In September 2022 the UK economy almost collapsed as a result of the proposed budget of the Truss government. She claims that she, and here advisers, had no idea of the state of the derivate market in gilts (bonds) and something called Liability Driven investments (aka gambling). I can believe her and just wonder how many other ‘hidden’ risks there are out there. In December 2022 the BIS issued a paper concerning the F/X market. I get the impression that the slightest economic ‘knock’ will send the markets out of control:
At no point during any of the preparations for the mini-Budget had any concerns about liability-driven investments and the risk they posed to bond markets been mentioned at all to me, the chancellor or any of our teams by officials at the Treasury…
…Astonishingly, it turns out that the value of total assets in LDI strategies is equivalent to around 60 per cent of the UK’s GDP.
The Bank for International Settlements issued a report on F/X swaps in December 2022 pointing out the hidden dangers lurking within the system:
Against this backdrop, turnover in FX markets continued its upward march at the global level but some key underlying trends came to a halt. Overall, turnover averaged $7.5 trillion per day in April 2022 – a volume 30 times greater than daily global GDP and 14% higher than in early 2019. At the same time, there was a pause in the decade-long rise of dealer banks’ trading with “other financial institutions”, eg asset managers and principal trading firms (PTFs). Drehmann and Sushko (2022) show evidence that asset managers’ FX trading and hedging needs declined along with their international investments. Similarly, after having gained market share at the expense of bank dealers in previous years, PTFs did not make further inroads.
Thanks for posting this @Divitias. The BIS is new to me. Although I guess I have heard of the “Bank for International Settlements” prior to this, I really never knew what they did, where they were located, etc.
I perused around their site rom the link that you sent and became educated on the purpose and mission of the BIS. Quite interesting! A Central Bank of Central Banks! Who would have known. Thanks again for the education!
Our mission is to support central banks’ pursuit of monetary and financial stability through international cooperation, and to act as a bank for central banks.
Note the BIS is a little like a financial United Nations. It has a huge impact on the third world and minor impact on the first world. A channel of communication for bankers it has no power in the first world.
That’s what they want you to think. Other disagree:
And it is unquestionably powerful and influential. Among other things, it hosts the Basel Committee on Banking Supervision, the international agency that has been trying—with mixed results—to bolster capital levels for financial institutions around the world. And it also hosts the Financial Stability Board, which acts as a coordinator of economic regulatory authorities around the globe. According to LeBor, BIS members regularly meet in private meetings—every other month on a Sunday at 7 p.m.—over lavish meals to hash out, in essence, how to run the world.
Divitias the history in that article was 78 years ago.
As my Jewish family position is Germans born after the war had nothing to do with the war. At this point anyone born before the war is over age 84 as my dad was born in 1939.
In the first world the bank has very little sway. There is no sovereign agency behind it. Other than central bank funding to keep it alive and working in the third world. The third world can not mount major industrial forces. That leads to them being our customers but it takes extending them credit very often. The loans are endlessly forgiven by first world governments.
As far as the mention of gold that is not deposits of gold. That is acting as a clearinghouse in essence, a powerless position of keeping a record.
I will add, the linked article was an emotional piece of writing. It is not an accurate or objective summary.
The Bank of International Settlements (BIS) is known to be the ‘bank of central banks’ and a confidential place where central bankers meet to discuss policies. However, this contribution shows that it is also far more.
Group thinking always is. That does not make the BIS powerful. It makes the FED, ECB, BoJ and BoE powerful. It is a channel of communication for them and the bankers that make up the major central banks.
Listen I am not buying into gold at any cost. Ironic words. No book is suddenly going to get me buying gold.
A few years ago the Henry Ford Museum in Dearborn hosted a traveling PIXAR exhibit that included a desk light, much like the one in the opening of this vid, that you could use to create your own stop motion animation of the lamp jumping or turning a somersault.
Speaking of Take Five, it was used in a fascinating British TV series of the 80s, which ran in the US on PBS. As usual, my boss at RS figured I was completely blowing smoke when I described some of the demonstrations done on the show, then, nearly lost his mind when one of the regular customers was also a fan of the show, and confirmed everything I had been describing to Ron was true.