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who's ruling?

23.05.2009 tags [ money | anger | madness ]

The Basel Committee on Banking Supervision (BCBS) is a committee of bank supervisory authorities from the G10 (i.e. the wealthiest 10 nations). They meet regularly at the Bank for International Settlements (BIS) in Switzerland and are in the process of putting together the international agreement known as the Basel Capital Accord (BCA). This sets bank supervision, risk-based capital and disclosure requirements for banks operating internationally.

While such an Accord might seem rather obscure and irrelevant to the general public, this is perhaps more a feature of the general ignorance, secrecy and complexity surrounding the operations of the international banking and monetary systems than anything else. but...

This Accord is of particular interest because of

Increasing Power of International Creditors over Debtors. International banks affected by BCA create the bulk of the money we all use in day-to-day living, especially the US currency which is the backbone of the international monetary system. The power of international creditors, particularly those responsible for money creation in the US Dollar, over debtors is increasing. This, in combination with the collapse of the gold standard and the original Bretton Woods structure in 1971, as well as the trend for western corporations to seek financing outside the banking sector, has lead to increasingly reckless behavior of these bank creditors. This is especially true where they can exercise their "powers" to access "collateral" (real assets) crucial to less powerful debtors - e.g. through IMF Structural Adjustment Programs internationally, and through predatory lending and foreclosures domestically. Such activities are increasing income and wealth gaps globally. Good supervision of, and appropriate capital standards for, powerful creditors can help curtail this recklessness.

Increasing Financial Consolidation: Both domestic and cross-border consolidation of financial services companies is continuing to escalate in the wake of global financial deregulation and the collapse of banks in various countries after financial crises. This is leading to the emergence of huge global "financial empires" domiciled in the same G10 countries that create the "hard currency", dominate institutions such as the IMF and set the rules for international banking. Also, the bigger a financial corporation becomes the more it becomes "too-big-to- fail". Big creditors at the heart of the international financial system are very likely to get bailed out no matter what they do, for their collapse could collapse the entire global financial system. This creates a tremendous "moral hazard" proportional to size and global reach. This further increases the powers of large western creditors over sovereign nations.

This is just an excerpt from a very interesting page I came accross. Read on, if your curiosity has awaken ... BIS...