It is impossible to manipulate reporting on the blockchain, and without it, in a successful banking business, nowhere. Therefore, bankers try to discredit the technology.
What do cheese and the banking system have in common? Holes. But the holes in the piece of cheese are not the same as the holes in the banks” balance sheet. Due to «holes» banks are recalling licenses, and the number of reviews gives rise to the feeling that many banks are only legal shells of «holes».
Holes in balances appear regularly
Banking regulators are introducing new and new regulations designed to prevent the emergence of «holes». Bankers are also inventing new and new ways of manipulating these norms.
«Hole in balance» means that the bank has less money than it owes customers. This happens when assets are withdrawn from the bank — cash and valuable collaterals. As a rule, unfair bankers who wish to cash in at the expense of depositors or at the expense of the state, if the bank will be transferred to the reorganization, withdraw the assets.
It happens that a hole in the balance sheet appears when assets are revalued — when the Central Bank recommends or prescribes to recalculate the value of assets when checking. This situation does not necessarily indicate the existence of malicious intent among bankers. An error may occur, for example, due to incorrect accounting of operations. If the Central Bank finds such an error — it gives recommendations on how to fix it. The bank is correcting, and everything is getting better. But this is in theory, in practice — everything is more complicated.
Through the holes in the balance, the depositors” money flows away
Because of what in the balance of banks there are holes? First, this happens when the «toxic» operation is accounted for as normal: for example, replacing a liquid collateral with an illiquid loan after issuing a loan. Secondly, if changes are made to the balance sheet before sending it to the regulator — the regulator sees a «correct» balance, while it is toxic. Thirdly, if the performed operation does not fall into balance at all. This can also and often happens before the «plum» — banks accept deposits, but do not take them into account. Cache bankers take with them to London, and depositors remain with fake contracts. To put it more precisely, bankers launder cash through special schemes and receive a «clean» cash in London.
Taken by the most famous «land‐mine», recently discovered by Interpol, tens of billions of dollars have been withdrawn from Russia. Many European banks also participated in this scheme. The well‐known grounds for laundering are the Czech Republic, Moldova, the Baltic states and countries of the post‐Soviet space. And although the ECB spins on the nuts, the Landmates are still working.
There is nothing more eternal than a permanent revoke of banking licenses
Licenses from banks are withdrawn by packs around the world. However, on different continents, the cries of the ruined depositors are heard with varying loudness. In the case of North America, the rigidity of regulation is affected — the most powerful banks work there. In Africa, a separate media sphere, because of what, we often do not hear the screams of deceived investors. Depositors of South America, it happens, also moan — regular crises are making themselves felt. In Australia, everything is relatively calm. Before the Arctic and Antarctica banks have not yet reached.
Europe also finds a breakthrough. In fraud suspected of the ancient Barclay’s Bank, Maltese Nemea Bank revoked the license.
In March of this year, a license was withdrawn from Estonian Versobank AS. The bank served only 5,600 customers, assets amounted to 294 million euros, so the strong negative effect of the review did not work. The European Central Bank described the non‐compliance with anti‐laundering legislation as the main reason for the withdrawal.
Near Europe, the financial institutions of the Middle East and the countries of the former USSR shake. In regions with an unstable economy, there are no stable banks.
Sanitation — the best reason to relax in London
Rehabilitation of collapsed banks is very profitable business. True, it is beneficial only for sanatoria. The best sanators are traditionally Russian bankers.
The Bank of Russia (the central regulatory body of Russia) provides long‐term loans to sanated banks on average at 0.51% per annum. Sanators use a sanitized bank as a trash can for their bad assets and bear no responsibility for this.
Approximately $ 41.9 billion in ruble equivalent was spent by the Central Bank of the Russian Federation on the rehabilitation of three private Russian banking groups in 2017. The regulator contributed 12.1 billion dollars to the banks” capital, and another 29.8 billion dollars were received by banks in the form of deposits.
