A US power speech barred the Swiss banks from all accounts of Viktor Velkselberg, sibuting billions from them because of former banking secrecy, and requiring Europeans to strictly apply sanctions against Putin and Iran.
Has a US aircraft carrier come up the Rhine? Have secret weapons been fired?
No, the power to demand such punitive actions and absolute obedience is even more secret – it is dollar clearing in New York.
This clearing house, a netting agency, allows banks not to make all payments between each other and bilaterally, but only to credit the peaks between on and off.
Since the dollar is the currency of the world, the big banks calculate in dollars, transfer in dollars, and balance the balances via a US agency in New York. This will allow the American state to turn the tap on all the banks it is failing to do.
There are two bodies, one of the central bank with more than 6,000 approved banks (Fedwire Funds), but only a small proportion of transactions, and one with about 60 large banks as participants. This Clearing House Interbank Payments System (CHIPS) handles the lion’s share of the world, in thousands of billions a day. Smaller banks handle their transactions through these large banks.
Exclusion from clearing brings bring troubles
Thus, if a major bank loses its right to intervene in these settlements of its transactions, it has enormous disadvantages. It has to send customers away, it loses the trust of the smaller banks that clear about it. And this right of access to the US clearing houses can be blocked by the state for criminals and convicts.
Big banks such as Swiss banking secrecy, or, like most accused European and American banks after the financial crisis, therefore have the highest interest in paying without waiting for proceedings. If convicted, they would be “criminal.”
The American method of shortening court proceedings through such settlements is available as a legal vehicle – the result is the billions in indulgences. Only an announced investigation triggers submission, because uncertainty about clearing access would be created during a long-running procedure. Every big bank immediately promises to “cooperate” in the process", delivers all the e-mails and thus definitely sticks to the knife. Because they do not want a court ruling, but a settlement.
Smaller banks that do not even do business in the US will also have to follow through on Russia or Iran sanctions, because the US authorities may be interested in their transactions submitted through the big banks in clearing, as well as those of the oil companies and their Banking.
The euro doesn’t want to be a competitor
European banks were already considering a dollar clearing house stored in Europe. But this would have to be a big throw, and have an important ingredient – liquidity. Only if huge sums of money are settled can enormous sums be processed. The big banks must also be able to stand behind them in the event of defaults with a lot of money.
The euro was initially intended as a competing currency area against the dollar and its clearing. But the hasty start of 1999 and the patchwork that has been organised since then for purely political reasons prevent such a role.
Most of the clearing of transactions in euros is now in London, and Brexit is leading to the desire of Frankfurt, Dublin and Paris to attract this clearing house. Today, however, as in the future at best, it is not in the euro area, but in the area of the pound. With British law, British know-how, and the liquidity there, it may remain more attractive, so to speak, more neutral. If, on the other hand, euro clearing moves to the continent, British banks would be under the European Union’s legal fubbles despite leaving the EU. Clearing is power.
The clearing of the euro can never move from London to the euro area. After all, if a thread of large banks involved breaks, the corresponding currency area must immediately guarantee billions and, if necessary, be able to “print”. Even if euro clearing were in Frankfurt, the ECB would face huge protests from member states if it simply helped out. But the Federal Republic would then have to speak in the Bundestag within quarter of an hour of taxpayers' money in such a way that the hole would be filled.
The US can only use the power of the dollar itself
As early as 1575, some 60 major bankers had moved the European clearing of their bills to Piacenza, because the French state bankruptcy ruined the Lyon fair as well as the currency.
The US’s power over clearing will also last as long as the state is still solvent and the dollar holds up halfway. Trump’s deficits threaten both from 2020. Money is a shy deer, the clearing power flees with it.