EU Imposes Stricter And More Extensive Crypto Regulations For Banks
also
EU lawmakers to vote on tighter crypto, ESG rules for banks
One amendment states that banks would have to apply a risk-weighting of 1,250% of capital to cryptoassets exposures, meaning enough to cover a complete loss in their value.
That "risk-weighting" means banks cannot use fractional reserve ratios, instead they would have to hold the full value of the crypto asset in case of losses.
Over recent decades, the fractional reserve system has descended into almost a free-for-all, with the US Fed setting the rate at 0% in 2020.
Effective for the reserve maintenance period beginning March 26, 2020, the 10 percent required reserve ratio against net transaction deposits above the low reserve tranche level was reduced to 0 percent, the 3 percent required reserve ratio against net transaction deposits in the low reserve tranche was reduced to 0 percent. The action reduced required reserves by an estimated $200 billion.
So the Fed's "ample reserves" regime led to an ample reduction in said reserves - not so ample after all.
So, a large amount of the world's banking system, and especially the so-called developed nations, are in a perpetual state of risk-aversion due to excessive greed. They strive to maximise profits at the expense of minimal protection, even when they pretend to be oh-so-prudent.
And this is where crypto scares the shit out of such banksters precisely due to its uncontrolled volatility. Hence why the banks are being told to hold 100% reserves equivalent to any exposure to crypto assets. But that means they would need to, in a sense, pay double for their crypto; if they hold $1m of BTC they then also need to hold another $1m to cover potential losses, down to zero.
This seems like yet another quarantine measure for the crypto system.
However, if you read the Reuters article, you will see that crypto is not even the biggest target.
The amendments also introduce a definition of "shadow banking", the vast sector of insurers, hedge funds and investment funds that make up about half the world's financial system and typically less regulated than banks.
Shadow banking institutions arose as innovators in financial markets who were able to finance lending for real estate and other purposes but who did not face the normal regulatory oversight and rules regarding capital reserves and liquidity that are required of traditional lenders in order to help prevent bank failures, runs on banks, and financial crises.
Notice that many "shadow banks" are well-known investment banks plus a huge swathe of offshore institutions. Much of the world is therefore involved in the rampant search for profits, leaving "protection" for the poor saps who believe in such things. And as for the "productive economy", nobody gives a crap about that apart from the surveillance economy and the degradation of life economy.
The last target of that EU law is the wokist ESG con - this is how the mega-banksters will control behaviour.
the GEULAG is being built - and few can see it.