Russia's Alternative to SWIFT Would Cause Big Problems for the West - Russia Insider

The Inevitable Blowback of Russia’s New Interbank System

Iran isn’t in a position to challenge the United States. But when the U.S.’ most loyal ally in Europe, the United Kingdom, called for Russian banks to be ejected from SWIFT during the height of the Ukraine crisis, the two Anglo countries met their match.

A few weeks ago, Russia announced its intention to launch an alternative to SWIFT by May 2015. Russia’s new interbank system would dominate transactions in rubles, with conversion to and from U.S. dollars at either end.

For example, an Iranian government agency could use dollars to buy rubles, transmit them via the Russian system, and have them paid to a supplier in Europe who then converted them back to dollars.

Short of hacking into the Russian system, the U.S. would have no way of knowing who was paying what to whom or for what reason.

Opportunity or Curse?

It’s not hard to imagine the opportunities this could present — and I’m dead sure the IRS and other U.S. agencies are doing so right now. One relates to “terrorist” financing and sanctions-evasion. But there are others.

For example, “U.S. persons” could send funds to a FATCA-compliant bank overseas, withdraw them, convert into rubles, and have them sent across the Russian interbank system to a non-compliant bank. They would then be outside the international tax reporting system the U.S. is trying so desperately to construct.

Complete story at - Russia's Alternative to SWIFT Would Cause Big Problems for the West - Russia Insider

$300,000 in gold missing from Ukraine Central Bank after swapped for lead bricks — RT Business

NoBC4U Note: You wonder how many things one country can screw up? Ukraine's going for a record.

$300,000 in gold missing from Ukraine Central Bank after swapped for lead bricks — RT Business

Cunning fraudsters have conned the Ukraine Central Bank branch in Odessa into buying $300,000 worth of gold which turned out to be lead daubed with gold paint.

“A criminal case has been opened and we are now carrying out an investigation to identify those involved in the crime,” a spokesman for the Odessa police force is quoted by Vesti.

The news was first reported by Odessa’s State Ministry of Internal Affairs.

READ MORE: Where has all Ukraine's gold gone?

A preliminary investigation suggests the gang had someone working for them inside the bank that forged the necessary paperwork to allow the sale of the fake gold bullion. It’s also been discovered that bank staff were not regularly checked when entering or exiting the premises.

Since the discovery, the National Bank no longer buys precious metal over the counter, as it cannot be sure of its authenticity, says the First Deputy Head of the National Bank of Ukraine, Aleksandr Pisaruk.

The National Bank of Ukraine (NBU) has confirmed the theft of several kilograms of gold in the Odessa region. The cashier involved has apparently fled to Crimea, Vesti Ukraine reports. Criminal proceedings began on November 18, even though the scam apparently took place between August and October.

In November, the Central Bank reportedly lost $12.6 billion in gold reserves, putting the total stockpile at just over $120 million.

However, the Central Bank reports that foreign currency and gold reserves stood at $9.97 billion at the end of November.

Complete story at - $300,000 in gold missing from Ukraine Central Bank after swapped for lead bricks — RT Business

Sanctioned Russian banks begin testing national payment system next week — RT Business

Russia’s Rossiya and SMP banks, which fell under Western sanctions, are among the eight lenders that will start testing the country’s new national payment system on December 15.

"The pilot project involves SMP Bank and Rossiya Bank, those for which the story is very critical and important. These are quite large banks,” the head of the Russian National payment system (NPS) Vladimir Komlev said in an interview with Rossiya 24 TV.

The move comes as a part of Russia’s ambitious initiative to move away from the Western dominance of its financial markets. Last month the Russian Central Bank said it would have its own international inter-bank payment system, an alternative to the global SWIFT network up and running by May 2015.

Gazprombank, Rosbank, Alfa Bank and Ural Bank for Reconstruction and Development are among eight other banks to join the pilot project. They were selected based on the size of business, location and technology platform, Komlev said.

Another bank involved in NPS testing is Russia’s second largest VTB. Recently its management has been vocal about the need to make Russia’s financial system more self-sufficient and ditch the US Dollar, Vedomosti reports.

Complete story at - Sanctioned Russian banks begin testing national payment system next week — RT Business

Safe-Deposit Box Craze Lays Bare Ukraine Woes After Vote | Johnson's Russia List

(Bloomberg – bloomberg.com – Daryna Krasnolutska – October 29, 2014) Wary of banks and alarmed by armed conflict around her parents’ town, Daria Demianenko joined Ukraine’s rush to an old-fashioned way of squirreling away cash.

More commonly known as a home for fancy jewels and ill-gotten gains, safe-deposit boxes are swallowing a growing chunk of regular savings in Ukraine. For Demianenko, a 32-year-old accountant, the box she rents for $8 a month means capital controls can’t block her family’s access to money.

“The central bank is tightening the screws — you can withdraw less and less,” she said by phone after stashing more than 10,000 euros ($12,700) in the Ukrainian capital, safely away from the eastern unrest. “We had to visit many banks in order to find a box. There’s a craze for them now in Kiev.”

The dash to this outmoded means of hoarding savings highlights the economic challenge facing Ukraine’s newly elected parliament. Already grappling with the fragile truce in the eastern insurgency, lawmakers chosen Oct. 26 must also rebuild confidence in the financial system to rescue this year’s worst-performing currency, keep a $17 billion bailout flowing and revive an economy forecast to shrink 10 percent.

The turmoil has sent the hryvnia plunging 36 percent against the dollar in 2014. While it gained 0.8 percent today in Kiev, its weakness has helped to erode faith in banks. Ukrainians have withdrawn about a third of retail deposits, exceeding 100 billion hryvnia ($7.7 billion), central bank Governor Valeriya Gontareva said last month.

Complete story at - Safe-Deposit Box Craze Lays Bare Ukraine Woes After Vote | Johnson's Russia List

Forward Guidance | KUNSTLER

     Guess what? There is none. Rather, the Federal Reserve practice of Delphically divulging its intentions ought to be understood as the master pretense of US economic life — the delusion that wise persons are actually in control of anything. The result of this guidance continues to be the mis-pricing of everything, especially the cost of money as represented in the operations of debt, and hence the value of everything denominated in money.

     The interventions of our central bank have really been aimed at one objective: to compensate for the contraction of real wealth in an economy that replaced purposeful activity with Kardashian studies and tattoo art.  Purposeful economic activity provides surpluses that allow for the repayment of debt. Kardashian study and tattoo art lead to entropic entrapment, aka, a death spiral of culture and economy. That’s where we are at. The debt is now eating us alive, and the central bank trick of piling on additional debt to mask the failure of repaying old debt is losing  its palliative punch.

     One big problem with the Fed’s policies is that the mis-pricing of everything ends up being expressed in the very statistics (GDP, unemployment, inflation) that are used to justify further interventions that produce ever deeper perversities. That is, the Fed distorts prices, which distort statistics used to make policy, which prompt the fed to ramp up policies that further distort prices, a dangerous recursive dynamic. Since prices are the basic information for running an economy, we end up in a situation where nothing really adds up. The antidote to that has been pervasive accounting fraud — the covering-up of mis-pricing, pretending that things add up when they don’t.

   

Complete story at - Forward Guidance | KUNSTLER