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A letter sent to a ZH reader yesterday by JPMorgan Chase, specifically its Business Banking division, reveals something disturbing. For whatever reason, JPM has decided that after November 17, 2013, it will halt the use of international wire transfers (saying it would “cancel any international wire transfers, including recurring ones”), but more importantly, limits the cash activity in associated business accounts to only $50,000 per statement cycle. “Cash activity is the combined total of cash deposits made at branches, night drops and ATMs and cash withdrawals made at branches and ATMs.”
Why? “These changes will help us more effectively manage the risks involved with these types of transactions.” So… JPM is now engaged in the risk-management of ATM withdrawals?
Reading between the lines, this sounds perilously close to capital controls to us.
While we have no way of knowing just how pervasive this novel proactive at Chase bank is and what extent of customers is affected, what is also left unsaid is what the Business Customer is supposed to do with the excess cash: we assume investing it all in stocks, and JPM especially, is permitted? But more importantly, how long before the $50,000 limit becomes $20,000, then $10,000, then $5,000 and so on, until Business Customers are advised that the bank will conduct an excess cash flow sweep every month and invest the proceeds in a mutual fund of the customer’s choosing?
Full redacted letter below:
- Toward Free Exchange Rather Than Capital Controls (economicsone.com)
- Easing troubles in the long run (thehindu.com)
- Capital controls to be lifted by January: Anastasiades (cyprus-mail.com)
- Capital controls to be lifted in the first months of 2014, Cyprus FinMin says (famagusta-gazette.com)
- Capital controls to be lifted except cross-border transfers (UPDATED) (cyprus-mail.com)
- Cyprus Capital Controls Could ‘End in Months’ (blogs.wsj.com)
- 5 Years Later: Winners & Losers of the Financial Crisis (fool.com)
- RBI chief says policy not to resort to capital controls – Reuters India (in.reuters.com)
Just a few weeks ago, the Icelandic government started threatening to use the European ‘template’ of removing guarantees on large deposits (though maintaining its capital controls) indirectly pressuring the wealthy to spend (for fear of haircuts). However, the capital controls have backfired as Bloomberg notes, Iceland’s private sector is running out of cash to repay its foreign currency debt, according to the nation’s central bank. The Prime Minister has said that the FX shortfall – exacerbated by his own policy restricting the selling of Krona – is “a matter of huge concern.” The government’s biggest challenge is to allow capital to flow freely without triggering a krona sell-off that would cause Iceland’s foreign debt to spike and undermine the nation’s economic recovery.
The yield on Iceland’s 5.875 percent dollar $1 billion bond due May 2022 has soared this year to as high as 5.71 percent last month from a low in May of 3.81 percent. Its spread to the U.S. Treasury curve widened to around 280 basis points yesterday from a May 28 low of around 180 basis points…
- Icelanders Run Out of Cash to Repay Foreign Debts: Nordic Credit – Bloomberg (bloomberg.com)
- Iceland’s private sector running out of cash to repay debts (irishtimes.com)
- Iceland Continues To Rise Above Rothschild NWO Banking Scheme: Hungary & Russia Continues Shutdown On Rothschild! (politicalvelcraft.org)