There's a new article out that many people are translating and confusing. They are not talking about an RV in Iraq, they are talking about the spread being in compliance early next year.
Just a reminder the spread is the difference between the official rate and the market rate or street rate and has been way out of whack recently in Iraq. This article simply means they expect the spread to come down closer to the official rate early next year. There is no RV.
A very important statement was made back in 2020 by the prime minister's economic advisor Mohamed Salah who used to be Deputy Governor of the CBI under Shabibi. He stated that Iraq's entire wealth including all minerals in the ground amounts to only $16 trillion dollars. Knowing that information one can then determine that there is no way a significant RV could ever occur with over 90 trillion dinar in circulation. It doesn't make sense...
They...have to have the dinar stabilized within the country and within the 2% rule mandated by the IMF in order to then accept IMF article VIII and begin to float the dinar which would raise its value based on supply and demand. All of these processes and or steps required time.
Hidden City Ticketing: A Response to Rising Airfares and the Dollar Dilemma in Iraq
The cost of air travel has seen a significant surge in recent years, leading to a rise in an exploitative practice known as “hidden city ticketing.” This method involves savvy travelers purchasing a ticket to a less popular final destination with a stopover at their actual desired destination, disembarking at the transit stop, and forfeiting the remainder of their journey. A cost-saving technique that leverages the fact that airlines often charge less for indirect flights.
Hidden City Ticketing: Frugality or Fraud?
As Kathleen Bangs, a former civil aviator, illustrated with an example: a direct flight from Minneapolis to Miami might cost $500, but a flight from Minneapolis to Jacksonville with a transit stop in Miami might only cost $350. The passenger can save $150 by simply not continuing the journey to Jacksonville. While such a practice is not illegal, it is frowned upon by airlines as it violates their ticket terms and conditions.
According to travel expert Scott Keyes, such practices not only deprive airlines of potential revenue from direct flights but also lead to operational issues like delays and lost sales from seats that could have been sold to other passengers. American Airlines has emphasized that such practices are strictly prohibited under their carriage terms and agency agreements.
Dollar Dilemma in Iraq
On the other side of the globe, in Southern Iraq, new regulations aimed at controlling the black market exchange rate have made it difficult for citizens like oil sector employee Harith Hassan to withdraw their full salaries in dollars from the bank. Despite having vast dollar reserves exceeding $100 billion, Iraq has imposed these measures to curb the burgeoning parallel exchange market and comply with international rules set by Washington.
The official exchange rate is 1,320 dinars to the dollar, while in the black market, it can go up to 1,600 dinars. The Central Bank of Iraq has decided to conduct all commercial transactions in Iraqi dinars instead of dollars from January onwards, creating a substantial reduction in the available foreign currency in the market. These measures have had a significant impact on various sectors, especially those dealing with Iran and Syria, which are under sanctions.
Travel Hacks and Future Projections
Simultaneously, some families have managed to drastically cut down their travel costs by maximizing credit card sign-up bonuses, accumulating transferable credit card points, and utilizing travel perks offered by airlines. However, this strategic long game requires time and effort to master. According to a study by Kayak, domestic airfare, car rentals, and hotel bookings are expected to decrease in 2024 compared to 2023. The International Air Transport Association (IATA) has projected a net profit margin increase to 2.7% for 2024, despite the challenges of high borrowing costs and limited capacity.
Judy Note:What We Think We Know as of Sat. 15 Dec. 2023:
On Mon. 1 Jan. 2024 the new Quantum Financial System (QFS) and Global Currency Reset will officially launch for BRICS participating nation’s gold/asset-backed currencies on the Star Link Satellite System.
On that same Mon. 1 Jan. 2024 the BRICS Gold/Asset-backed XRP Digital Currency would officially be considered the Global Standard for international trade, with all participating nations’ currencies trading at a 1:1 with each other.
Bank Accounts of The People of all participating BRICS Nations have been mirrored onto the QFS. The People will gain access to their accounts by going to an official Redemption Center to obtain cards, phones and computers that work on this fully secure system that will only allow the owner of the account to have access.
