October 23, 2012,
I never thought I’d see the day. Two years since the HIRE Act, FATCA, and Dodd-Frank became law and threw global finance into a tailspin, two foreign banks have finally stood up to Uncle Sam…
Bottom line, it’s more reporting, more registration, more paperwork, more hassle…
Yet just yesterday, DBS Bank in Singapore stood up to the US government, indicating that they would not be registering with US authorities for at least for one Dodd Frank provision pertaining to swaps. Nordea Bank in Sweden made a similar statement.
This is an interesting turn of events which could evidence a bigger trend.
We’ve already been seeing signs that US financial influence is waning. The dollar is being slowly displaced in international markets. Countries around the world are starting to increase their reserves of China’s renminbi, as well as accept renminbi in international trade settlements.
We’ve also seen foreign companies like McDonalds issuing debt denominated in renminbi, the launching of renminbi-denominated commodity futures contracts, and the trading of renminbi assets in foreign exchanges.
All of that used to be dominated by the dollar. But now the dollar’s share is gradually fading.
If more banks follow DBS and Nordea in standing up to the US government, it will be the clearest sign yet that this trend is taking hold… perhaps accelerating the dollar’s decline…