banking

Crumbling Fractional Reserve Bank

Is this the End of Fractional Reserve Banking?

In the following article Douglas French looks at the shaky Fractional Reserve Banking system that has been around since it was created by the Banking Act of 1933 (aka. the Glass-Steagall Act), which also created the Federal Deposit Insurance Corporation (FDIC). Will Fractional Reserve Banking survive to celebrate its Centennial anniversary?  Recent trends in Idaho (of all places) could spell the end of fractional reserve banking (but not the FED).

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Global Trade

How Is Technology Affecting Global Trading Markets

Being able to enter and execute stock trades on a smartphone application is something we can easily take for granted these days, which is amazing simply because this was not even remotely possible a couple of decades ago. Technology has always been at the forefront of innovation in the financial markets; we can’t forget that the stock market we know today as the Nasdaq made its debut in 1971 as the first electronic trading platform open to ordinary investors. Prior to that, all transactions had to be cleared with a personal broker by means of a telephone call. And individual transaction fees were much higher. Prior to May 1, 1975 brokerage commissions were regulated by the government and actually kept artificially high. In those days, buying 100 shares of a blue-chip company could cost $100 or more in commissions.

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Governments Around the World Outlawing Cash

Recently, France decided to crack down on those people who make cash payments and withdrawals and who hold small bank accounts. In 2011 Italy began working to end the right of landlords, tradesmen, and small businesses to perform large transactions in cash. Spain has outlawed cash transactions over €2,500. In Sweden, the use of cash is being steadily eliminated. Denmark’s central bank, Nationalbanken, has another justification for ending its use of banknotes—producing paper money and coinage is not cost effective. Israel also seeks to end the use of cash. A 2012 law in Mexico bans large cash transactions, with a maximum penalty of five years in prison. In 2014, Uruguay passed the Financial Inclusion Law, which limits cash transactions to US$5,000. And In the US, federal law requires banks to file a “suspicious activity report” (SAR) on their customers whenever a customer requests a suspicious transaction. (In 2013, 1.6 million SAR’s were submitted.) As to what may be deemed “suspicious,” it may be any transaction of $5,000 or more, but it may also mean a series of transactions that, together, exceed $5,000.

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Basel III- Bank for International Settlements

What is Basel III and Will it Help Avert Another Banking Crisis?

The Third Basel Accord (i.e. Basel III) is a voluntary global regulatory standard on banks requiring adequate capital and providing stress testing and market liquidity guidelines. Members of the Basel Committee on Banking Supervision agreed on the accord in 2010–11 and scheduled it to be phased in from 2013 through 2019.  Basel III was developed in response to the deficiencies in financial regulation revealed by the late-2000s financial crisis. Basel III was supposed to strengthen bank capital requirements by increasing bank liquidity and bank leverage based on the specific types of assets and liabilities held by the bank rather than being based on general assumptions that all banks are the same.

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Cyprus-Canada

If Cyprus Is the Bellwether, Canada Is the Red Flag

If Cyprus is the bellwether, then Canada is the red flag, showing that Cyprus is not an isolated situation. The damage wreaked by monumental debt is systemic, and it has taken place throughout the First World and beyond.

This latter statement will very likely be the most difficult to accept as reality. If so, here is something to consider: Canada has approved its bail-in on a national level just one week after a final decision was made in Cyprus. As we all know, the wheels of governments worldwide move slowly. The reader might ask himself whether he believes that the Canadian government has, in short order, approved its own bail-in, in reaction to the events in Cyprus. If this possibility is simply too far-fetched, he must accept that the plan for Cyprus has been known to the Canadian government for some time and that a similar bail-in for Canada has been in the works for a while. It was simply agreed that Cyprus would go first – to act as the litmus test.

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