18. What is the global interbank system (“GIS”) and how does it operate?

The OFFICIAL AI Grok version of the GIS records it as being:

The Global Interbank System, often referred to in the context of international finance, is not a single, formally defined entity but rather a network of systems, institutions, and processes that facilitate the transfer, clearing, and settlement of financial transactions between banks worldwide. It primarily revolves around the interbank market and systems like SWIFT, CHIPS, Fedwire, and other regional or domestic payment systems that enable cross-border and domestic financial transactions.

Here’s a concise breakdown:

1.        Interbank Market: This is a global network where banks lend to and borrow from each other to manage liquidity and meet reserve requirements. It operates through short-term loans and is critical for maintaining stability in the banking system.

2.        SWIFT (Society for Worldwide Interbank Financial Telecommunication):

• A key component of the global interbank system, SWIFT is a messaging network used by banks and financial institutions to securely exchange information about financial transactions, such as money transfers, securities trading, and treasury operations.
• It doesn’t move money itself but provides standardized instructions for payments, enabling banks to communicate efficiently across borders.
• Over 11,000 institutions in more than 200 countries use SWIFT, handling billions of messages annually.

3.        Payment and Settlement Systems:

• CHIPS (Clearing House Interbank Payments System): A U.S.-based system for large-value, time-sensitive international and domestic payments, processing over $1.8 trillion daily.
• Fedwire: Operated by the U.S. Federal Reserve, it handles high-value, real-time gross settlements in U.S. dollars.
• TARGET2: Used in the Eurozone for euro-denominated transactions.
• RTGS (Real-Time Gross Settlement): Many countries have their own RTGS systems for instant, final settlements between banks.

4.        Correspondent Banking:

• Banks maintain accounts with each other (correspondent banks) to facilitate cross-border payments and transactions in foreign currencies.
• This network underpins much of the global interbank system, especially for transactions where direct access to a local payment system isn’t available.

5.        Role and Importance:

• The global interbank system ensures the smooth flow of money across borders, supporting international trade, remittances, investments, and everyday banking.
• It maintains liquidity, reduces counterparty risk, and supports monetary policy implementation by central banks.
• It’s critical for economic stability, as disruptions (e.g., during the 2008 financial crisis) can lead to liquidity shortages and systemic risks.

6.        Challenges and Innovations:

• Challenges: High costs for cross-border payments, delays in settlement, and vulnerabilities to cyberattacks or sanctions (e.g., SWIFT bans on certain countries).
• Innovations: Blockchain-based systems (e.g., RippleNet), central bank digital currencies (CBDCs), and initiatives like SWIFT’s Global Payments Innovation (GPI) aim to make transactions faster, cheaper, and more transparent.

However, in addition to the above, the following should be noted:

1. The Global Interbank System is a network of banks, in effect it’s a platform that interconnects all the banks throughout the world to a centralized system that allegedly is based in Brussels.
2. The system consists of, for each bank, a system of accounts which include both on-ledger and off-ledger accounts with the “on-ledger” (“on balance sheet”) accounts being visible to the public on the white screen and the “off-ledger” (“off balance sheet”) accounts being visible on all the different colored screens including the black screen and so on.
3. All the off-ledger accounts are what is called “fiduciary accounts” which means that the bank is acting technically as a trustee of an asset that doesn’t belong to them but they earn fees and commissions and bank charges on transactions that are conducted by the fiduciary for the beneficiaries. Therefore, they are not required to disclose the balances of such accounts on their audit reports but they must declare the earnings (e.g. bank charges and other agreed income) that they receive from such accounts.
4. The way that the system operates is that money is converted from off-ledger which means non-existent “M-0” accounts which is the value created as a result of the gold that is based in the Philippines because that value that is posted in the custody account is in fact a value that is based on the gold that has been taken from the Indigenous People of the Philippines. It is converted into an account but it is not yet “on-balance sheet” that means that in order to support the global financial system it is necessary to move money from the M-0 account to the “M-1” account, which means that it would move from the off-ledger to the on-ledger and it would then become a visible asset on the balance sheet of the bank.
5. What is important to understand is that all the fiduciary accounts that are within the global interbank system are backed by the gold of the Indigenous People of the Philippine islands and that is really the heart of the issue.
6. In addition to the above, what is crucial to understand is that the Debt-based FIAT Currency System is one where firstly, the money is created out of “thin-air” by the Central Banks and secondly, by its very nature, it is inflationary and this has a major impact on the capital and capital ratios of any bank as their capital is always depreciating in value and the banks are continually requiring additional capital to comply with the prudential requirements and capital ratios. Accordingly, banks have three (3) ways to shore up or increase their capital base and to remain compliant, namely they can:

• Undertake a “capital raise” which requires their shareholders to inject capital into the bank;
• Increase their retained earnings, by reducing dividends or particularly by leveraging the income earned from the use of “off-balance sheet” assets; or,
• Attempt to bring “off-balance sheet” assets to “on-balance sheet” assets. However, this is a “high-risk” strategy as many would regard this as a money laundering process, particularly as the majority of these assets clearly belong to the Indigenous People of the Philippines.