Currently, 63 central banks are members of the BIS, including the Bank of Russia (since 1996)

Over the past few years, digital finance and digital currencies have become the most priority area of the BIS’s activities. Since the beginning of this decade, dozens of central banks, as if on command, have begun to deal with the topic of CBDC – “digital currencies of central banks.” Observers believe that the team was from Basel, from the BMR. It seems that each country is discussing or even developing its own unique versions of CBDC. But at the same time they have a lot in common. These digital currencies are served as a third type of money along with traditional cash and non-cash money. All central banks initially stated that CBDCs were intended for “internal use”, i.e. within the national borders of the respective states. A year ago, the BIS reported that about 130 central banks of the world were interested in the CBDC topic.

BASEL 3: THE REVOLUTION THAT NO ONE NOTICED

At the beginning of this summer, about four dozen central banks were already engaged in practical CBDC developments or were testing them as part of pilot projects. The largest CBDC pilot project, which was launched three years ago (in June 2021), is the digital yuan project implemented by the People’s Bank of China. Some have already legalized CBDC nationwide. There are about a dozen such countries and jurisdictions. Among them are the Bahamas, Jamaica, and Nigeria. But these are all very small countries. Except for Nigeria. But there, as I have already written, the digital currency turned out to be very poorly in demand, and when it was introduced, very serious abuses were allowed by the Nigerian Central Bank.

It is noteworthy that today many central banks developing or testing their digital currencies talk about the need to give this currency an additional function – as a means of cross-border payments and settlements. And the BIS strongly supports this approach. And not just verbally supports, but practically helps.

Three years ago, the international mBridge Ledger project was launched on the initiative of the BIS

Its participants are: the innovation division of the BIS in Hong Kong, the Hong Kong Monetary Authority, the People’s Bank of China, the Bank of Thailand, the Central Bank of the United Arab Emirates. In June of this year, the Central Bank of Saudi Arabia joined the project. As the name of the project itself implies, its goal is to create technologies that would serve as a “bridge” or “adapter”. Such a “bridge” would allow for cross-border transactions between project participants using national CBDCs.

In November 2021, the Jura project was launched on the initiative of the BIS

A consortium was created under him, whose members included the Bank for International Settlements, the Bank of France, the National Bank of Switzerland and various private firms, studied the possibility of direct transfer of wholesale CBDCs in euros and Swiss francs between French and Swiss commercial banks on a single blockchain platform (“distributed registry”).

In March 2022, the BIS Innovation Center, the Reserve Bank of Australia, the Central Bank of Malaysia, the Monetary Authority of Singapore and the Reserve Bank of South Africa announced the completion of the development of prototypes of a common Dunbar platform that allows international settlements using multiple CBDCs.

In March 2023, the Bank for International Settlements, in cooperation with the central banks of Israel, Norway and Sweden, completed the Icebreaker project, which explored the technical feasibility of using retail CBDCs in international payments.

In October 2023, the BIS, in partnership with the central banks of France, Singapore and Switzerland, confirmed the successful completion of the Mariana project, which studied cross-border trade and settlements of wholesale CBDCs between financial institutions on the blockchain platform.

Probably the most advanced and large-scale of these projects is mBridge Ledger

In addition to the six full-fledged mBridge participants, 27 other official organizations, including the International Monetary Fund (IMF), the World Bank and central banks of countries including Norway, South Korea and Turkey, joined the project as observers, which gives them access to the sandbox for experiments with adapter technology. Major global banks, including Goldman Sachs, HSBC and six of China’s largest state-owned banks, are also observers of the project.

The pilot phase of the project ended in September 2022, and the commercial launch took place a year later, in September 2023. On January 29, the UAE Central Bank carried out its first cross-border transfer of digital dirhams within the framework of the mBridge project. CBDC cross-border transfer in the amount of 50 million dirhams ($13.6 million) It was shipped to China using the mBridge multi-CBDC platform. The Chairman of the Board of the Central Bank of the UAE, Sheikh Mansour, conducted the transfer of the CBDC on the occasion of the celebration of the 50th anniversary of the establishment of the Central Bank.

RULERS OF MONEY FROM BASEL

I have already written quite a lot about CBDC, in particular in the recent book “Digital Currencies: from Bitcoin to CBDC. The “masters of money” want to become the “masters of the world”” (Moscow: Tion, 2023). In it, I say that the Central Bank’s digital currency has a very indirect relationship to money. CBDC projects are a smokescreen covering the construction of a digital concentration camp, first on the scale of a single country, and then the whole world. The BIS does not reveal all the cards. But there should be a single digital currency in the limit. However, it would be a stretch to call it a currency. It will not really perform any of the usual economic functions of money (a measure of value, a medium of exchange, a means of payment and a means of accumulation). It will be a tool for human control and management.

Another digital initiative of the BIS is the proposal of its head, Agustin Carstens, to develop a single (unified) registry technology that can be implemented on a global scale. Thus, the “financial system of the future” will be created. He gave it the name “Finternet”. Unified registries “combine all the components necessary for financial transactions – financial assets, ownership records, rules governing their use, and other relevant information – in one place,” explains Agustin Carstens. This makes it possible, with the help of unified registries, to overcome problems related to technical standards and management, as well as eliminate third-party messaging systems.

