Here’s what we have for you today:
• Interesting interest
• Binance in trouble
• Europe’s banking problem
US on interest rate
US consensus: Federal Reserve Chair- Jerome Powell said “It’s not a surprise that there are institutions that have unhedged long positions in long-duration securities that have lost value as longer-term rates have gone up due to our rate increases.”
Possibility: The liquidity problems may not be big enough to wipe out the whole financial system, but it will continue, and more banks can go bust.
In theory: When banks have problems, they lend more slowly. When lending slows, the economy slows. And when the economy slows, inflation cools.
CFTC examines Binance
Where’s the license? The US Commodity Futures Trading Commission has just filed a lawsuit against Zhao and his firm Binance for allegedly allowing US residents buy and sell crypto derivatives while the firm is not registered.
On the contrary: Binance is not licensed in the United States. The platform, however, has a subsidiary, Binance.us, which caters to investors living on American soil.
The compliance: CFTC stated “Binance did not require its customers to provide any identity-verifying information before trading on the platform, despite the legal duty that entities like Binance functioning as futures commission merchants (FCMs) collect such information, and failed to implement basic compliance procedures designed to prevent and detect terrorist financing and money laundering”.
Unveiling the European banking
Swiss shade: US investors are gearing up to sue the Swiss government for the way in which it engineered a merger between Switzerland’s two largest banks (Credit Suisse and UBS).
The Swiss government’s action wiped out $17bn investment from the bank’s AT1 bondholders, damaging transatlantic trust both in Europe’s banks and in the competence of their oversight by European governments.
Switzerland’s doppelganger? The tiny Pyrenees Principality of Andorra’s has an overweight banking sector that accounts for over 20% of its GDP. It has attracted large deposits from investors from all over the world drawn by its secrecy, soft regulation and generous tax arrangements.
The Andorragate: Andorra’s current Prime Minister Xavier Espot is running for re-election and is accused by investors of subverting the rule of law in an alleged abuse of power aimed at protecting Andorra’s ancient banking families from the scrutiny of US law enforcement.
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