'The European central bank (ECB) will be modeled after the Federal Reserve. Like the Fed in 1913, it will have the institutional appearance of decentralization, but also like the Fed it will be run by a cartel of big bankers in collusion with politicians at the expense of the public'.
Bretton Woods consolidated all nations' wealth and financial control to that 1% ---leaving the gold standard allowed all nations' gold reserves to be sold to those same 1%----and FIAT MONEY allowed those 1% to implode our national economies with fraud all while saying---this is good for economic stability, employment, and the quality of life for 99% of people.
IF THE US HAD STAYED ON GOLD STANDARD WITH NO US FED WE WOULD HAVE REMAINED A STRONG, BROAD FINANCIAL EQUITY NATION FOR A THOUSAND YEARS. We would not have grown as fast industrially, but as we see today the damage of unlimited industrialization is our DOWNFALL.
Please consider what would have been if Robber Barons had not taken both major parties-----left social capitalism is the best economic model for the 99% who hold their leaders accountable. Today, with all US universities now controlled by corporations ----all economic policy is right wing, corporate wealth and power. It matters to have our public universities working for public interest.
We have discussed in detail the role of US FED as ROBBER BARON IN CHIEF----this should allow citizens to see how expanding a powerful FED structure to ONE WORLD ONE WORLD CENTRAL BANK would leave a few hands on the spigot of all money transfer globally. NOT GOOD.
'But I think the more likely candidate is the Bank for International Settlements (BIS), the "central banker's bank" in Basle, Switzerland'
Let's look at the next candidate for ONE WORLD ONE WORLD CENTRAL BANK ---we saw the World Bank/IMF as one model being used---the BANK FOR INTERNATIONAL SETTLEMENTS---BIS is the other model. Switzerland is home of DAVOS --the meeting of the global 1%----so this is where all those families tied to global 1% have their power. If they did not install a US FED----remove the GOLD STANDARD----install FIAT MONEY-----these global 1% would not have the power today in the US as it does. THESE ARE THE PROBLEMS WE THE PEOPLE MUST FIX-----
Again, the BIS was created at around the same time as United Nations tied to war reparations......
What Is The Bank For International Settlements?
By Reem Heakal
Headquartered in Basel, Switzerland, the Bank for International Settlements (BIS) is a bank for central banks.(To learn more about central banks, see the article What Are Central Banks?) Founded in 1930, the Bank for International Settlements is the oldest global financial institution and operates under the auspices of international law. But from its inception to the present day, the role of the BIS has been ever-changing, as it adapts to the dynamic global financial community and its needs. Read on as we explain this bank and its role in global banking.
The BIS was created out of the Hague Agreements of 1930 and took over the job of the Agent General for Repatriation in Berlin. When established, the BIS was responsible for the collection, administration and distribution of reparations from Germany - as agreed upon in the Treaty of Versailles - following World War I. The BIS was also the trustee for Dawes and Young Loans, which were internationally issued loans used to finance these repatriations.
After World War II, the BIS turned its focus to the defense and implementation of the World Bank's Bretton Woods System. Between the 1970s and 1980s, the BIS monitored cross-border capital flows in the wake of the oil and debt crises, which in turn led to the development of regulatory supervision of internationally active banks.
The BIS has also emerged as an emergency "funder" to nations in trouble, coming to the aid of countries such as Mexico and Brazil during their debt crises in 1982 and 1998, respectively. In cases like these, where the International Monetary Fund is already in the country, emergency funding is provided through the IMF structured program.
The BIS has also functioned as trustee and agent. For example, from 1979 to 1994, the BIS was the agent for the European Monetary System, which is the administration that paved the way for a single European currency.
Notwithstanding all the roles mentioned above, the BIS has always been a promoter of central bank cooperation in an effort to ensure global monetary and financial stability.
Lean On Me
Given the continuously changing global economic structure, the BIS has had to adapt to many different financial challenges. However, by focusing on providing traditional banking services to member central banks, the BIS essentially gives the "lender of last resort" a shoulder to lean on. In its aim to support global financial and monetary stability, the BIS is an integral part of the international economy.