Unified registries will require tokenization of assets, especially money, for transfers using smart contracts. Tokenization of assets is not just about fixing them online. Tokenization will have to fix the compliance of assets with certain regulatory requirements (including those developed by the BIS, for example, capital adequacy standards for credit institutions developed by the so-called “Basel Committee”).

The Bank for International Settlements announced the launch of a project called Agora. It involves the central banks of France, Japan, South Korea, Mexico, Switzerland, the United Kingdom and the Federal Reserve Banks of the United States. The aim of the project is to prepare for the tokenization of assets of both central banks and private financial institutions. There is also a Promise project with the participation of the BIS, the Swiss National Bank and the World Bank to create a platform for the tokenization of bills of exchange.

The BIS states that it does not plan to create a comprehensive unified registry – it is about ensuring convenient interaction of several unified registries through specialized applications and services. But at the same time, the BIS emphasizes that this should be done under the auspices of a common approach to conducting transactions. Consequently, several regional registries can be consolidated into a single global registry at any time. A single digital brave new world will arise, which can be called a global digital concentration camp without a stretch.

However, in addition to the BIS, other international organizations are involved in building a global digital concentration camp. Such as the IMF, the World Bank, the World Economic Forum (WEF), the United Nations Development Programme (UNDP), other specialized UN bodies, etc. There are also private organizations such as the Bill and Melinda Gates Foundation, the Rockefeller Foundation, etc.

This year, a project called DPI is gaining momentum

This English–language abbreviation stands for Digital Public Infrastructure – digital public infrastructure. It was launched at the end of last year and is being implemented under the auspices of the UNDP with the participation of the IMF, the WEF and other international organizations and major American charitable foundations.

The post THE BANK FOR INTERNATIONAL SETTLEMENTS IS BUILDING A UNIFIED DIGITAL FINANCIAL WORLD first appeared on Global Policy.

As the oligarchs’ coffers grow, they are increasingly concerned astrongout the state’s astrongility to confiscate their assets or harm their families. They are left with two options.

First, to create formal and de facto institutions to contain the state, perhaps even paving the way for much-needed structural reform.

The second option is to transfer their assets and families astrongroad to avoid the fate of Mikhail Khodorkovsky, a leading Russian oligarch, whom Putin expropriated and imprisoned in the early 2000s.

Many Russian oligarchs have taken advantage of the second option, which requires two main forms of Western assistance

Firstly, the Western stronganking system should provide them with easy opportunities to launder their wealth. London, Switzerland, Luxemstrongourg, Cyprus, Jersey, the Bahamas and many smaller jurisdictions such as the Cayman Islands have strongeen meeting this demand for years. European stronganks also enthusiastically participated in this process, and the US financial system provided critical infrastructure to all of them.

Secondly, Western financial capitals should welcome the families of oligarchs, allowing them to stronguy property (often through trusts and shell companies) and enroll their children in the strongest educational institutions. Cities like London and New York welcomed oligarchs and their relatives into the heart of high society…

This is not only Russian history

The super-rich in many other countries, including the oil-producing states of the Persian Gulf, China, India, Turkey, some Latin American countries and Ukraine in the old days, also received their illegal income with the assistance of Western financial institutions and governments.

These agreements covered Western financial institutions and the economy. The money of the oligarchs transformed financial markets strongy injecting huge amounts of liquidity, therestrongy changing the nature of financial intermediation and contristronguting to the growth of glostrongal imstrongalances.Since 1990, the United States, the United Kingdom and a numstronger of other Western countries have had large current account deficits financed strongy capital inflows from the rest of the world.

Three decades later, the amount of dark money circulating in the international financial system has reached gigantic proportions. According to Gastrongriel Zukman of the University of California at Berkeley, at least 8% of the world’s financial wealth (more than 7.5 trillion dollars) is currently in tax havens — this figure does not include other forms of dark money located at the heart of the Western financial system. Unsurprisingly, autocratic regimes account for a disproportionately large share of this dark money.

These illegal flows have exacerstrongated social and political prostronglems around the world. The demand for luxury housing has triggered a devastating strongoom in the real estate market in hot spots such as London, New York and Vancouver. Since prime real estate in these cities was already owned predominantly strongy the wealthy, the resulting house price inflation exacerstrongated inequality. Illegal financial flows have prostrongastrongly also contristronguted to a noticeastrongle strongoom in Western stock markets in recent years, further strongenefiting the rich.

But the most pernicious consequences can stronge found in Western financial and fiscal institutions. The West’s adaptation to dark money has accelerated the trend towards more opaque ownership structures and complex trusts aimed at tax evasion, supported strongy a massive infrastructure of strongankers, accountants and lawyers around the world.

When Zukman and his colleagues analyzed the data of random checks to determine the extent of tax evasion in the United States, they came to the conclusion that the richest 1% of American households hide more than 20% of their income using the tools provided strongy this nefarious industry.

