Dude the entire monetary system is fucked.
Not counting mortgage backed securities, high credit card debt, bank runs
We got the banks leveraging $100s of Trillions in derivative contracts.
We got the LIBOR to SOFR transition of $600 trillion worth of contracts to a different interest rate benchmark system which changes the values of those contracts. That means derivatives, CDO/CLOs, any loan and debt, etc. The Federal Reserve has capped a hard date of June 30, 2023 that all contracts in play must change to the new SOFR system. Banks have had since 2012 to change and are only 60% of the way there.
This sudden change in 100s of trillions worth of derivatives and other contracts can cause the banks to suddenly become illiquid.
Federal Reserve publicly releases FedNow CBDC platform in July, right after to hard date to the LIBOR to SOFR transition.
Its all going to crash no matter what. Get your money out of the system because you can be damn sure they won't default, they'll just have the Federal Reserve print out money into oblivion. And if they do default your money is worth much less anyway.
SOURCES
United States Office of the Comptroller of the Currency (OCC) - March 31, 2023 Quarterly Report on Bank Trading and Derivatives Activities - Fourth Quarter 2022 -
PAGE 12 & PAGE 22
PAGE 22 - NOTIONAL AMOUNTS OF DERIVATIVE CONTRACTS HELD FOR TRADING:
TOTAL ALL COMMERCIAL BANKS, SAVINGS ASSOCIATIONS, AND TRUST COMPANIES ASSETS ~$21.1 Trillion
TOTAL DERIVATIVES ~$191 Trillion
TOTAL HELD FOR TRADING AND MARK TO MARKET (MTM) ~$181.9 TRILLION
An over leverage of about 40:1
BIS - The notional value of outstanding over-the-counter (OTC) derivatives rose to $632 trillion at end-June 2022, up from $598 trillion at end-2021.
https://www.bis.org/publ/otc_hy2211.htm
WHERE TO ACCESS LIBOR TO SOFR PUBLIC REPORTS
REPOST (March-16-2023) Update on LIBOR to SOFR:
Derivatives by trade volume is being measured monthly https://www.isda.org/2022/05/16/benchmark-reform-and-transition-from-libor/#clarus
- ISDA-Clarus RFR Adoption Indicator
RFR or Risk-Free Rates in US is SOFR Whitepaper on the methodology https://www.isda.org/a/iKNTE/ISDA-Clarus-RFR-Adoption-Indicator-Whitepaper.pdf
Page 2 in the USD row
Currently there are monthly reports tracking the volume of derivatives trading and about 60% volume of derivatives trading on the market are in the RFR (which is the SOFR change) rather than LIBOR.
March 2023 Monthly Report
https://www.isda.org/a/aeLgE/ISDA-Clarus-RFR-Adoption-Indicator-March-2023.pdf
Interactive Chart
Dude the entire monetary system is fucked.
Not counting mortgage backed securities, high credit card debt, bank runs
We got the banks leveraging $100s of Trillions in derivative contracts.
We got the LIBOR to SOFR transition of $600 trillion worth of contracts to a different interest rate benchmark system which changes the values of those contracts. That means derivatives, CDO/CLOs, any loan and debt, etc. The Federal Reserve has capped a hard date of June 30, 2023 that all contracts in play must change to the new SOFR system. Banks have had since 2012 to change and are only 60% of the way there.
Its all going to crash no matter what. Get your money out of the system because you can be damn sure they won't default, they'll just have the Federal Reserve print out money into oblivion. And if they do default your money is worth much less anyway.
SOURCES
United States Office of the Comptroller of the Currency (OCC) - March 31, 2023 Quarterly Report on Bank Trading and Derivatives Activities - Fourth Quarter 2022 -
PAGE 12 & PAGE 22
PAGE 22 - NOTIONAL AMOUNTS OF DERIVATIVE CONTRACTS HELD FOR TRADING:
TOTAL ALL COMMERCIAL BANKS, SAVINGS ASSOCIATIONS, AND TRUST COMPANIES ASSETS ~$21.1 Trillion
TOTAL DERIVATIVES ~$191 Trillion
TOTAL HELD FOR TRADING AND MARK TO MARKET (MTM) ~$181.9 TRILLION
An over leverage of about 40:1
BIS - The notional value of outstanding over-the-counter (OTC) derivatives rose to $632 trillion at end-June 2022, up from $598 trillion at end-2021.
https://www.bis.org/publ/otc_hy2211.htm
WHERE TO ACCESS LIBOR TO SOFR PUBLIC REPORTS
REPOST (March-16-2023) Update on LIBOR to SOFR:
Derivatives by trade volume is being measured monthly https://www.isda.org/2022/05/16/benchmark-reform-and-transition-from-libor/#clarus
- ISDA-Clarus RFR Adoption Indicator
RFR or Risk-Free Rates in US is SOFR Whitepaper on the methodology https://www.isda.org/a/iKNTE/ISDA-Clarus-RFR-Adoption-Indicator-Whitepaper.pdf
Page 2 in the USD row
Currently there are monthly reports tracking the volume of derivatives trading and about 60% volume of derivatives trading on the market are in the RFR (which is the SOFR change) rather than LIBOR.
March 2023 Monthly Report
https://www.isda.org/a/aeLgE/ISDA-Clarus-RFR-Adoption-Indicator-March-2023.pdf
Interactive Chart