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Losing faith: Global financiers look to de-Americanize

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Guest Scáthach

A US debt default could hit on Thursday, and world leaders are second guessing the dominant role America plays in finance. Regardless of the final decision in Washington, confidence and credibility in the US has already eroded.

 

Last week China, the biggest US creditor, started to make preparations for a technical default on loans. The European Central Bank and the People’s Bank of China (PBC) have agreed to start supplying each other with their currencies, avoiding the dollar as an intermediary currency. The currency swap agreement will last for three years and provide a maximum of 350 billion Yuan ($56 billion) to the ECB and 45 billion euro ($60.8 billion) to the PBC.

 

In a further sign of growing distrust, China introduced a so-called “haircut”, or a discount, on the value of US Treasuries held as collateral against futures trades.

 

Developing and developed nations are equally concerned, and institutions like the World Bank and the International Monetary Fund (IMF) have issued several warnings.

 

If the US misses the debt ceiling deadline of October 17 and stops paying their creditors, it would be the first major Western government to do so since Nazi Germany under Hitler in 1933, which wasn’t able to pay their debts following World War I.

 

http://rt.com/business/losing-faith-de-americanize-161/

 

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Guest Scáthach

Central banks getting ready for financial Armageddon

 

If the US debt-ceiling debate goes past the eleventh hour, and the default of the world’s largest economy becomes a reality, leading central banks around the world are gearing up to minimize losses and keep the world economy functioning.

 

Central banks have begun preparing for the worst-case scenario if US does fault, which would result in a serious devaluation of Treasury bonds, delayed payments, and a more large-scale version of the current government shutdown.

 

http://rt.com/business/plan-b-central-banks-217/

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