A bank killer blow from Switzerland

Posted: January 6, 2016 in Uncategorized

During the Christmas time Switzerland announced they will hold a referendum that would be the nightmare scenario for any banks.

The Referendum (it needs a 100,000 signatures to go ahead) would strip the bank the ability to create money.

Practically if the bank give out USD1 billion of loans they would be required to keep USD1 billion of reserves.

Currently around the world the average is 10%.

Loans are the main center of profitability for the bank.

This line of thought, in the recent time, has been around since 2012 when an International Monetary Fund published a research paper which clearly indicates that is the ability of bank to create money that creates bubbles and crashes.

The Iceland government, in 2015, commissioned a report on the issue.

The fact that now Switzerland will have a referendum should be particularly troubling as Switzerland is the home of the latest new ideas (all the new banking requirements come out of meetings in Davos, Switzerland).

If such a change goes mainstream…the banks as we know it (and their valuations) will change forever, even if they decide that the reserve requirement goes to 60%.

History is full of curiosity

The banking system as we know it has been created in 1666 (well…what an interesting number for the Christians, 1 – 666) by Charles II in England.

Immediately the banking rates dropped from 14% (1660) to 6% (1690).

And in 1720 the first bubble (South Sea Bubble) crashed. Opss!!

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