Babylon's Bankers


...yes, you read that correctly, and this "little" bit of news comes from a regular reader here, Mr. G.B. And, like me, I'm sure you'll be thankful when you read this little "teaser" of an article:

Swiss & Chinese Central Banks Enter Swap Agreement

Ok, so as the article states, a mere $23,000,000,000 deal isn't all that big of a deal in a world where Western banks have run amok on credit default swaps and derivatives that are now into the quadrillions of dollars. And as you have probably gathered, the article has a bit of its own agenda that becomes evident, though not obtrusively so, in reading. Consider the remarks about how Russia (implying Mr. Putin), doesn't "get it," i.e.,, doesn't get the modern measures of power:

"This is nothing major, but it demonstrates the further distinction between RUssia and China whereas the former is still functioning old world idea of empire and the latter comprehends its the economy stupid."

And this:

 "Russia still thinks that its power is determined by territory – a very old 17th century idea by the Physiocrats."

But actually, those are admissions that Russia does get it. Land  and its resources are tangible assets. Or to put the point "country simple," would you rather have a few houndred thousand hectacres of land in Russia with the mineral rights, or would you rather have a US Treasury bond? or a "credit default bundle" guaranteed by BNP Paribas or Deutsche Bank? (I'll take the land, thank you). And Russia, for good or ill, with its vast sprawl and extent, has that good old fashioned measure of power called "strategic depth." So does China. So does Brazil, Canada, the USA, Australia, but few else. And the article's author seems to be ignoring Russia's own deals in the economic sphere.

However, all this doesn't really speak to the significance of what just happened between Switzerland and China, and from my "hack from South Dakota's" perspective, there would seem to be two major, if not huge implications, both of which flow from these simple statements:

"The deal will also allow the Swiss central bank to invest some of its huge accumulation of foreign exchange reserves in the Chinese bond market. The Zurich-based SNB said the agreement will further strengthen collaboration between it and its Chinese counterpart and is a “key requisite for the development of a renminbi market in Switzerland.”" (Emphasis in the original)

In other words, implication one: the agreement is a first step toward the bi-lateral currency swaps that China his been instituting elsewhere and with other countries, and hence the agreement with the Swiss central bank will eventually open the entire Swiss system to this arrangement, and this will be an important strategic step to similar arrangements throughout the rest of Europe, or as the article states, it is a major step in the creation of a reminbi market in Switzerland. The second huge implication here is the first statement: "The deal will also allow the Swiss central bank to invest some of its huge accumulation of foreign exchange reserves in the Chinese bond market."  Reserves of US dollars and treasury bonds perhaps? Or again, to put it country simple: I wonder whose securities the Swiss will be selling, what currencies they will buy (besides using their own), and how many Chinese bonds they'll buy? guessed it...

See you on the flip side...


  1. as far as Chinese are concerned: I just recently returned from a 10-day stint singing Wagner in Norwich, England and we were housed (‘dormitoried’) at the University of East Anglica; ca. 80% percent of the graduates (3 days of ceremonies taking place on my watch time during my stay) were Chinese; the only reason I know this is because my Korean co-workers stated they spoke English with a Chinese accent-


    and China doesn’t have a say on things?

    please be well all-


  2. The Swiss are definitely not stupid, and maybe they see a change coming in the “exchange” market”. The next move will be in the western elites ballpark, and so it’s a wait and see kind of situation.
    I’m no financial wizard but there are visual changes coming down the pipe, so I’m sitting on my hands as all this unfolds, and maybe the Swiss guards at the Vaticanofworms might get paid in the Chinese funny money.

  3. Robert Barricklow

    Renminbi is literally the people’s currency.
    The yuan is the basic unit of the renminbi.
    A good analogy is that between sterling and pound.
    Chinese currency is basically a form of “Public Banking versus the West’s privatized banking. One is the people’s currency of, for, and by the many; the other, is of, by & for the benfit of the few. One is extractive& closed-private; the other is open and productive.
    Guess which one acts just like cancer?

  4. The author of this article imagines money,stocks or bonds are as real as land and minerals. In the long run land and minerals are real things you can hold in your hands money, stocks and bonds are only real to the extent the represent something real. I thought the Yuan was the name of Chinese currency when did the Reminbi became the name of it’s currency?

    1. But the stocks and the bonds can be traded, or borrowed against, tomorrow, whereas minerals can take years to develop.

  5. Quoting:

    “would you rather have a few [houndred] thousand [hectacres] of land in Russia with the mineral rights, or would you rather have a US Treasury bond? ‘

    Depends on how quickly one can move one or the other. The US T bill can be traded tomorrow. And there can be real legal difficulties in getting to those minerals.

    The problem, for speculators, with Chinese bonds would be state control of the currency exchange rate. There aren’t huge short term gains to be made if the currency’s exchange rate doesn’t move over a few months.

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