The Iraqi Dinar, Kingpin of the Global Currency Reset, revalued in-country some time ago; has been trading on the back screens of the Forex for weeks and exchanging the new Iraqi Dinar rate at a 1:1 with several countries currencies in their exports and imports.
On Wed. 6 Dec. 2023 the fiat US Petro Dollar was officially removed from the trade of OPEC Oil. Over 130 countries including OPEC members no longer would use the fiat US Dollar for oil and gas purchases, challenging the long standing dominance of the US Dollar as the basis for international trade.
Their fiat Petrodollar was now dead and as their Global Banking System collapsed, it was expected that they would retaliate with Worldwide Terrorist Cyber Attacks.
An RV of currencies in 209 countries aided by the White Hat Global Alliance Military would very soon be victorious over this Deep State Cabal.
Petrodollar Endgame Moves Even Closer: The UAE just stopped transaction oil in U.S. dollars. BRICS now controls most of the world’s nuclear arsenals, oil and precious metals & rare earth minerals.
Rumored Timing:
Fri. 15 Dec. Worldwide Banking Crash, Media Blackout and Ten Days of Darkness begin. The World Bank is expected to collapse on Friday December 15, 00:01 ET
On Mon. 1 Jan. all gold/asset-backed currencies across the Globe would be on par 1:1 with each other; in the US Social Security benefits will be much higher and the SS R&R payments would start on a monthly basis.
Tues. 30 Jan. 2024 deadline for implementation of Protocol 20 by major corporations around the world that have interfaced their networks on the QFS.
In three to six months the Rodriguez Trust will begin to administer “universal basic income” for citizens of all GESARA-compliant countries. The amount per individual or family will depend on the status, needs, employment level and age of the person/family and will work to encourage people to work if they can.
Here are some more notes I tried to get FROM WOLVERINE PM CALL to add to Big Skye’s great report!!! (Thank you Skye !!) trigger groups in Zurich are being paid. Trump is in reno tomorrow, something will happen tomorrow, all saying right after tomorrow, but others say on Tuesday. We have been waiting for tomorrow.
Mauricio is getting the authority to release funds, he is waiting for the light to open the floodgates. He is the #2 Guy in the RV Trump is first. Lucky to meet him. I have heard that a lot of sources say tomorrow may be the day it will happen, say it is lining up for tomorrow. I pray it comes to fruition for tomorrow.
No need to have a Humanitarian project for Tier 4B, and no obligations, but the big whales, need projects, as they will get billions of dollars, and they need projects with their money. For people like us, no project is required, but they would like us to do good things with our money. For those who planned projects for a long time, these people are in special groups to do projects, so they would be pleased that those groups have projects. Many people have been pushing humanitarian projects for years, and they have made money off of it for years, but no, no need for a project to get paid.
Skye will do a presentation in 5 minutes, but we have had no confirmation at all, but we hope she will be able to pull it off this week. It is not her fault, the alliance needs to get it confirmed and do a follow-up for it to happen. I do not understand what is going on Skye. I have heard it will be a shotgun release, which will be fantastic. I spoke to a huge whale, and this guy called me and told me “We are going to have a good Christmas” whom I cannot name. The Pentecostal group is all lined up, they sang a song I sent to you guys, where they are saying Merry Christmas and all Cheerful. I think we will have a great Christmas.
Some say the EBS, I don’t know, I prefer it to come later, as people will be afraid to go outside, I prefer it to come after the exchange, especially if people have no funds to buy food. Some people say 3 days, others say 10 days. People need money to buy essentials. In my personal view, I hope it doesn’t happen like that.
Telegram post 12/13/23
Forwarded from Wolverine:
*Good morning to all owners and beneficiaries*.
*The last step in the Redención centers* to complete the identification and training of their staff will end tonight, Wednesday, December 13.
">*The treasure of the U.S.A. told Redemption Centers* that they would have scheduled appointments for the next 7 to 9 days.