To promote such stability, the BIS offers a forum of cooperation among member central banks (including monetary agencies). It does so by offering support and banking services for central banks:
The BIS offers its support by:
- Contributing to international cooperation - As a crucial resource for central banks and other financial institutions, the BIS produces research and statistics, and organizes seminars and workshops focused on international financial issues. For example, the Financial Stability Institute (FSI) organizes seminars and lectures on themes of global financial stability. The governors of member central banks meet at the BIS twice a month to share their experiences, and these meetings function as the core of central bank cooperation. Other regular meetings of central bank executives and specialists, as well as economists and supervisory specialists, contribute to the goal of international cooperation, while also ensuring that each central bank serves its country effectively. The ultimate goal of all these high-level meetings is global financial stability.
- Offering services to committees established and working at the BIS - By offering its services to various secretariats of financial committees and organizations created under its patronage, the BIS also functions as an international "think tank" for financial issues. Committees such as the Markets Committee debate and improve upon fundamental issues regarding the workings and regulations of the international financial infrastructure.
How the Bank Operates
The BIS does compete directly with other private financial institutions for global banking activities; however, it does not hold current accounts for individuals or governments. At one time, private shareholders as well as central banks held shares in the BIS. But in 2001 it was decided that the private shareholders should be compensated and that ownership of the BIS should be restricted to the central banks (or equivalent monetary authorities). There are currently 55 member central banks.
The BIS's unit of account is the IMF's special drawing rights, which are a basket of convertible currencies. The reserves that are held account for approximately 7% of the world's total currency.
Like any other bank, the BIS strives to offer premium services in order to attract central banks as clients. In order to provide security, it maintains abundant equity capital and reserves that are diversely invested following risk analysis. The BIS ensures liquidity for central banks by offering to buy back tradable instruments from central banks; many of these instruments have been specifically designed for the central bank's needs. In order to compete with private financial institutions, the BIS offers a top return on funds invested by central banks.
The statutes of the BIS are presided over by three bodies: the general meeting of member central banks, the board of directors and the management of the BIS. Decisions on the functions of the BIS are made at each level and are based on a weighted voting arrangement.
The BIS is a global center for financial and economic interests. As such, it has been a principal architect in the development of the global financial market. Given the dynamic nature of social, political and economic situations around the world, the BIS can be seen as a stabilizing force, encouraging financial stability and international prosperity in the face of global change.
We always shout to watch out for those IVY LEAGUE universities and those OLD WORLD MERCHANTS OF VENICE-----they are the source of massive frauds and looting these few decades.
Below we see the influence of just one Robber Baron family connected to early American settlers but tied to old world global 1%. We have always known the connections of Roger Williams et al to OLD WORLD FREEMASONRY and Brown University being central in the slave trade of 1500-1700s. Who would one think would want to be tied to these OLD WORLD MERCHANTS OF VENICE LAISSEZ FAIRE global trade policies?
Cornell University is of course ground zero for our OLD WORLD MERCHANTS OF VENICE freemasonry and happens to be from where Bill Clinton's ancestors tied to the same lived-------these families were low-tier upon coming to America---they became tools of top tier global 1% once established.
Thomas Cornell (settler)
From Wikipedia, the free encyclopedia
Thomas Cornell, Sr (c. 1595 – c. 1655) was one of the earliest settlers of Boston (1638), Rhode Island (1643) and the Bronx and a contemporary of Roger Williams and the family of Anne Hutchinson. He was the ancestor of a number of Americans prominent in business, politics, and education.
Thomas Cornell is an ancestor to a number of prominent and notorious Americans, including Ezra Cornell founder of Cornell University, William Ellery, signer of the Declaration of Independence, Ezekiel Cornell a Revolutionary War general who represented Rhode Island in the U.S. Continental Congress from 1780 to 1782, Bill Gates, Presidents Jimmy Carter, Grover Cleveland and Richard Nixon, First Lady Elizabeth Monroe, Senators Bob Graham and Daniel Webster, Secretary of State John Kerry, Amelia Earhart and accused axe murderer Lizzie Borden by way of Thomas Cornell (Jr.)'s daughter, Innocent, born to his second wife Sarah Earle Cornell after his execution.
