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Europe going the way of Russia

danmand

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Europe Is Working On Alternative To SWIFT For "Financial Independence" From The US

Mon, 08/27/2018 - 11:23

In the aftermath of a report that Germany was working on a global payment system that is independent of the US and SWIFT, on Monday Germany and France said they’re working on financing solutions to sidestep U.S. sanctions against countries such as Iran, including a possible role for central banks, Bloomberg reported.

"With Germany, we are determined to work on an independent European or Franco-German financing tool which would allow us to avoid being the collateral victims of U.S. extra-territorial sanctions," French Finance Minister Bruno Le Maire said Monday during a meeting with press association AJEF. “I want Europe to be a sovereign continent not a vassal, and that means having totally independent financing instruments that do not today exist.”

The discussions, which also involve the U.K., are a signal that European powers are trying to get serious about demonstrating a greater level of independence from the U.S. as President Donald Trump pursues his “America First” agenda.

After the US reimposed sanctions on Iran, making funding to Iran projects virtually impossible, European companies including Daimler and Total halted activity or backtracked on investment plans to avoid U.S. punishment, but France and Germany and their European Union partners want business with the Islamic Republic to continue.

Le Maire said using the European Investment Bank, which has exposure to the U.S., as a “financial channel” would be “very complicated” and that the French and German governments are talking to their respective central banks about their involvement. “If we want to build a truly independent instrument we must open up all the options,” he said.

Separately, Germany's Foreign Minister Heiko Maas again weighed in on the topic of European financial independence on Monday, saying the EU is working to protect economic ties with Iran and keep payment channels open.

Maas said Europe has started work on creating a system for money transfers that will be autonomous from the currently prevailing Society for Worldwide Interbank Financial Telecommunication (SWIFT).


German foreign minister Heiko Maas


"That won’t be easy, but we have already started to do that," Maas said at the annual Ambassadors Conference in Berlin on Monday, as quoted by RIA Novosti. "We are studying proposals for payment channels and systems, more independent from SWIFT, and for creating European monetary fund."

Maas also announced plans to reveal a new foreign policy strategy towards the US.

“We have to react and strengthen Europe’s autonomy and sovereignty in trade, economic and finance policy,” Maas said in a speech in Berlin. "It’s high time to recalibrate the Transatlantic Partnership – rationally, critically, and even self-critically," the FM added.

Maas echoed his comments from last week when he called for European autonomy to be strengthened by creating payment channels that are independent of the United States, establishing a ‘European Monetary Fund’.

Europe's desire to create its own system is connected to Washington’s recent withdrawal from the Iran nuclear deal, and the re-imposition economic sanctions against the Islamic Republic. As Brussels stays committed to the pact signed in 2015 between Tehran and the world powers, the EU had to enforce the ‘Blocking Statute’ in order to safeguard European businesses operating in Iran from US sanctions against the country. However, the measure failed to keep European majors like Total, Maersk, Mercedes in Iran, as they cannot function independently of the US-dominated international banking system and international financial markets.

SWIFT, which is short for the Society for Worldwide Interbank Financial Telecommunication, is the financial network that provides high-value cross-border transfers for members across the world. It is based in Belgium, but its board includes executives from US banks with US federal law allowing the administration to act against banks and regulators across the globe. It supports most interbank messages, connecting over 11,000 financial institutions in more than 200 countries and territories.

Ironically, it was Russia who took the first initiative, after its Central Bank governor, Elvira Nabiullina, said that the country had created a national system for money transfers that could protect its banking from a potential cut off from SWIFT transfer services. The step was triggered by the constant anti-Russia penalties introduced by Washington since 2014 for various reasons, including the reunification with Crimea, alleged involvement in the military conflict in eastern Ukraine, alleged US election meddling, and the alleged poisoning of former double-agent Sergei Skripal in the UK. The result was also a near complete liquidation of Russian holdings of US Treasuries and their conversion into gold and other non-US foreign reserves.
 

danmand

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EU security must no longer depend on US – Macron
Published time: 27 Aug, 2018 10:24

Tanks rumble down the Champs Elysee avenue during the traditional Bastille Day military parade in Paris, France / AFP

The security of the European Union must no longer depend on the US, French President Emmanuel Macron said. He also called for a review of the security approach towards Europe's partners, including Russia.
Europe can “no longer” entrust its security to the US alone, the French president said, speaking at the annual French ambassadors' conference at the Elysee Palace in Paris.

“It is up to us today to take responsibility and guarantee [the EU’s] security and, therefore, EU sovereignty,” he added.

Speaking about Brexit, he stressed that France wants to maintain "strong relationship" with London but “not at the price of the dissolution” of the EU. It is necessary to build "a strategic partnership" with the UK, he said, adding that he has “the same thought” about EU neighbors Russia and Turkey.

The French leader stated that he wants “to launch an exhaustive review of [EU] security with all Europe’s partners, which includes Russia.”