*Notification for Tier4B ( the internet group) would be sometime on Wednesday, December 13th to start appointments on Thursday, December 14th.
There is and was a push for this to be done before Friday, December 15th.
You will receive the release documents for the accounts that are being enabled in the NUVES.
I just had a meeting with two friends who work within the payment program.
Summary:
1- Nothing is left in the hands of the managers.
2- Everything is now in the payment phase through authorized banks.
3- Since yesterday, very important changes and adaptations have been made to make everything more precise, faster and safer.
4- All the escrow accounts of all the people who will receive have already been opened.
These are accounts that no administrator has access to.
Only the account holder will be able to access it.
5- An Escrow account is as if each person owned a private bank, since it works as a financial platform. (People usually don’t know what this is like yet and will need to learn.
However, it is simple and easy and you can do it using your cell phone or computer at home.
6- Now the phase of sending the CALLS to all the people called planned or contributed will begin.
This will be done via email and SMS.
This is an appointment for the person to appear at a specific bank branch to speak with the manager.
There he will sign contracts, receive a credit card and can download a certain amount to his usual account for immediate use in a conventional way.
Finally, you will receive all the instructions on what you can or cannot do with your securities.
7- All this will happen from now on.
8- But everything will be done in the utmost secrecy, if the person starts to talk, to tell, especially through social networks, whoever it is, their values will be blocked with no possibility of reversing the process.
For now, that’s basically it. In reality, everything is published, the World Bank codes are received and entered into the system.
So we can say IT’S REALLY OVER!!!
Now it’s just a matter of a little more patience and that’s it.
By: Pedro S. Cru.
Now you can open your champagne, change your life drastically, and prepare to help your neighbor.
JUST REMEMBER THAT ALL THIS IS NOT BUSINESS, *IT IS A 100% HUMANITARIAN PROJECT!*
The government is spending 133 trillion dinars from the current year’s budget and revealing the status of employees’ salaries for the new year
Member of the Parliamentary Finance Committee, Mustafa Al-Karawi, said in a press interview that “delaying the budget releases does not affect employees’ salaries,” indicating that “salaries have been fully secured.”
Al-Karaawi added, “About 130 trillion Iraqi dinars were spent out of the total budget amounting to 199 trillion dinars.”
A member of the Parliamentary Finance Committee pointed out that “delayed projects are among the government’s obligations, and will be proceeded with after disbursing all investment budget allocations.”
For his part, economic affairs specialist Safwan Qusay said in a press interview, “The cessation of oil exports in the Kurdistan region affected Iraqi revenues, but the rise in oil prices in recent months made up for the shortfall.”
Qusay added, “The monthly spending rate is approximately seven trillion dinars, while the budget was built on the basis of 15 trillion dinars, meaning there is an excess in spending.”
The economic affairs specialist pointed out that “the money spent is 80% of the operating budget, and the financial abundance is rotated, given that the budget is for three years.”
Earlier, the Parliamentary Finance Committee confirmed that entering the new year 2024 will not stop the disbursement of funds from the tripartite budget, given that it was approved for three years, while indicating that the committee is awaiting schedules from the government related to spending for the new year.
The head of the committee, Atwan Al-Atwani, said in a statement to the official agency, last week, that " The committee approved a tripartite government budget, and there is no interruption to spending and disbursement, given that the approved budget is for (3) years to ensure the continuation of spending, contracting, and the continuity of the government’s work throughout its years without faltering, as happened in the past, which led to the budget being delayed for more than 6 months.
He added, “With regard to the 2024 budget, the committee is communicating with the government while awaiting its schedules, and it is possible to complete the issue as soon as possible with the aim of sending it to the House of Representatives to vote on it.”link
Article: "A STATEMENT ISSUED BY THE IRAQ ECONOMIC CONTACT GROUP OF THE GROUP OF SEVEN COUNTRIES, THE EUROPEAN UNION, AND THE WORLD BANK" This data supports all that we have been seeing where Iraq is going international. It is coming out strong and to the point from the horse's mouths. For those that doubt it still.. Good luck.