Russian bankers suffered a traditional banker «punishment» — they left for London and stopped doing business in Russia. This is a very common practice in Russia: since the perestroika that contributed to the collapse of the Soviet Union, so did many «successful» bankers. The one whose banks were rehabilitated or were absorbed by state banks, after leaving the West turned out to be more than wealthy persons.
Blokchain deduces bankers «on pure water»
Blockchain eliminates the main cause of the appearance of holes in the balance sheet: the operation is necessarily accompanied by its accounting, and it is impossible to make changes in hindsight. The transaction is confirmed by both parties involved in the transaction — this is one of the fundamental principles of a decentralized data registry.
If the banking operations are accounted for in the blockchain, a record of the liquid pledge will be impossible to forge. The regulator will be sure that no one can «clean up» the data before sending it. Transfer to a deposit account will be necessarily accounted for in the balance sheet and no one can take the cache out of the bank in the box.
All fraudulent actions are made «hindsight». Blokchain deprives bankers of this opportunity. That is why bankers claim that money is being laundered through the crypto currency, drugs, human organs and weapons are bought. Through the discrediting of crypto‐currencies, based on the technology of blockchain, banks want to discredit technology itself, which will knock the ground out of their feet.
Blokchain is able to keep bank secrecy
But what about bank secrecy? — you ask, because the information in public chain is available to each user. Indeed, it is impossible to keep bank secrecy in a classic blockchain, since the information recorded in the blockchain is open by default to everyone. To store confidential information, private chains are used distributed registries, which are maintained by one owner.
Hacking private blockchain is just as difficult as hacking public blockchain. All hashes of blocks of private chain are published in a public chain. To change the information it is necessary to select a hash for each block in which the attacker wants to make a substitution.
On a conventional computer with an eight‐core processor, the selection of a hash to a block of private lock‐up will take several trillion years. If you connect all the computers occupied by bitcoin mining to the selection of hashes, the time will be reduced to about a billion years. Hardly scammers have so much free time. Unless in prison or in a cemetery, but there is no access to the Internet.
We believe that banks should provide the regulator with access keys to private blockchains, since, according to the law, the regulator can request financial information in any analytical context. Thus, the regulator will be able to monitor all the indicators of banks in real time. But the main thing the regulator will get is the certainty that the data in the banks” balance sheet will not change after the date or before sending it. Blokchain gives such confidence.
Here are just a few decentralized projects, which may well push banks in the field of corporate financing and private deposits:
Funding Circle — SME financing service
The project attracted more than 50 thousand investors who are lending to small and medium‐sized businesses in the UK. A small or medium‐sized business can take a loan in the amount of 25,000 to 500,000 pounds sterling if it successfully works for more than two years and has a sufficient internal rating of the project.
The creators of the project strive to provide entrepreneurs with independence from credit organizations with their bureaucracy and sluggish infrastructure.
Zopa — peer‐2‐peer financing
Site for the search for personal loans. Zopa allows individuals to invest from £ 1000 (maximum is not limited) and borrow from 1 thousand to 25 thousand pounds sterling. The investment is distributed over many loans — so the risk of depositors is diversified.
This British start‐up was launched in 2005 and has already arranged borrowing for £ 2’000’000’000.
Finolog — financial platform for entrepreneurs, investors and borrowers
The platform allows entrepreneurs to monetize their trust rating. Under the «granted trust» you can borrow money or get a commodity loan. It is enough to connect to the platform and enter data about your business.
The creators of the Finologist are building a decentralized ecosystem of financing, in which each participant can earn money without increasing their risks.
Entrepreneurs who share their trust receive a commission from sales built with their guarantees. Investors receive a share in the proceeds from sales, made due to their financing. Earn on the site can even independent developers who connect to the platform, write scoring or will enrich the data.
And there are hundreds of such projects.
Hey, banks! This bell rings for you!