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16th December 2021 > > German banks and cryptos.


Germany loves cryptos!

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With three interest rate rises pencilled in for the US next year, the Bank of England and the ECB are nervously eying the size of their own balance sheets. The basic premise of Modern Monetary Theory (aka the Magic Money Tree) is stripped of any semblance of rationale and is shown to be the sham it was all along. Executives for Spanish and Italian banks must be telling their government bond desks to put on their biggest selling boots.

Occasional Series – Political hypocrisy

I know, this subject seems to crop up as much as the thorny issue of regulation.

But perhaps correlation can sometimes be a result of causation?

Shaun Bailey ran a dreadful campaign to become London Mayor, a fact openly admitted not just by the Tory faithful, but also by all those people who publicly decry the Tories. Even those who secretly vote for them. That is virtue signalling at its most destructive in my view, but let’s leave that discussion for another day.

As a reward for his efforts, Shaun was made chairman of the London Assembly’s policing committee. Unfortunately for him, he has just been forced to resign from that role.

No prizes for guessing that the reason for his resignation is that a party was held on his behalf which he attended with dozens of people drinking and partying (as we all should have the right to do so as consenting adults) at the same time as there was a ban on indoor mixing between households in London.

The chutzpah of the political elite never fails to take one’s breath away.

But for today’s Occasional Series, the Shaun Bailey story is merely an amuse bouche, not even a starter, to the dish of real hypocrisy.

Martin Reynolds, PPS to Boris, has told staff that all emails are automatically deleted after 90 days, as a “standard security policy”. Not in my workspace ever, mate.

It has been suggested that this might have been a call to arms to rapidly empty your inbox (and deleted box) of all messages over 90 days old if you happen to be at risk of being part of the ongoing police investigation. I do find this explanation to be a touch on the extreme side.

It is more likely the deletion of all emails over 90 days for Conservative party staff in Whitehall is true.

If that is the case, that is quite an extraordinary admission.

Public and private companies must keep records for seven years.

Partnerships and sole traders have the same minimum time limit.

Private individuals who complete self-assessment tax forms - most people these days I believe - must keep records for a minimum of five years.

But we now learn that the inner machinations of the party which has been the dominant political force (*) for the last half century are not held to the same high standards as the rest of us.

The chutzpah of the political elite never fails to take one’s breath away.

Curious Cryptos’ Commentary – Germany & cryptos

Regular readers already know that Germany has one of the most enlightened approaches to crypto products, and crypto innovation, and is the most welcoming of European countries to the avalanche of crypto tax dollars heading its way.

The German banking industry is an interesting case study.

It is incredibly diverse, with many locally based institutions servicing the specific needs of their varied client base. Much like Italy, there is a very strong retail element (moms and pops is the usual vernacular) that is largely absent from the UK banking landscape.

Many of these German financial institutions are small, or very small, or even smaller than that, again in stark contrast to the UK in which most banking operations are highly concentrated. It is true that in the UK the disruptive influence of FinTech is starting to make its mark, precisely because of the concentration of banking power in the hands of the few.

Wary of the potential challenge from FinTech start-ups like Revolut once they move on from disrupting the UK, the Sparkassen (German savings banks who are not usually the first to engage with technological revolution) are jointly launching a crypto wallet and exchange in 2022:

"More and more consumers are interested in crypto-assets. One in ten customers of the German Savings Banks states he/she owns or has owned crypto-assets. Considering their expectations, the Savings Banks Finance Group has to look into crypto-assets, too."

Quickly moving on from the obvious use of limiting pronouns that show blatant disregard for the 100+ genders recently identified by the BBC (and counting), this is an extraordinary development for such a traditionally conservative element of the financial landscape.

There are 370 or so Sparkassen, with $1 TRILLION of assets under management. In the context of a similar valuation for BTC, this is far from a trivial part of the potential crypto customer base.

The ability of cryptos to revolutionise the world continues to surprise on the upside.

(*) In the last 47 years no parliamentary majority has ever been gifted by the electorate to anyone other than the Tories, except in the specific situation that the forename of the leader of that alternative party is Tony.

Reserve Treasury Protocols (before they all go to zero

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