The 16th largest bank in the US, First Republic Bank get acquired by JP Morgan
🧵 This is how the FRC collapsed in the middle of the Banking crisis.

Timeline of events related to FRC. This is the second biggest Banking failure in US history.

Bank had assets size of more than $200 billion.

And market capital of $22.5 Bilion before March.

The rising debt of the US can be the major trigger for de-dollarisation, here is why

•The irreversible damage it can do to the US economy and USD is unimaginable.
🧵 •The US national debt hit an all-time high of $31.5 trillion.

• It has hit its ceiling limit of debt and it will unable to borrow money anymore.

First Republic Bank is down more than 45% today.

•Coustomers withdraw $100 billion of deposits over the last couple of months.
•Another regional bank of the USA needs capital.

•Probably another bailout waiting at the door of the US Fed. •Bank used to provide personalized service to high net-worth individuals.

• It has total assets of over $212 billion.

9 out of 10 central banks are thinking of launching CBDC,
•In some countries, it is already started on a pilot basis.

🧵 on CBDC, why Central banks are keen to launch it.
• Like it or not this is here to stay, why?
• How it will change the concept of money and transaction? Central Bank Digital Currency, which is a country's fiat currency that is issued and backed by the country's central bank. Unlike cryptocurrencies such as Bitcoin or Ethereum, which are decentralized and not backed by any government or central authority.

To understand fully the current events unfolding in the context of De-dollarization,

You have to first understand the oil market and Petrodollar.

🧵On how the oil market is key to dominating the global currency and its connection with recent events. The global crude oil market size is $2747.78 billion in 2022 and it is expected to grow to $2904.09 billion in 2023.
And further to grow to $3481 billion by 2027.

There is an old saying.

"Hit the iron when it's red hot to mold in the shape"

If you understand this you will understand the timing of current events unfolding in the context of dedollarization. you will realize why these things are happening rapidly in the direction of de-dollarization.
Look at the current scenario of the USA macro issue -
🚨 The USA is battling the highest-ever inflation in a decade.
Eroding the confidence of the US citizen.

🚨 Kenya has joined in the latest move to do trade settlements in local currency.
Kenya has signed deals with UAE's ADNOC and Saudi Aramco for the supply of petroleum products for the next six months and trade settlement will be done in Kenya's local currency shilling.
Why ? It was done to curb the demand for dollars. It spends hundreds of millions of dollars every month on imports.
And it has to spend dollars in the market to avoid the free fall of the shilling in the countries.

Like, Global systematic important banks (GIBs) every country has a list of Domestic Systemically Important Banks (D-SIBs), whose failure can cause cascading effects on other financial institutions in the country and create moral hazards.
For India, these banks are D-SIBs per RBI. The concept came after the 2008 Global financial crisis, Global systematically important banks (GIBs) were identified by the Basel Committee on Banking Supervision.
Starting in 2015 RBI issued the names of banks designated as D-SIBs

Global systematically important Bank(GIBs) lists are made by The Basel Committee on Banking Supervision.

Here is the list of GIBs given by BCBS before the fall of Credit Suisse.

Keep an eye on them 👀 in this banking crisis. BCBS is an international forum for banking regulators that aims to promote global stability by enhancing regulation and cooperation among the central bank around the world.

Egypt can be the 19th country doing bilateral trade settlement in the Indian rupee.

As per reports, Egypt will be importing 1.5 lakh tonnes of Indian rice and is willing to pay in Indian rupee, because Entire North Africa is facing a currency problem. So does Egypt, it is also facing a severe crunch of dollars.
Why are many developing and emerging countries facing a dollar shortage?
I have explained this in detail here.

https://twitter.com/Chandankr2018/status/1629343334081740801?t=Yfj9zEZqe5qcp9_V5oPHWw&s=19

Deutsch Bank is the largest Bank in Germany and one of the Systematically important Banks in Europe.
It is one

It has Total assets of over $ 1.5 trillion, one of the largest banks in the world by assets size. The bank provides a range of financial services, including investment banking, commercial banking, retail banking, wealth management, and asset management. It operates in over 60 countries worldwide, employing more than 87,000 people.

