Вторая часть статьи В.Ю. Катасонова «Валютные свопы в современном мире. Рождение всемирного валютного картеля» на английском языке.
Before 2011, unlimited swaps between central banks were open for a period of seven days. In the autumn of 2011, however, the US FRS, the European Central Bank (ECB), the Bank of Japan, the Bank of England, the Bank of Switzerland and the Bank of Canada (the ‘big six’) agreed to coordinate actions to ensure the liquidity of the global financial system.According to the press release posted on the websites of the above-named central banks, the aim of these actions was “to ease tensions in the financial markets and thereby reduce the negative effects of this tension by issuing loans to households and business in order to stimulate economic activity”. This decision was prompted by the fact that signs of a second ‘wave’ of the financial crisis were becoming increasingly apparent in the global financial system.
The monetary authorities of America, the EU, Great Britain, Japan, Switzerland and Canada agreed to the following: a) to reduce the cost of providing dollar liquidity through currency swaps (linking its calculation to the indices of domestic currency swaps in the US banking system); b) to extend the period of currency swaps to up to three months; c) there will be no limits on the provision of dollar liquidity, the size of currency swaps will be determined by the needs of the corresponding country’s banking system; d) the Federal Reserve, as and when required, will also reserve the right to turn to its central bank partners for foreign currency; and e) the agreements will remain in effect from 5 December 2011 up to and including 1 February 2013.
In December 2011, the FRS backed a lending programme by the ECB known as LTRO-1 (long-term refinancing operation-1). This involved the issue of euro banknotes to the tune of nearly €500 billion. Part of this issue was immediately exchanged for US currency under a three-month swap totalling $100 billion. Some analysts refer to this as the first coordinated issue of the ECB and FRS. The withdrawal of such a large amount of euros from the currency market prevented a breakdown in the fragile status quo between the two parts of the Euro-Atlantic world. Without the currency swap transaction, the euro exchange rate would have fallen sharply, causing economic-financial and political tension between Brussels and Washington undesirable to both.
As is well known, since 2010 the US monetary authorities have been carrying out a programme of ‘quantitative easing’, which in fact means an increase in the dollar money supply. Scholastic discussions are underway about whether similar ‘quantitative easing’ should be carried out by the US’ closest partners – the European Union, Great Britain, Japan, and Canada. However, no matter what the actions of these countries’ central banks are called, they all increase the amount of money in circulation. And it is extremely important that these actions are coordinated. After the 2007-2009 financial crisis, the West understood this and began building a mechanism for this kind of coordination, and currency swaps are now becoming an important part of this mechanism. With their help, it is possible to straighten out various imbalances relatively quickly and prevent the leading countries of the ‘golden billion’ from sliding into a currency war with each other.
The 2011 agreement on currency swaps entered into by the ‘big six’ was set to expire on 1 February 2013. Without waiting for this deadline, however, the central banks extended the agreement for another year in the middle of December 2012, although the ‘big six’ had become the ‘big five’ after Japan withdrew from the agreement.
The currency pool of the ‘big six’ as a stepping stone to a single global currency
During the next phase, the US FRS, the ECB, the Bank of England, the Bank of Canada, the National Bank of Switzerland and the Bank of Japan (after returning to the ‘elite’ club) agreed to make the temporary currency swap agreements into standing arrangements On 31 October 2013, six of the world’s leading central banks created an international currency pool allowing liquidity in the countries participating in the pool to be increased more quickly should their market conditions deteriorate or in case of serious disturbances in the currency markets. Essentially, a small group of leading central banks is setting up a global currency management mechanism. Some are referring to it as the birth of a global currency cartel of central banks and the crystallisation of the control nucleus of international finance.
It is already becoming noticeable that central banks are strengthening their coordination. Analysts are paying attention to the fact that the corridor of fluctuations in the exchange rates of the ‘big six’ has narrowed, and currency speculators have fallen on hard times. The idea of a ‘freely convertible currency’ at fixed rates of exchange in the zone of the ‘big six’ will be rather arbitrary. The ‘big six’ has already consolidated its position regarding countries that are not part of this ‘elite’ club, and sceptics rightly believe that it is now pointless for the G20 to discuss the possibility of developing a single monetary policy.
Currency wars are not going anywhere; they are just ceasing to exist within the currency pool of the ‘big six’, while new currency wars between the ‘big six’ and the rest of the world are inevitable. The success of BRICS and other countries on the periphery of global capitalism in building a fair global financial order will, to a large extent, depend on the understanding that the West has already been consolidated and has distanced itself from the rest of the world.The ‘big six’ is a closed club that is not going to accept any more members (although it is known that Australia has asked and, if accepted, it will become the ‘big seven’).
There are signs that the currencies coming off the printing presses of the FRS, the ECB and the other central banks in the ‘big six’ are not different monetary units, but a single currency. After all, if there are stable exchange ratios between the euro, the US dollar, the British pound sterling, the yen, the Swiss franc and the Canadian dollar, then they are no longer different currencies, but different variations of a single global currency.
The mechanism being put together is, to a certain extent, reminiscent of the Bretton-Woods system, which also had fixed rates of exchange, and gold and the US dollar were recognised as world money. The similarity is external, however, it is superficial. In 1944, the decision to create a new global financial system was made by countries with government delegations at the conference. For all the peculiarities of the Bretton-Woods system, any country could become a member (although there were temporary restrictions for Germany and its allies in the Second World War). Initially, the Bretton Woods agreements were signed by 44 countries, but two decades later (in the 1960s), more than 100 countries had become members of the Bretton Woods system. Today’s currency ‘big six’ is a closed club. Even the Bank for International Settlements (BIS), referred to as “the central banks’ club”, comes across as a rather democratic organisation in comparison.
With today’s currency ‘big six’, the situation is quite different. Plans to create a single global currency are being worked out by central banks that have a status independent of the government. Decisions regarding the creation of permanent currency swaps between ‘select’ central banks do not have to be discussed by either the governments or parliaments of the ‘big six’ countries, whereas the agreements signed by the delegations at the 1944 Bretton Woods Conference went through the ratification procedure in parliaments.
Although every central bank in the ‘big six’ is officially equal, some are ‘more equal’ than others. One central bank that is ‘more equal’ is the Federal Reserve. In essence, all swap transactions since 2008 boil down to the fact that the Federal Reserve supplied its partners with ‘green paper’. It is doubtful that the makeup of the ‘big six’ will be expanded. On the contrary, it is more likely that, over time, the FRS will rid itself of some of its currency cooperation partners as an unnecessary burden.
Some experts are given to dramatising the situation currently emerging in the monetary and financial world, seeing signs of the ‘end times’ in it. In fact, we are seeing signs of the dismantling of national governments, the establishment of supranational institutions, and an increase in the power of global bankers. One should not think, however, that the currency ‘big six’ mentioned above is a consolidated nucleus safe from internal conflicts. It should be recalled, for example, that in the autumn of 1961, the central banks of leading countries in the West formed the so-called ‘gold pool’ (made up of the Federal Reserve Bank of New York and the central banks of seven leading capitalist countries) designed to carry out joint interventions in order to maintain a stable price for gold. In March 1968, however, the pool collapsed. Today’s currency pool of ‘six’ could also collapse. To a large extent, however, this will depend on how much countries on the periphery of global capitalism are able to consolidate their own monetary and financial policy.