The beginning of the end of fiat, or the beginning of the end of the (visual) game??

Rumormill News

The beginning of the end of fiat, or the beginning of the end of the (visual) game??

Posted By: Watchman
Date: Tuesday, 8-Feb-2011 09:45:24

The major banksters are formally accepting PM's as collateral. They always have, but the fact that they are admitting it is promising. This from: http://www.zerohedge.com/article/morning-gold-fixing-gold-bullion-considered-collateral-international-clearing-house-%E2%80%93-lchcle Gold Bullion Considered as Collateral by International Clearing House – LCH.Clearnet A further sign of how gold bullion is increasingly seen as not only a safe haven asset and a currency but also a financial asset, is news that the LCH.Clearnet is giving further consideration to a plan to accept gold bullion as collateral. They may accept gold bullion as collateral against margin positions on a range of asset classes and derivatives in the international financial markets. LCH.Clearnet have been considering allowing gold as collateral since October 2009 and the move by the CME and JP Morgan to allow physical gold as collateral may have made their plans in this regard more concrete. "We’re looking at it closely,” David Farrar, LCH.Clearnet Director of Commodities told CNBC (see News). “It’s something that, subject to regulatory approval, we’d look to introduce later this year." LCH.Clearnet (previously known as the London Clearing House and the Paris based Clearnet) is an independent financial clearing house, serving major international exchanges and trading platforms, as well as a range of OTC markets. Its main business is in Europe and it is the largest over-the-counter interest rate swap clearer. In December 2009, LCH.Clearnet began guaranteeing trades between banks and their buy side clients in the $342 trillion interest-rate swaps market. LCH.Clearnet clears for a large number of commodity, derivative and equity exchanges. It clears a broad range of asset classes including securities, exchange traded derivatives, energy, freight, interbank interest rate swaps, and euro and sterling denominated bonds and repos. The nominal value of European government bond and repo trades cleared by the LCH.Clearnet group in 2010 increased by 28% year on year, a record fuelled by increased demand as banks seek to manage their counterparty risk exposures. The total nominal value of fixed income trades alone cleared by LCH.Clearnet during 2010 reached EUR137 trillion, equating to over EUR500 billion in nominal value cleared daily. Also in 2010, LCH.Clearnet launched the first clearing service for under pressure Spanish government bonds and repos. A notional value close to EUR700 billion was cleared during the year. John Burke, director and head of fixed income at LCH.Clearnet said recently that “at times of market stress, clearing becomes increasingly important" and that “maintaining liquidity and managing collateral are top of the list of priorities for banks.” With counterparty and sovereign risk remaining elevated, gold is no longer being seen simply as a commodity. Rather, it is increasingly viewed by market participants as an important asset and a currency with no counterparty risk. We are gradually seeing the monetisation and indeed the ’financialisation’ of gold, as gold is gradually being reincorporated into the modern financial and monetary system. Keynes’s ‘barbaric relic’ is becoming less barbaric by the day. However, the man in the street remains completely unaware of this trend as it continues to be ignored by mainstream media and its implications not realised.