Speaking about Syria, the president recalled the bombardments which France and its allies – the US and the UK – unleashed on the war-stricken country in April this year. "We will continue to do this [airstrikes] in cases” where it is proven that the government of Bashar Assad used chemical weapons on Syrian people, the centrist politician added. The April airstrikes were carried out in response to an alleged gas attack in Douma on April 7, which the West blamed on Assad’s government.


Berlin should ‘recalibrate’ partnership with US in ‘sober and critical’ way – German FM
The US-UK-French operation started hours before a team from the Organization for the Prohibition of Chemical Weapons (OPCW) was due to reach the city to inspect the site of the alleged incident.

Relations between the US and its NATO partners haven’t been smooth in recent months. During a NATO summit in July, Donald Trump demanded that the bloc’s nations spend 4% of their GDP on defense, doubling the current spending commitment that many member states are already struggling to meet. Back then French Foreign Minister Jean-Yves Le Drian spoke against the antagonistic conduct of the US president, accusing him of trying to destabilize European unity with his antics. “He is taking initiatives with respect to Europe, in particular in the field of trade, which are aimed at destabilization,” Le Drian added.

It is not the first harsh remark made by France towards its long-standing ally, the US. On the heels of Trump’s withdrawal from the Iranian nuclear agreement in May this year, France’s Finance Minister Bruno Le Maire urged Europe to stop acting like “US vassals” and continue trading with Tehran in defiance of what “the global economic policeman” has in store.

Tensions between Versaille and the White House rose again shortly after when Trump slapped the EU with tariffs on steel and aluminum imports as part of a trade war. Macron called the measures “illegal” and warned that “economic nationalism leads to war,” adding that this is exactly “what happened in the 1930s.”
 

Liminal

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Why am I not surprised by the lack of comments on something so significant?
 

Frankfooter

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Why am I not surprised by the lack of comments on something so significant?
There has been talk of the world moving away from a USD base for years.
Though with Russia, Iran and China now being severely pissed at Trump its more likely.
 

nottyboi

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There has been talk of the world moving away from a USD base for years.
Though with Russia, Iran and China now being severely pissed at Trump its more likely.
Trump has set in motion the end of the USD as the global settlement currency. At this point he has already made it irreversable. Before it was simple and established to use the USD, not everyone has seen how it harms their soverignity, new payment systems, crypto currencies, Yuan, Euro ...USD is gonna be a liability
 

danmand

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There has been talk of the world moving away from a USD base for years.
Though with Russia, Iran and China now being severely pissed at Trump its more likely.
The difference is that the Trump regime, for reasons I cannot fathom, is actively pushing other countries off the use of $US and into the arms of China/Russia.

The USA has been served extremely well by the $US as a reserve currency, a system USA itself put in place.
 

danmand

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Is The World Ganging Up Against The Dollar?

Authored by James Rickards via The Daily Reckoning,

The U.S. has been highly successful at pursuing financial warfare, including sanctions. But for every action, there is an equal and opposite reaction.

As the U.S. wields the dollar weapon more frequently, the rest of the world works harder to shun the dollar completely.



I’ve been warning for years about efforts of nations like Russia and China to escape what they call “dollar hegemony” and create a new financial system that does not depend on the dollar and helps them get out from under dollar-based economic sanctions.

These efforts are only increasing.

In the past four months, Russia has reduced its ownership of U.S. Treasury securities by 84% and has acquired enough gold to surpass China on the list of major holders of gold as official reserves.


Russia has almost 2,000 tonnes of gold, having more than tripled its gold reserves in the past 10 years. This combination of fewer Treasuries and more gold puts Russia on a path to full insulation from U.S. financial sanctions.

Russia can settle its balance of payments obligations with gold shipments or gold sales and avoid U.S. asset freezes by not holding assets the U.S. can reach.

Of course, Russia is not the only country engaged in financial warfare with the United States. China and Iran are leading examples, but we can also add Turkey to the list after its latest currency crisis.

Russia is providing these and other nations a model to achieve similar distance from U.S. efforts to use the dollar to enforce its foreign policy priorities.

Take China and Iran. China is the second-largest economy in the world and the fastest-growing major emerging market. China has a voracious appetite for energy but has little oil of its own. Iran is a major oil producer, and China is Iran’s biggest customer.

But oil is priced in dollars and dollars flow through the U.S. banking system. Trump’s Iran sanctions make it impossible for China to pay Iran in dollars. If U.S. sanctions prohibit dollar payments for Iranian oil, then Iran and China may have no choice but to transact in yuan (see below for the implications).

Meanwhile, Europe has remained a faithful partner to the U.S. and has gone along with sanctions against Iran, for example.

That’s because European companies and countries that violate U.S. sanctions can be punished with denied access to U.S. dollar payment channels.

But now, Europe is also showing signs it wants to escape dollar hegemony. German Foreign Minister Heiko Maas recently called for a new EU-based payments system independent of the U.S. and SWIFT (Society for Worldwide Interbank Financial Telecommunication) that would not involve dollar payments.

SWIFT in the nerve center of the global financial network. All major banks transfer all major currencies using the SWIFT message system. Cutting a nation off from SWIFT is like taking away its oxygen.