We had some problems with the embassy recently...They put the army out from the 12th, a couple days back, through the 20th. So you kind of go, wow. They're really focusing in on the 20th. Again, they are telling us a story. Whether that is an indicator or not it's going to be determined. Don't think that we're telling you it's going down on the 20th because that's not what we said and that's not what I'm telling you. But it's fascinating stuff...
Romanowski [US Ambassador to Iraq] had her G7 meeting...She's taken photo op with the G7 supporting the reforms of Iraq. That's powerful stuff.
Article quote: "...during the coming year the Iraq economic contact group will further cooperation to support the development of the economic and financial sector in Iraq including prime minister Al-Sudani's policies to enhance the value of the dinar...This is a clear announcement of the new policies regarding the dinar during the transitional period..." That's a drop the mic you guys. Phenomenal...In other words if you're going to enhance the value of the dinar something is going to change.
Article "STATEMENT OF THE IRAQ ECONOMIC CONTACT GROUP OF THE G7, EUROPEAN UNION AND WORLD BANK" This is the road map they have been using to show the world their intentions.
They have every intention to see Iraq succeed and get back into the international arena and into her rightful place in the international financial system! We can see by the evidence over the last few months that support they are getting down to the wire...
Iraq is presenting that they're going international and they have been talking about it for a long period of time.
They've actually doing it for a long period of time and they're coming to fruition to where they've publicly told us they were going to start spending money and that could be as soon as around the 20th. Then you have the end of the year dinar only. They have the taxation in dinar on the same time frame. These little bits and pieces they feed us, their time frames, we put it together...and we'll see how they roll out in the coming days. It's a phenomenal process...
The dollar is going away between now and the 20th for commercial purposes. It will not be used as of the same data for taxation in the country... Will they still be able to buy dollars to travel. ..? Yes. Will they be able to use the dollar for transactions in country for commercial purposes?Answer, No. Will they be able to use any other currency other than the dinar for commercial purposes within the country as of January 1, 2024? ...the answer is no... Standby for this to get really exciting because everything we're seeing is telling me that we've never been here before...
Article: "Samsung: Iraq represents the most prominent market in the Middle East" The Iraqi markets are going to explode. Samsung is going to be there all along the way. They will not be alone be sure. Having an early start is a big deal...Iraq's private sector is going to be on fire.
Al Sudani has established a "Unique private sector development council..." ...Giving credibility to the private sector is getting ready to explode. It's going to be phenomenal.
If the Finance Minister needs to work to the end of the year to make sure that everything's sorted and ready to go and do it right and do it properly so the Iraqi citizens get what they deserve which is purchasing power.I think it's a phenomenal situation. I think everybody can clearly see...they're doing it and it's coming to fruition...
I asked [my CBI contact] what the next targeted steps were and I was told that the committee does not even know and were told just to standby and the CBI is going to try to “push” to continue as they are ready for the next step in the process. I was told the IMF is negotiating the new peg for the dinar but to remember it impacts all countries in this new peg not just Iraq.
I was told this is close to being completed and should be done this week ending. This lines us up for next week to begin the currency sway [swap ?] out, but they told me it is delayed until further notice.
So, at least we now have a timeline when they did plan it and still could do it based on what happens with the US bombing issue. My contact did reiterate that the process now is irreversible and must go forward. The US had already given assurances they would not back out if the CBI moved ahead. So all I can say is let’s sit tight and watch what does happen in the coming week.
...just recently Iraq now began broadcasting news in-country to the citizens that the dinar is an “issue of a homeland” in a real way...a patriotic video...is telling the people that the dinar is valuable and will revitalize the nation...It DOES NOT say the dinar is going to be stronger than the dollar, but it does tell the citizens they should be very proud of their national currency and that it is very valuable. Valuable at 1/6 of a penny? ...something BIG is about to happen with the dinar...
