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Home Daily Digests Fed Gold, SWIFT CBDCs, Energy Concerns, and Vulnerabilities of the TBTF Banks

Fed Gold, SWIFT CBDCs, Energy Concerns, and Vulnerabilities of the TBTF Banks

This digest covers the Fed’s lack of transparecny regarding gold holdings, recent SWIFT experiments with CBDCs, Saudi criticism of current energy transition strategies, and the precarious exposure of five major US banks to commercial real estate.

user profile picture Ivor Mar 28, 2024
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In the realm of international diplomacy and legislative influence, the American Israel Public Affairs Committee (AIPAC) has been actively organizing trips to Israel for members of Congress, funded by the American Israel Education Fund (AIEF). These trips, which have totaled 309 since 2019, aim to bolster support for pro-Israel policies among U.S. lawmakers. Despite the growing divide within the Democratic Party over U.S. support for Israel, these educational journeys continue to draw politicians to meet with Israeli officials and explore historical sites, underlining the complex interplay of international relations and domestic policy debates.

Meanwhile, the Federal Reserve’s opacity regarding its foreign gold holdings has sparked controversy. After evading direct questions from Congress and denying a Freedom of Information Act request, the Fed’s reluctance to disclose details about its gold reserves has fueled criticism from sound-money advocates. This issue gains further complexity against the backdrop of several countries withdrawing their gold from the U.S., a move possibly influenced by the sanctions imposed on Russia. The Fed’s lack of transparency raises questions about the stability and trust in U.S. monetary policies and its implications on global financial systems.

On the energy front, the head of Saudi Aramco criticized the current energy transition strategy at the CERAWeek conference in Houston, highlighting the persistent dominance of fossil fuels in global consumption. With oil demand projected to hit a record high, industry leaders argue for a more realistic approach to energy policies that acknowledges the ongoing reliance on oil and gas. This stance challenges the prevailing narrative of an imminent shift to renewable energy sources and underscores the complexities of balancing environmental goals with economic and practical realities.

In the digital finance sector, Swift’s recent experiments with central bank digital currencies (CBDCs) have demonstrated the potential for enhancing global trade, reducing transaction costs, and improving interoperability among different digital networks. The collaborative sandbox testing, involving 38 global institutions, showcased how CBDCs and digital tokens could streamline trade flows and foster growth in tokenized securities markets. This development points to a future where digital currencies play a pivotal role in the financial landscape, offering a glimpse into the evolving nature of global commerce and monetary transactions.

Lastly, the exposure of five major U.S. banks to commercial real estate (CRE) loans has raised concerns reminiscent of the 2008 financial crisis. With JPMorgan Chase leading in CRE loan holdings, the situation highlights the risks associated with significant real estate investments by financial institutions. Despite Federal Reserve Chairman Jerome Powell’s reassurances, the reliance on emergency bailout programs like the Standing Repo Facility (SRF) underscores the delicate balance between financial stability and the potential for systemic risks. This scenario prompts a reevaluation of regulatory measures and capital requirements to safeguard against future financial downturns.

Sources

Five U.S. Banks Hold Half a Trillion Dollars in Commercial Real Estate Loans

If CRE is not a problem at the largest banks, that’s because both the banks and the Fed believe that the Fed will always spring to the rescue with an emergency bailout program.

Source | Submitted by drbrgr

Swift CBDC Sandbox Experiments Demonstrate Successful Use of Digital Tokens and Interoperability

The experiments found that our interlinking solution has the potential to simplify and speed up trade flows, unlock growth in tokenised securities markets, and enable efficient FX settlement. And this, all while allowing financial institutions to make use of their existing infrastructure.

Source | Submitted by shplad

Saudi Aramco CEO Criticizes Global Energy Transition Strategy as "Visibly Failing"

“In the real world, the current transition strategy is visibly failing on most fronts,” Saudi Aramco Chief Executive Amin Nasser said at the CERAWeek conference in Houston.

Source | Submitted by sandy-loam

Federal Reserve Refuses to Disclose Information on Foreign Gold Holdings

“The Fed doesn’t want anyone to know that foreign governments and other central banks are yanking their gold from America’s shores because it would reveal the folly of U.S. monetary and foreign policy.”

Source | Submitted by gamma-geek-2

Mystery Revealed: Who Funds Congressional Trips to Israel?

“The trips clearly have an impact, as personal experiences in Israel often show up in congressional narratives justifying support for pro-Israel policies.”

Source | Submitted by newsbuoy

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