The U.S. had previously banned Iran from the dollar payments system (FedWire), which it controls, but Iran turned to SWIFT to transfer euros and yen in order to maintain its receipt of hard currency for oil exports.

In 2013, the U.S. successfully kicked Iran out of SWIFT. This was a crushing blow to Iran because it could not receive payment in hard currencies for its oil.

This pushed Iran to the bargaining table, which resulted in the Iran nuclear deal with the U.S. and its allies in 2015. Now Trump has negated that U.S.-Iran deal and is putting pressure on its allies to once again refuse to do business with Iran.

And Congress is again pushing to exclude Iran from SWIFT as part of a sanctions program.

The difficulty this time is that our European allies are not on board and are seeking ways to keep the nuclear deal alive and work around U.S. sanctions.

Europe’s solution is to therefore create new nondollar payment channels.

In the short run, the U.S. is likely to enforce its sanctions rigorously. European businesses will probably go along with the U.S. because they don’t want to lose business in the U.S. itself or be banned from the U.S. dollar payments system.

But in the longer run, this is just one more development pushing the world at large away from dollars and toward alternatives of all kinds, including new payment systems and cryptocurrencies.

It’s also one more sign that dollar dominance in global finance may end sooner than most expect. We are getting dangerously close to that point right now.
 

onthebottom

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This has been a danmand wet dream for a decade here on TERB.

China will not float its currency, it benchmarks it to the USD. Russia has a GDP smaller than Canada.

SWIFT is a European based organization, if you’ve ever worked with them you’d know that.

Nothing to see here.
 

danmand

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This has been a danmand wet dream for a decade here on TERB.

China will not float its currency, it benchmarks it to the USD. Russia has a GDP smaller than Canada.

SWIFT is a European based organization, if you’ve ever worked with them you’d know that.

Nothing to see here.
You could not be more wrong. If the $US loses its global reserve currency status, it will be disastrous for all North Americans, including both of us. That is why I cannot understand why USA are preventing countries away from using $US.

I recommend you buy a bit of physical gold as insurance against this possible calamity. Remember, you buy insurance, not because you want your house to burn, and not because you expect your house to burn, but for the unlikely case of your house burning.

PS: I actually also worked with SWIFT. It is located in Belgium.
 

nottyboi

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This has been a danmand wet dream for a decade here on TERB.

China will not float its currency, it benchmarks it to the USD. Russia has a GDP smaller than Canada.

SWIFT is a European based organization, if you’ve ever worked with them you’d know that.

Nothing to see here.
Chinas currency is backed by massive amounts of treasury bills it holds. It can make the Yuan a deravitive of the US$ because it can back it with almost unlimted US treasuries. if the Yuan is attacked, T bills will be dumped to defend it driving US interest rates up and the dollar up at the same time. This would cripple the US economy. Swift hs said in no uncertain terms that it will abide by the laws and directives of the Belgian govt.
 

onthebottom

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Chinas currency is backed by massive amounts of treasury bills it holds. It can make the Yuan a deravitive of the US$ because it can back it with almost unlimted US treasuries. if the Yuan is attacked, T bills will be dumped to defend it driving US interest rates up and the dollar up at the same time. This would cripple the US economy. Swift hs said in no uncertain terms that it will abide by the laws and directives of the Belgian govt.
Think about that first sentence. China needs to back its currency with another countries assets. China is not a transparent economy where the rule of law protects investors, it’s not reserve currency material.

SWIFT is all about fees, they get paid to move money, no more or less. At some point blockchain will bring them down but that’s another thread.

There is nothing here to see. The world is pissed the US is using its leverage, that doesn’t mean the leverage isn’t there. All we have to do is stand next to China and Russia, we are gorgeous in comparison.
 

Polaris

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You could not be more wrong. If the $US loses its global reserve currency status, it will be disastrous for all North Americans, including both of us. That is why I cannot understand why USA are preventing countries away from using $US.

I recommend you buy a bit of physical gold as insurance against this possible calamity. Remember, you buy insurance, not because you want your house to burn, and not because you expect your house to burn, but for the unlikely case of your house burning.

PS: I actually also worked with SWIFT. It is located in Belgium.
What about this. Okay, this is radical ... but ...

Why not have the SWIFT, the Chinese system currently in place, and another one from the Europeans?

Why not?

Why cannot some rich fat cat in Europe have different systems for trade and investment?

Suppose some aristocrat in European doing his business in China, or where-ever, then moving his/her money around the various systems ... then ... then invest into the deep and liquid US markets.

Remember, Wall Street controls the Democratic Party.

:pizza:
 

HEYHEY

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Whoever decides to move away from the us dollar will swiftly be in need of some freedom, way of cruise missiles lol
 

danmand

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Whoever decides to move away from the us dollar will swiftly be in need of some freedom, way of cruise missiles lol
You think for a minute USA will attack Russia?
 

jcpro

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Beware of any opinions starting with or including "Europe wants, thinks, desires, etc." It usually only means Germany and/or France. Europe is not a monolith nor are its interests.
 
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