A fruitful week in the footsteps of financial and banking reform
Economy News-
The last week ending on 14/12/2023 witnessed clear activity and efforts by the government and the Central Bank to implement the visions, plans drawn and the roadmap contained in the methodology of financial and banking reform in paragraph 7 and other relevant paragraphs of axis 12 of the government curriculum and the new strategy that the Central Bank is working on for banking reform and foreign trade financing and reconsidering lending policies in accordance with building a national lending strategy that adopts new mechanisms for bank financing and the Riyada initiative to develop the capabilities of young people and allow them to choose
Their small and medium enterprises are pioneering in all areas of development and technology.
Inaddition to confirming the plans for digital transformation in thefinancial and banking sector and moving to the community of criticismand focusing clearly on electronic payment applications in all fieldsand in fruitful cooperation and high coordination with governmentstakeholders and with the continuous support of the Prime Minister, soit was achieved during the past week and in light of the negotiatingvisits to organize foreign trade financing conducted by delegations fromthe Central Bank, the government and banks to Turkey and to the UnitedArab Emirates and meetings with the US Federal Reserve Bank and theTreasury The United States, the Central Bank of Turkey and the concernedauthorities in Turkey include the following:
First: Starting to open accounts for our banks in Turkish lira and euros, withthe strengthening of the Central Bank of Iraq in accordance withspecial arrangements and understandings.
Second: Starting to strengthen the balances of our banks in UAE dirhams andagreeing with First Abu Dhabi Bank on all arrangements clearly.
Third: Finding and strengthening the relations of our banks with foreigncorrespondent banks, achieving the compliance of the Iraqi bankingsystem with international banking standards, and enhancing the advancebalance in our bank accounts, and this will lead to a gradual reductionof dependence on the electronic platform in 2024.
Fourth: Meeting the Central Bank's requests for foreign exchange shipments for the year 2024 .
Fifth: Emphasis on the electronic link between the Central Bank, customs, tax, and automation of the customs system and the tax system.
Tocomplement the procedures of the Central Bank to employ the strategy offinancial inclusion and electronic payment, the decision of its Boardof Directors was issued to establish the National Company for ElectronicPayment Systems in Iraq.
Whichwill regulate, develop and manage the national electronic paymentsystems with high efficiency, and that the role of the Central Bank willbe regulatory and supervisory on these systems, and the implementationand development of the legal and operational framework will be initiatedwith the participation of all relevant authorities in accordance withthe Central Bank Law.
Thisconfirms that the Central Bank and the government are working incoordination and continuous efforts to achieve financial and bankingreform, which is the beginning of the successful economic reform.
The central goal is to stabilize the exchange rate and not to accept theexistence of another price for trading on the black market higher thanthe official rate, and to eliminate speculation in the black dollar anddamage the national economy.
There is hidden information being revealed in these [This week's bank story] phone calls...They're running out of time...The Venturi effect of the whole monetary reform is becoming so narrow he can barely get everything through fast enough right now.
The employees are being educated/updated. Very good. They are telling them the dinar...we'll be doing it, sure...The banks know when and they're getting the customers ready and preparing them...This is what I am coming across...You may be still getting a lot of denials and that's still to be expected, but I am a central hub of information. People call me because they want me to share it with you...these bank stories are powerful.
[California Golden Valley Bank Story]
Bank Story Lady: (family friend) had an appointment yesterday. Whenever the banker found out how many dinar that we are holding in our group which is about half a billion he said that was too much, they weren't going to be able to handle that much...Then this morning he got a call from his bank Golden Valley and they said look we had a meeting about you and your group last night.
FRANK: They had a meeting about his issue with the dinar?
BANK STORY LADY: Yes, because it was so much. They invited him back...we're waiting for that update.
FRANK: The updates came...Turns out this bank has told this group of people...we can't handle that much volume at our banks, therefore we are sending you to an exchange center and they will give you 4.5% to put it in the bank. They said Morgan Stanley are the people we are going to introduce you to for a management company to help you when you come in towards the end of the year.