The history of Cornell University begins when its two founders, Andrew Dickson White of Syracuse and Ezra Cornell of Ithaca, met in the New York State Senate in January 1864. Together, they established Cornell University in Ithaca, New York, in 1865. The university was initially funded by Ezra Cornell's $400,000 endowment and by New York's 989,920-acre (4,006.1 km2) allotment of the Morrill Land Grant Act of 1862.
Here we see Grover Cleveland, Nixon, Jimmy Carter, John Kerry, and that gazillionaire Bill Gates----allowed to buy Department of Defense computer technology patents to become that global 1%.
Grover Cleveland came to office at the time of this same system of economic crashes-----and as we see below he was tied to GOLD STANDARD VS SILVER wars only siding with GOLD until banking structures for FIAT BANKING were in place. This was the driver of ending GOLD STANDARD but the investments overseas are what brought the nation down......global investment by the then 1% was followed by a crash with Cleveland at the helm at the time of this crash.
WHO IS A SILVERIST-----RON PAUL OWNS A MAJORITY OF SILVER ---THAT IS WHAT DRIVES RON PAUL----
One of the first clear signs of trouble came on February 20, 1893, thirteen days before the inauguration of U.S. president Grover Cleveland, with the appointment of receivers for the Philadelphia and Reading Railroad, which had greatly overextended itself. Upon taking office, Cleveland dealt directly with the Treasury crisis, and successfully convinced Congress to repeal the Sherman Silver Purchase Act, legislation Cleveland felt was mainly responsible for the economic crisis
Ron Paul is not worried about you and me----Paul is worried that hyper-inflation created by Nixon's FIAT MONEY disconnecting US economy from GOLD will kill his own personal wealth---and it will. His drive to end the FED is good---his desire for Gold Standard is good---but he is doing it for himself---he is far-right wing extreme wealth extreme poverty LIBERTARIAN . So, NIXON' fiat money policies threw RON PAUL for a loop. NIXON, JIMMY CARTER, JOHN KERRY, BILL GATES all same family. To where did much of US wealth move these few decades of ROBBER BARRON FRAUDS-----Jimmy Carter is not just a peanut farmer. It so happens that these family members are all ONE WORLD ONE GOVERNANCE and of course ONE WORLD CENTRAL BANK. Today's US FED under YELLEN is about to unleash hyper-inflation that will kill 99% OF WE THE PEOPLE'S wealth-----as it says----simply owning precious metals is not a hedge in this manufactured massive fraud by the descendants of Thomas Cornell for one.
If you lived in a state that was left social progressive you learned all this in K-public university-----these universities would publish research on public policy making all this well known...CLINTON/BUSH/OBAMA killed public K-university so WE THE PEOPLE THE 99% these few generations do not know all these connections. This is the problem and this is what we need to FIX---how is shaking our fist at Trump going to FIX these local problems? That dastardly 5% to the 1%----This is why we say---don't go Libertarian just because Ron Paul wants to save his investments-----he is a global Wall Street player and will not protect the 99% of people ---Libertarians are wealth and corporate power.
Ron Paul Put 64 Percent Of His Portfolio In Gold, Silver Miners
By Michelle Jones on August 21, 2013 4:31 pm in Business
Ron Paul really likes gold. And silver. And hard assets of almost any kind. But equities, not so much. Street Authority took an up-close look at the former presidential candidate’s portfolio recently, and he has an astonishing 64 percent of it in gold and silver miners. Twenty-one percent of his portfolio is in real estate, while 15 percent of it is in cash.
The remaining 1 percent is allocated to stocks, although his bets are on the short side.
Ron Paul worries about the economy
Any investor who has just read this portfolio allocation is probably scratching his or her head. Why on earth would anyone put so much in one sector of the market? For Paul, it’s simple. He has said in the past that he’s worried about the strength of the U.S. dollar because it isn’t backed by a physical asset. Also it’s been devaluing steadily since 2001 thanks to increasing deficits in domestic trade.
Paul is also worried about massive inflation, and gold is generally a safe bet against inflation, although many would point out that it’s strange to invest in gold miners rather than the precious metal itself through exchange-traded funds.
Ron Paul is just one of those US citizens able to gain wealth and is likely to take that fall. What voters must consider is this-----PAUL is ONE WORLD ----his shouts to END THE US FED come as global 1% intend to end the US FED anyway------that is what ONE WORLD CENTRAL BANK is---ending our national Wall Street and national US FED to create only that international financial model controlled by the global 1%.