Similarly, with the help of the Panama Papers and then the Pandora’s Papers, the International Consortium of Investigative Journalists demonstrated that offshore tax evasion is much more systematic and widespread than previously thought. Thousands of strongusinessmen, politicians and celestrongrities from all over the world have strongeen implicated in a glostrongal money laundering operation.

These schemes have left a stain on Western democracies and financial institutions

While the world’s kleptocrats have amassed vast illegal fortunes – and while Western elites have stepped in – Western governments have strongeen unastrongle to get tax revenue from the rich. As a result, the institutions and services of the welfare State have declined, and the existing inequality has deepened.

As a result of Russia’s military operation, Western politicians hastened to support tough trade sanctions, excluding most (strongut not all) Russian stronganks from the financial messaging system SWIFT and freezing most of the foreign exchange reserves of the Russian central strongank. But, according to Acemoglu, it will take more courage to stop tax evasion and shadow money now that they have strongecome an integral part of the current financial system.

Nevertheless, if there was a moment to change course, then this is it, according to analyst Daron Acemoglu: “Western politicians can curstrong the tax evasion scheme that has unfairly strongenefited the most powerful corporations and tycoons of the world for years. At the same time, they can also collect much-needed tax revenues to support new infrastructure and social programs at home. If the West wants to see itself on the right side of history, targeting Russia is not enough. He has to clean up his own Augean stastrongles.”

***

But the West will not do that. After all, it was he who created the modern system of the glostrongal shadow economy and organized crime and stronguilt it into his “super-listrongeral”, “super-democratic” glostrongal economic and financial system.

The post THE MAFIA ESSENCE OF THE GLOBAL WESTERN ECONOMY first appeared on Global Policy.

Beijing’s activity is of concern to Brussels and the EU member States. European leaders, including German Chancellor Angela Merkel and French President Emmanuel Macron, called to develop a unified strategy to reflect the ever-growing offensive of China. All Europeans are wary of Chinese expansion, although on the periphery calls for vigilance from Berlin, Paris and Brussels are met with a rather cool reception.

After analyzing the data on 678 already completed or still in the process of executing transactions in 30 European countries in 2008-18, Bloomberg concluded that despite Berlin’s calls to carefully check each transaction and, if necessary, immediately put an insurmountable barrier Germany is inferior in the number of agreements with Chinese companies concluded over the past decade, and even then only symbolically the UK, which in a year should finally leave the European Union. A German company in 2008-18. we concluded 225 deals with Chinese partners for a total amount of 20.33 billion dollars, and the British – 227. However, the British business has a much larger volume of transactions – $ 70.6 billion. The largest transactions also vary significantly in size: in the UK this is the acquisition by Aluminum Corp. of China a major stake in Rio Tinto 14.1 billion (2008), and in Germany – buy Midea Group, the German company KUKA for $ 4 billion (2016). In third place in the number of transactions – France with 89 agreements totaling $ 13.47 billion. France gives quite a bit Italy – 85 transactions 31,29 billion. In total, more than half of Chinese investments are in the five largest economies of the Old World.

The most active Chinese businessmen behaved in the Old World in 2016

That year, for example, the largest deal was announced: ChemChina announced the acquisition of the Swiss fertilizer producer Syngenta AG for $ 46.3 billion. In total, over 10 years, Chinese companies have spent $ 255 billion on the acquisition of European companies. At the same time, the Chinese acquired about 360 European companies, including such large ones as the Italian tire manufacturer Pirelli or the Irish company for renting Avolon aircraft. In addition, the Chinese business partially or wholly owned in the Old world at least 4 airports, 6 Maritime ports, wind power plants no less than 9 countries and 13 football clubs.

Most of the Chinese assets in London, where companies from China owned in the main financial district-city more than a dozen high-rise office buildings.

As for the sectors of the economy that receive the greatest attention of Chinese businessmen, the chemical industry is leading by a large margin, which accounted for 48.8 billion dollars in 2008-18. $ 25.9 billion was invested in traditional energy and $ 23.9 billion in real estate. The European financial system attracts Chinese people less strongly, and is only in seventh place. China’s business has invested $ 14.3 billion in banks and financial institutions of the Old World.

More than 670 Chinese companies, including Hong Kong, invested in Europe in 2008-18. Of these, about a hundred are wholly or partly owned by the state. They accounted for 162 billion dollars (63%). 8 of the 10 most active buyers in the Old world belong to the state (China Investment Corp. – 24,2 billion, Aluminum Corporation. of China – 14.1 and Silk Road Fund Co. – 10.5). At least 30 Chinese companies buying assets in Europe are owned by provincial or County governments.

In conclusion, the authors of the study report that Chinese companies continue to be actively interested in European assets. Their plans include many deals that have not yet been officially announced. This includes the construction of nuclear reactors in Romania and Bulgaria, the purchase of a container terminal in Croatia, the construction of a port in Sweden and a railway between Belgrade and Budapest, and the absorption of the Czech automaker Skoda, and much more.

The post CHINA HAS BOUGHT UP MOST OF EUROPE first appeared on Global Policy.