Awake-in-3D: Why your Bank Deposits can be Legally Confiscated
Why Your Bank Deposits can be Legally Confiscated
On December 14, 2023 By Awake-In-3D
Read the separate introduction to this article here
The Historical Context of Banking Regulations
In the records of American financial history, the westward expansion of banking institutions played a pivotal role, mirroring the expansion of railroads, land settlements, and the burgeoning farm mortgage market.
As banks extended their reach, so did the growth of bank shareholding, setting the stage for a dynamic interplay between financial institutions and the broader economic landscape.
Impact of the 1929 Stock Market Crash and the Creation of Bank Deposit Insurance
The results of the 1929 stock market crash reverberated through the foundations of the banking sector, triggering bank runs and failures that exposed a growing number of average Americans to the double liability consequences.
It was amidst the chaos of the Great Depression that the New Deal under President Roosevelt introduced a groundbreaking solution — deposit insurance. This provision aimed to make depositors whole in the face of banking failures, signaling a shift in the characteristics of the depositor-bank relationship.
In the aftermath of the stock market crash, the concept of deposit insurance gained traction, offering a safety net for depositors.
The FDIC (Federal Deposit Insurance Corporation) was established in 1933 as a government agency funded by premiums paid by private banks.
Dual Shareholder Liability and the Shift to Deposit Insurance
Before the founding of the Federal Reserve System in 1913, senior bank managers of national banks were also major shareholders of their bank and therefore held personally liable for net losses in the event of a bank’s failure.
Meaning, bank managers had to liquidate their holdings to pay back depositors if the bank failed.
This mechanism of dual shareholder liability served as a robust mechanism to ensure prudent banking practices.
However, as the 20th century progressed, the landscape changed, and the focus shifted toward a reliance on deposit insurance, rather than dual shareholder liability.
This reduced the responsibility and influence of shareholders to proactively monitor their bank’s financial stability.
Basically, the adoption of Deposit Insurance created a moral hazard where shareholders of banks were no longer held responsible for paying back depositors with their money if the bank failed.
You Do Not Legally Own the Funds Deposited at Your Bank
The relationship between depositors and banks was established by a traditional legal framework surrounding deposit ownership.
It used to be that once funds are deposited into a bank, the legal ownership shifts, and depositors effectively hold unsecured IOUs. This meant that depositors were deemed as Creditors of the bank.
Traditionally, this arrangement implied that banks were obligated to repay Creditor funds in cash upon demand, providing a sense of security for depositors.
But not any longer.
The traditional understanding of the depositor-bank relationship comes under scrutiny within the fine print of an FDIC-BOE joint paper. This plan, dated December 10, 2012, proposed a paradigm shift — converting these unsecured IOUs into “bank equity.”
In essence, depositors would no longer be Creditors holding claims to their funds; instead, they would become stockholders in the bank, with the fate of their “investments” (deposits) tied to the bank’s performance.
When looking into the details of the FDIC-BOE joint paper, titled “Resolving Globally Active, Systemically Important, Financial Institutions,” the plan outlines an efficient path for returning a failing bank to the private sector, emphasizing the conversion of depositor debt into equity as a crucial step in this process.
The Cypress Banking Crisis was a Test for the New Bail-in Process
To better understand the full implications of the FDIC-BOE directive, we can look back at what happened to depositors during the Cypress bank crisis in 2013.
The confiscation of bank customer deposits to bail out failing banks (called a bail-in) was not a one-off incident. It proved to be part of a broader strategy rooted in international initiatives originating from the G20 Financial Stability Board in Basel, Switzerland. Cypress banks were the perfect testing ground.
This comprehensive document reveals a carefully crafted plan to address the fallout of a financial institution’s failure, emphasizing the need for a controlled resolution to avoid systemic disruptions and the utilization of public funds.