Simply calling for END THE US FED ----does not a left social progressive or a right wing conservative make.
The GLOBAL GREEN CORPORATION PARTY calls for END THE US FED----but they are ONE WORLD ONE WORLD CENTRAL BANK----that's why they shout END THE US FED.
Jill Stein and Bernie Sanders are indeed global 1% OLD WORLD MERCHANTS OF VENICE installing United Nations global corporate sustainability policies. Trump is simply the same OLD WORLD MERCHANT OF VENICE GLOBAL 1% FREEMASON so he is not stopping MOVING FORWARD.
To Really ‘Make America Great Again,’ End the Fed!Written by Ron Paul
Sunday November 27, 2016
Former Dallas Federal Reserve Bank President Richard Fisher recently gave a speech identifying the Federal Reserve’s easy money/low interest rate policies as a source of the public anger that propelled Donald Trump into the White House. Mr. Fisher is certainly correct that the Fed’s policies have “skewered” the middle class. However, the problem is not specific Fed policies, but the very system of fiat currency managed by a secretive central bank.
Federal Reserve-generated increases in money supply cause economic inequality. This is because, when the Fed acts to increase the money supply, well-to-do investors and other crony capitalists are the first recipients of the new money. These economic elites enjoy an increase in purchasing power before the Fed’s inflationary policies lead to mass price increases. This gives them a boost in their standard of living.
By the time the increased money supply trickles down to middle- and working-class Americans, the economy is already beset by inflation. So most average Americans see their standard of living decline as a result of Fed-engendered money supply increases.
Some Fed defenders claim that inflation doesn’t negatively affect anyone’s standard of living because price increases are matched by wage increases. This claim ignores the fact that the effects of the Fed’s actions depend on how individuals react to the Fed’s actions.
Historically, an increase in money supply does not just cause a general rise in prices. It also causes money to flow into specific sectors, creating a bubble that provides investors and workers in those areas a (temporary) increase in their incomes. Meanwhile, workers and investors in sectors not affected by the Fed-generated boom will still see a decline in their purchasing power and thus their standard of living.
Adoption of a “rules-based” monetary policy will not eliminate the problem of Fed-created bubbles, booms, and busts, since Congress cannot set a rule dictating how individuals react to Fed policies. The only way to eliminate the boom-and-bust cycle is to remove the Fed’s power to increase the money supply and manipulate interest rates.
Because the Fed’s actions distort the view of economic conditions among investors, businesses, and workers, the booms created by the Fed are unsustainable. Eventually reality sets in, the bubble bursts, and the economy falls into recession.
When the crash occurs the best thing for Congress and the Fed to do is allow the recession to run its course. Recessions are the economy’s way of cleaning out the Fed-created distortions. Of course, Congress and the Fed refuse to do that. Instead, they begin the whole business cycle over again with another round of money creation, increased stimulus spending, and corporate bailouts.
Some progressive economists acknowledge how the Fed causes economic inequality and harms average Americans. These progressives support perpetual low interest rates and money creation. These so-called working class champions ignore how the very act of money creation causes economic inequality. Longer periods of easy money also mean longer, and more painful, recessions.
President-elect Donald Trump has acknowledged that, while his business benefits from lower interest rates, the Fed’s policies hurt most Americans. During the campaign, Mr. Trump also promised to make audit the fed part of his first 100 days agenda. Unfortunately, since the election, President-elect Trump has not made any statements regarding monetary policy or the audit the fed legislation. Those of us who understand that changing monetary policy is the key to making America great again must redouble our efforts to convince Congress and the new president to audit, then end, the Federal Reserve.
Each of the original 13 colonies have this same set of OLD WORLD FAMILIES that make up that US 1%. These are those top tier 5% to the 1% ----with our states and cities having those lower-tier fighting to climb this insider ladder. Now, our black citizens at the time of Roaring 20s Wall Street frauds created their own class of families they call that US 1%----the Harlem Renaissance was that agreement between US black and white 1% to keep the 99% of US citizens impoverished. This is what we see today as Greeks and freemasonry totally captured black economic society.
