The authorities have also had to resort to quantitative easing, using the balance-sheets of central banks to ensure the funding of clearing banks and to keep the lid on bond yields.
Yet, one clear objective that seems to have emerged from their meeting over the weekend was that of clearing out banks' toxic assets.
The latest released minutes of the Exchange Fund Advisory Committee reveal that the panel rejected a proposal to dollarize the "aggregate balance" or the total of the clearing accounts banks maintain with the Monetary Authority, the de facto central bank.
Yes, independent or no, governed by a cabal of financiers or a collection of fools, its function has grown way beyond simply raising money for the government or clearing debts between banks.
In the mid-1980s, when MasterCard entered the market, the clearing system between banks in different cities was (and is) almost non-existent: a cheque could take up to a month to clear, and many sellers would not release goods until it did.
By 2002, it promises to put into operation an automated clearing-house to which all banks can link up easily.
By the time it reaches its destination, it may have passed through five or six banks and two national clearing systems.
Sandner issued a letter that year to members--clearing firms, traders, investment banks and so on--prodding them to accept electronic trading and to consider going public as a way to (1) break logjams on how to run the place and (2) get rich.
Demand for clearing transactions are expected to increase over the next few years as regulators force banks and other parties to channel trades through regulated clearing houses to ensure their risk positions can be better monitored.
The idea was to give the participants a rich set of analytic tools and real-time, secure connections to both the global clearing systems and the back offices of banks around the world.
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They have also coaxed leading international banks into setting up a global clearing house to reduce the risk of loss should big foreign-exchange trades not be completed as the parties agreed.
The CFTC also proposed to limit the ownership of clearing houses, exchanges and trading systems by banks and major swaps dealers to 20%, which the banks are disputing as they have economic interests in the controlling the derivatives trade.
These then morphed into "banks for bankers" - clearing houses which would mop up liquidity among the middle and upper classes and spread it through the private banking system (in the lobby of the Bank of England there is a nice painting of the English bourgeoisie queuing up at Threadneedle Street on Dividend Day by George Elgar Hicks).
The Fed has the regulatory authority to immediately implement this policy by ordering banks to stop funding, investing, clearing or facilitating derivatives commodity trading.
Plus the banks can save capital because through a combined clearing platform for derivatives.
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Setting up as an SEF entails a hefty investment in systems to connect banks and their clients, as well as clearing-houses, where all trades conducted on an SEF will ultimately end up.
TMs. The new banks will also be plugged directly into Japan's clearing system.
Interpreted broadly, that could be used to cut off all banks doing business with the North from U.S. clearing systems.
He asks the chief executive of the Association for Payment Clearing Services (Apacs), which represents the credit card industry, what the banks are thinking of lending money to people who will never be able to afford to pay it back.
Europe's banks may have to deal with up to 31 different national and cross-border clearing and settlement systems when trading in European shares and bonds.
Banks argue that derivative paper work is a mess and too hard to clean up for exchange clearing.
Banks say that costs in Europe are several times America's, where the Depository Trust and Clearing Corporation handles most security trades.
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