🚨 Recently Saudi Arabia and Iran shows interest in joining BRICS.

BRICS giving the world an alternative to looking beyond G7.
On all fronts, it is planning to tackle western hegemony.

🧵Let's understand recent moves by BRICS countries and their impact on the global economy. BRICS is a grouping of five major emerging economies: Brazil, Russia, India, China, and South Africa. These five countries are emerging economic powerhouses that could become increasingly important in the global economy.

The merger of Credit Suisse and UBS has been finalized but is the crisis over?
And what will be the future implications of this merger?
Is banking regulation needs to be updated? Deal to take over Credit Suisse by UBS :
• UBS will buy Credit Suisse for $3.3 billion.
• Shareholders will get 1 UBS share for each 22.48 Credit Suisse shares.
• And $ 17 billion worth of Credit Suisse AT1 bonds will be marked down to zero.

Let's connect the dots and try to understand the basics of the banking system.
At the end of the thread, you will be able to relate all that is happening in the banking sector.
[Thread ] All banks have two major things at hand.
•Assets and liabilities
•In simple terms, Assets are anything that gives a return like loans, securities and various other reserves
•And liabilities are something that banks have to pay like customers' deposits, debt, cash reserves.

Last week was scary for the US banking sectors-
🚨 Crypto-focused bank Silvergate went bankrupt. Central lender to the crypto company
🚨 Silicon Valley Bank, the 16th largest bank in the US went down, Majority of Bank customers were startups and Ventures capitalist. 🚨 Signature bank's operation was shut down by the regulator due to systematic risk.
Although the fall of Signature bank was due to panic outflow of funds.
But what does the fall of Silvergate and SVB teaches us?

Series of major events on 12th March 2023.
➡️After the fall of SVB many US Regional banks were facing huge outflows of funds.
➡️ US govt response was all banks in the US have a healthy balance sheet and no capital infusions are required. It was the fault of SVB. ➡️More than 3500 CEOS and founders representing some 220000 workers had signed a petition started by Y combinator appealing directly to the US treasury to backstop depositors.

As of now, everyone is aware that #SVB shut down its operations.

The reason was that the bank invested depositors' money into long-term bonds. Those bonds' value dropped as interest rates have been rising causing them to lack enough asset backing to match the amount of...contd. depositor money in the bank.
Why did bond value drop as interest rates increased?
Generally, bond price and interest range have an inverse relationship.
Because when the interest rate goes up new bonds are likely to be issued with higher coupon rates,

SVB was on the list of largest banks in the United States and was the biggest bank in Silicon Valley-based on deposits.
👉It was the part of S&P 500 in the USA
And now it is shutting down its operations. The company focused on lending to technology companies, providing multiple services to venture capital, revenue-based financing and private equity firms that invest in technology and biotechnology, and also on private banking services for high-net-worth individuals,

Currently, Indian rupees account for only 1.7% of global trade

For India to become a powerhouse globally, its currency needs to be recognized globally.

🧵Internationalizationon of the Indian Rupee Let's understand the advantage of settling trade in the Indian rupee.

Do you know why now budget being presented in the first week of Feb rather than the last week of Feb as it was practiced earlier?
1/n let's understand first the basics of a budget and its process.
Govt uses this as a fiscal policy to control inflation, boost growth, and increase employment by using tax, borrowing, and expenditure as tools.
2/n

As of today, the USA has a total of $31.2 trillion in debt.
The USA hit its debt ceiling limit this week, currently, extraordinary measures are in place.
Thread
1/n And this is not the first time the USA has hit debt ceiling limits,
In recent years it hit the ceiling limit in 1995,2011,2013 and 2023
In any other country, if they hit the ceiling limit, they will reduce their spending and put down strong policies to avoid this in the future.