When Greenspan brought the US down to economic crash and recession/depression after these few decades of massive Robber Barron fraud he sent trillions of dollars to this BANK FOR INTERNATIONAL SETTLEMENTS. Those Bretton Woods Central Banks in nations around the world were key to laundering all the wealth out of US through US FED and global Wall Street frauds......in turn those foreign Central Banks did the same to their 99% moving all wealth to the 1%. One of the loudest shouts against these 2009 bank bailouts was over those trillions of dollars sent to BIS-----know what BIS is intended to be? Possibly that ONE WORLD ONE WORLD CENTRAL BANK.
It was simply a blatant looting of our US Treasury in this staged bankrupting of US and is an assault on our national sovereignty by these 1% families. Who controls BASEL BIC? No doubt those same global 1% OLD WORLD MERCHANTS OF VENICE families.
This is why WE THE PEOPLE THE US 99% AND ALL OTHER NATIONS' 99% WOULD NOT WANT A WORLD CENTRAL BANK TO THE EXCLUSION OF NATIONAL BANKS. END THE US FED DOES NOT MEAN REPLACE IT WITH THIS ONE WORLD MODEL.
Below we see Bernie Sanders rise to the stage as neo-liberalism morphs to global corporate campus socialism---so please don't think these national media events around a few stances make that citizen a POPULIST LEADER----AS WITH RON AND RAND PAUL---- we gave Bernie a chance and he pulled an AL GORE on us----GORE being tied to a Maryland OLD WORLD MERCHANT OF VENICE freemason family.
What Is The Bank For International Settlements?
None of this would have occurred if FDR did not end Gold Standard and if Nixon had not installed FIAT MONEY. The US would have had a health economy for a thousand years and the world would not have had the industrial revolutions one after the other that created CLIMATE CHANGE.
Sep 20, 2011 @ 01:26 PM 89,108 12 Stocks to Buy Now
The Fed's $16 Trillion Bailouts Under-Reported
Tracey Greenstein , Contributor
I cover culture and travel. Opinions expressed by Forbes Contributors are their own.
The media’s inscrutable brush-off of the Government Accounting Office’s recently released audit of the Federal Reserve has raised many questions about the Fed’s goings-on since the financial crisis began in 2008.
The audit of the Fed’s emergency lending programs was scarcely reported by mainstream media - albeit the results are undoubtedly newsworthy. It is the first audit of the Fed in United States history since its beginnings in 1913. The findings verify that over $16 trillion was allocated to corporations and banks internationally, purportedly for “financial assistance” during and after the 2008 fiscal crisis.
Sen. Bernie Sanders (I-VT) amended the Wall Street Reform law to audit the Fed, pushing the GAO to step in and take a look around. Upon hearing the announcement that the first-ever audit would take place in July, the media was bowled over and nearly every broadcast network and newspaper covered the story. However, the audit’s findings were almost completely overlooked, even with a number as high as $16 trillion staring all of us in the face.
Sanders press release, dated July 21st, stated:
“No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president.”
The report serves as a clear testimony of the Fed’s emergency action plan to bailout foreign corporations and banks in a time of crisis, but the GAO report does not berate the Fed; rather, it provides a lucid explanation of where the money was allocated and why.
According to The Washington Post, “The GAO report did not condemn the Fed’s actions, it simply illuminated them. The GAO also recommended that the Fed make clearer and more rigorous its policies for hiring independent contractors to manage investment programs."
A wider investigation of the Fed is due on October 18th, which will provide more thorough details. The GAO report said that the Fed issued "conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans." The audit will inspect the "conflicts of interest" and the inner-workings of the Fed's emergency-lending programs.
For Sanders, one thing is clear: "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."
This document has a great schematic to what this BIC/GLOBAL NATIONAL BANKS looks like and it is this structure that makes it appear this BIC will be that model WORLD CENTRAL BANK.
During Obama global Wall Street US FED, US Treasury, and global Wall Street banks essentially eliminated WE THE PEOPLE THE 99% from our own US economy. That 5% to the 1% received some stock option payments but for the most part only the global 1% were included in Bernanke's US FED controlled US economy. That is because all the FIAT MONEY CONTROLS said to TRICKLE DOWN to main street were now all directed at only global corporations, global Wall Street, and global banking. This created the TWO TIER ECONOMIC STRUCTURES were WE THE PEOPLE THE 99% will not HAVE MONEY----the global 1% WILL HAVE MONEY.
