. This is all happening in an inflationary environment with the dollar at its core.
Until recently, the dollar has had a relatively stable value and low inflation, and has served the world’s reserve currency well. But as inflation set in, the world realised that this design would bring everyone down through the ‘dollar inflation export’. It worked like this: if the Fed had to raise interest rates because of inflation, all the other central banks had to follow suit, because if they didn’t, the inflation in their own economies (caused by the inflation of the world’s reserve currency, which everyone uses to trade with each other) would be exacerbated by the devaluation of their respective currencies (relative to the dollar).
And just like that, voila – the system is broken again, this time beyond repair. Suddenly the talk of the town is all about a new global financial crisis, accompanied by what some economists call a “severe recession”. But Janet Yellen has said in the past that “there won’t be another financial crisis in our lifetime”. I don’t know if she still stands by her words. In any case.
So, if we assume that the current banking and financial system is heading for collapse, who will save it this time and how? One thing is for sure, the money printing will not work this time. So what if …… they would say “let it all go down” and the banks really don’t need it anymore? Do you think that is a possibility? If what should have been allowed to happen in 2008 happens now, what will happen next? What if the banks and the dollar system do collapse?