The pivotal element of this plan is the conversion of depositor debt into equity, altering the traditional dynamics of banking relationships.Connections between the FDIC-BOE and the G20 Financial Stability Board (The Elite Central Planners)
Tracing the roots of the FDIC-BOE directive takes us back to the G20 Financial Stability Board in Basel, Switzerland. The global nature of these initiatives signifies a coordinated effort to establish a framework for handling failing financial institutions on an international scale. Understanding these origins provides context to the broader implications and suggests a shared approach among major economies.
The shockwaves from the Cyprus banking crisis and the subsequent confiscation of customer deposits serve as a stark reminder that the FDIC-BOE directive is not an isolated strategy.
A broader examination of global initiatives reveals similar directives in New Zealand, highlighting an international trend towards bail-ins as a mechanism to stabilize failing financial institutions. The interconnectedness of these strategies underscores the need for a unified approach in addressing systemic risks.
Here’s the Kicker: The FDIC Insures Bank Deposits but NOT Funds Determined to Be Bank Equity
One notable aspect of the FDIC-BOE directive is the absence of explicit mention regarding the protection of “insured deposits” in the United States. This omission raises questions about the safety of deposits traditionally covered by FDIC insurance, leaving depositors uncertain about the security of their funds in the event of a financial institution’s failure.
The primary risk (and significant cause for concern for your bank deposits) pertains to the potential transformation of depositor funds into bank equity through the FDIC-BOE directive, a component of the Dodd-Frank Act. This conversion, termed “statutory bail-ins,” must be understood regarding the security of depositor funds and their coverage under FDIC insurance.
The simple takeaway:
Your Deposits Become Bank Equity: Traditionally, depositor funds are legally considered assets of the bank as soon as they are deposited. The FDIC-BOE directive introduces the possibility of converting depositor IOUs into bank equity, fundamentally altering the nature of the depositor’s claim on the bank.
Your Potential Loss of FDIC Protection: If depositor IOUs are converted into bank equity, they lose their status as insured deposits, putting them at risk of being wiped out in the event of a financial institution’s failure. This is a departure from the traditional understanding that insured deposits (typically up to $250,000) are protected by FDIC insurance.
The Systemic Risks: The shift from secured depositors to unsecured stockholders introduces systemic risks, potentially exposing depositors to losses akin to those experienced by Lehman Brothers shareholders during the 2008 financial crisis.
In essence, the risk lies in the legal and systemic shift that could render depositor funds vulnerable to losses, challenging the conventional understanding of FDIC-insured deposits as a safe haven for cash.
Summarizing the Significant Risks and Concerns for Bank Depositors
The Legal Shift: From Secured Depositors to Unsecured Stockholders
The FDIC-BOE directive represents a significant legal shift for depositors. Once holders of secured deposits with a legal right to demand cash, we may find our deposits transformed into bank equity and we become unsecured stockholders, subject to the market’s uncertainties. This shift challenges the traditional perception of deposits as a secure form of holding wealth.
Implications for Insured Deposits: No FDIC Safety Net
The lack of explicit mention for “insured deposits” in the FDIC-BOE directive introduces uncertainty for depositors who have relied on FDIC insurance to safeguard their funds. The traditional safety net provided by deposit insurance may no longer extend to cover the potential conversion of these deposits into bank equity, exposing insured depositors to unforeseen risks.
The Domino Effect of One Major Bank Failure Spreading Across the Financial System
Beyond individual depositors, the broader systemic risks associated with the FDIC-BOE directive become clear. The interconnected nature of financial institutions means that the repercussions of a single bank’s failure, coupled with the conversion of depositor funds into equity, could trigger a domino effect, impacting the stability of the entire financial system.
Basel III International Reforms, Committee on Banking Supervision, Bank for International Settlements, Revised June 2011 http://www.bis.org/publ/bcbs189.pdf
“Shareholder Liability: A New (Old) Way of Thinking about Financial Regulation,” The C.D. Howe Institute, Commentary No. 401, February 2014, by Finn Poschmann. Search for Commentary 401.pdf at http://www.cdhowe.org