Obama ran as a left social progressive telling us he would hold power accountable and then flipped to being more ONE WORLD THAN BUSH.
How to Send an International Wire
via the Fedwire
This document is intended to serve as a quick reference guide for steps senders and receivers may
take to route international wire transfers through
the Fedwire Funds Service
The Federal Reserve Banks frequently receive requests from Fedwire participants for the Fedwire Funds Service to offer
international funds transfers. These requests appear to arise, in part, from the misperception that the Fedwire Funds
Service cannot be used to send/receive wire transfer messages to/from parties located outside of the U.S.
While it is true that funds transfers denominated in foreign currencies must be processed through an international correspondent bank, a sender can route the U.S. leg of an international transfer denominated in U.S. dollars through the Fedwire Funds Service.
For instance, if a Fedwire Funds Service participant knows the proper routing information for all the banking parties in a wire transfer payment chain, then
it can route a transfer through the Fedwire Funds Service to send a U.S. dollar Fedwire funds transfer message to a party outside of the U.S.
Likewise, if a foreign sender knows the proper routing information for a Fedwire Funds Service participant
(i.e., routing number or SWIFT Bank Identifier Code (BIC), if applicable), then the Fedwire Funds Service participant can receive U.S. dollar wire transfer payments originated outside the U.S. over Fedwire.
Please take time to research this FEDWIRE BIC EXCHANGE as it will show were MOVING FORWARD ONE WORLD CENTRAL BANK started ----with the Bretton Woods FDR WW 2 actions tied to UNITED NATIONS.
What is happening in US today is this----all global Wall Street banks are merging and literally will disappear into this international banking structure tied to INTERNATIONAL ONLINE BANKING ONLY. The US will essentially become that same developing nation colonial outpost nation having no banking system of its own. NO BANKING NO SOVEREIGNTY......
Tim Geithner is the architect of all this for the global 1%----fueling the frauds as New York FED during the time Wall Street frauds went wild----he didn't see anything says GEITHNER----we see he is that grad from GLOBAL JOHNS HOPKINS which was central in both the frauds and the wealth accumulation. Tim Geithner said as a commencement speaker at HOPKINS in 2009 -----PEOPLE ARE GOING TO HATE US---BUT IT HAD TO BE DONE----he was talking about ONE WORLD ONE GOVERNANCE and it had to be done for the global 1%.
We keep emphasizing NONE OF THIS WAS LEGAL---they ignored the entirety of US Federal court precedence---US Constitutional law----so
WE THE PEOPLE THE 99% ARE NOT DOWN AND OUT-----STAND UP AND TAKE OUR NATION BACK. GET RID OF THOSE GLOBAL WALL STREET POLS AND PLAYERS.
If someone is shouting END THE US FED----they are as likely working to create this ONE WORLD CENTRAL BANK to replace the US FED as they are a REAL 99% wanting to save US sovereignty by getting rid of US FED.
From Wikipedia, the free encyclopedia
"Geitner" redirects here. For the surname, see Geitner (surname).
75th United States Secretary of the Treasury
January 26, 2009 – January 25, 2013
DeputyNeal S. Wolin
Preceded byHenry Paulson
Succeeded byJack Lew
9th President of the Federal Reserve Bank of New York
November 17, 2003 – January 26, 2009
Preceded byWilliam Joseph McDonough
Succeeded byWilliam C. Dudley
United States Under Secretary of the Treasury for International Affairs
BornTimothy Franz Geithner
August 18, 1961 (age 55)
Brooklyn, New York, U.S.
Spouse(s)Carole Marie Sonnenfeld (1985–present)
Alma materDartmouth College
Johns Hopkins University
Timothy Franz "Tim" Geithner (/ˈɡaɪtnər/; born August 18, 1961) is a former American central banker who served as the 75th United States Secretary of the Treasury under President Barack Obama from 2009 to 2013. He was the President of the Federal Reserve Bank of New York from 2003 to 2009, following service in the Clinton administration. He now serves as president of Warburg Pincus, a private equity firm.
THESE ARE THE PEOPLE THE WORLD CALLS A GLOBAL CRIMINAL CARTEL----THAT GLOBAL 1% AND THEIR 2% WITH THAT 5%.
Fedwire: The US Dollar in International Payments
ARTICLEBy Frances Coppola
The US dollar is the world’s premier reserve currency. It is used as a settlement currency for transactions worldwide, and commodities traded on world markets are priced in dollars. Many countries outside the US either use it as their own currency (Ecuador, Panama) or peg their currency to it in some way (China). International payments denominated in US dollars are made all over the world, all the time.
But ultimately, all international payments in US dollars have to be settled through the US, as the issuer of the currency. Specifically, international wire transfers are processed via the Federal Reserve’s Real Time Gross Settlement System (RTGS), known as the “Fedwire Funds Service” or just “Fedwire.”
How does Fedwire work for international payments?
Fedwire is one of a family of central bank RTGS systems that together form what we might call the “hubs” of the international payments network. Broadly speaking, each currency issuer has its own central bank RTGS system. So, for example, the European Central Bank’s (ECB) TARGET2 system is the RTGS for the Euro, and the Bank of England’s CHAPS is the RTGS for sterling. Fedwire, like other RTGS systems, handles international payments instantly (“real time”) and without netting (“gross”). Once the accounting entries are made, they are irreversible (“settled”).
Central banks operate RTGS systems because, as currency issuers, they can provide unlimited liquidity to the international payments network, eliminating the risk of wire transfer failures due to lack of currency reserves at intermediaries.
In the fall of 2007, international payments systems became stressed due to shortages of certain currencies, including the US dollar. The Fed provided US dollar liquidity to support international payments via temporary swap lines with a number of other central banks. The temporary swap lines ended in 2010, but permanent swap lines have now been established with five major central banks including the ECB and the Bank of Japan, reinforcing the US dollar’s position as the international settlement currency.
Both US and foreign banks can send and receive payments via Fedwire. If foreign banks are Fedwire participants, they can send and receive payments directly via Fedwire using the SWIFT international messaging service. If they are not, then they can send payments via a US bank or another foreign bank that is a Fedwire participant – this is a form of “correspondent banking.”
Another route for international payments is the bank-owned, privately operated Clearing House International Payments System (CHIPS). Participants include US banks and US branches of foreign banks. CHIPS is not a RTGS: dollar payments sent via CHIPS are batched and netted before processing. The net transactions are then settled via Fedwire. As the Federal Reserve Bank of New York says, “CHIPS is both a customer and a competitor of the Federal Reserve’s Fedwire service”, since CHIPS relies on Fedwire for settlement but accepts large value payments that could be sent directly via Fedwire.
An uncertain future for international US dollar payments
Use of the Euro for international payments is growing, and admission of the Chinese Renminbi to the IMF’s SDR basket starting in October 2016 raises the possibility that it could become an important international settlement currency in the future.5 Nonetheless, as yet the dominance of the US dollar in international payments is not seriously challenged. But the way in which international dollar payments may be processed in future could be affected by other factors.
In 2014, the French bank BNP Paribas was fined nearly $9 billion for systematic violation of US sanctions against various countries. Additionally, its access to dollar clearing via CHIPS and Fedwire for certain types of transaction was suspended for a year.6 This is the most severe penalty imposed on a foreign bank for breaking US laws, but it is by no means the only one. Other foreign banks which have suffered penalties for sanctions-breaking and money laundering include HSBC, Barclays, Standard Chartered, ING and Credit Suisse.
The long line of regulatory and legal enforcement actions against foreign banks trading in US dollars has raised questions about the future of international dollar clearing through the US. Writing in September 2014, Ernest L. Patrikis, a partner at a leading international law firm, warned that excessively heavy penalties could drive foreign banks to exit from dollar clearing altogether, or to set up their own offshore facilities.8 But an unnamed senior banking executive quoted in Euromoney in January poured cold water on the idea that European banks would set up their own US dollar clearing facility, noting that underlying transactions would still need to be settled in New York.9
International payments denominated in dollars are quickly and efficiently processed through the Federal Reserve’s Fedwire system, which can be accessed by financial institutions worldwide either directly or via the US’s extensive network of correspondent banks. Until other currencies can offer similar efficiency of processing and widespread acceptance, US dollar clearing via Fedwire seems likely to remain the world’s premier international payments process.