Tighten your belts the Reserve Bank says it is broke thanks to Covid scamdemic and note printing

by Alison Ryan

Australia’s Central Bank Says It Is Bust, Real Money new, Sep 21, 2022.
After the Australian fiscal year ended in June, the Reserve Bank of Australia marked its bond holdings to market – wiping out all its reserves.

The central bank of Australia on Wednesday made the astonishing admission that it is, basically, bust. Its entire equity has been wiped out by pandemic-related bond buying.

Of course, the Reserve Bank of Australia is a central bank, and can print money. So it can work its way out of a situation that would bankrupt a conventional bank or company.

Still, as the U.S. Federal Reserve meets today on interest rates, it’s an interesting insight into the challenges other central bankers face as they attempt to reconcile Covid stimulus with post-Covid inflation and economic emergence.

The RBA began its bond-purchase program in November 2020 as a second stimulus package in response to the pandemic. The first round of measures saw it slash rates to record lows, and set up a term funding facility offering cheap three-year funding to banks. For the bond buying, the central bank bought Australian government bonds and semi-government securities in the secondary market to lower interest rates on bonds maturing between five and 10 years out.

The program was extended, and extended, and extended yet again. Ultimately, the RBA bought A$281 billion (US$188 billion) in national, state and territory government bonds.

Now the bill has come due.

The RBA will announce its full-year results for the Australian fiscal year through June 30 in a month or so. But they won’t be pretty.

The central bank has had to mark the value of its holdings to market, resulting in a A$44.9 billion (US$30.0 billion) valuation loss. Offset by A$8.2 billion (US$5.5 billion) in underlying earnings from the central bank’s holdings, and it is posting a net loss of A$36.7 billion (US$24.5 billion).

That has exhausted the bank’s A$15.4 billion reserve fund and A$8.4 billion in other reserves, and then some. So the RBA is in negative equity to the tune of A$12.4 billion (US$8.3 billion).

“If any commercial entity had negative equity, assets would be insufficient to meet liabilities, and therefore the company would not be a going concern,” RBA Deputy Governor Michele Bullock explains in outlining the central bank’s situation. “But central banks are not like commercial entities.”

The RBA has a government guarantee against its liabilities, meaning “there are no going concern issues with a central bank in a country like Australia,” she says by way of reassurance. And of course the central bank can simply print more money, so “the Bank can continue to meet its obligations as they become due and so is not insolvent. The negative equity position will, therefore, not affect the ability of the Reserve Bank to do its job.”

A license to print money to get out of that kind of problem is never, however, going to be good news for your currency. And indeed, the Aussie dollar has lost 13.6% of its value against the U.S. dollar since early April. Look back 18 months, and the decline in what some Aussies joking call the “Pacific peso” is 19.5%.

It’s a far cry, with US$1 now buying you A$1.50, from 2013, when the Aussie dollar briefly rose above parity to become stronger than its U.S. counterpart. However, the Australian government was forced to inject cash into the central bank in 2013 because it had suffered losses on its foreign-currency reserves. The RBA notes it’s not requesting any cash injection now.

With interest rates rising in Australia, the RBA is in the unenviable position of having to pay out higher interest on its liabilities than it is able to earn on the bonds and other assets it has been buying. “In other words, underlying earnings are negative,” Bullock says. “It is difficult to be precise about how long this situation will last or how big these negative earnings will be.”

On the plus side, having marked to market at June 30, the central bank finds that its bond holdings are now valued below their face value at maturity. As a result, it should be making capital gains as the bonds come due. The RBA is now going to run its bond portfolio back down.

The RBA slashed rates to a record low of 0.1% in November 2020. The Aussie central bank has now hiked three times, bringing the current interest rate to 2.35% as of its September 6 meeting. It is next due to meet on rates on October 4.

As of the end of the June quarter, the RBA held A$356 billion (US$238 billion) in Australian government bonds, and also has another A$188 billion (US$125 billion) in assets connected to the term funding facility. Across the entire government, the entity that issues the Aussie government’s debt – the Australian Office of Financial Management – will be reporting a significant gain on the liabilities it has issued, equivalent to the losses that the RBA has had to write down.

The RBA notes that other central banks would be in a similar position but use different accounting methods. The Bank of England and the Reserve Bank of New Zealand both have an indemnity from the government on any losses. So their governments would essentially bail them out, something the RBA stresses it is not asking the Australian government to do.

However, the RBA typically contributes its profits to the government coffers as a dividend. The government likely should expect a hole in its budget where that dividend contribution used to be, for “the next few years,” Bullock says. The last bonds mature in 2033.

Similarly, the Swiss National Bank reported a first-half loss of 95.2 billion Swiss francs (US$98.7 billion), its largest since the central bank was set up in 1907. Falling bond prices and the appreciation in the Swiss franc ate into its huge foreign-currency holdings, but like the RBA the loss is on paper until the bonds mature.

The bottom line, Bullock says, is that central banks had to spend their way out of the pandemic crisis if their economies were going to stay afloat. In that sense, the RBA’s bond buying “broadly achieved its aims,” she concludes.

https://realmoney.thestreet.com/investing/global-equity/australia-s-central-bank-says-it-is-bust-16103021

About Editor, cairnsnews

One of the few patriots left who understands the system and how it has been totally subverted under every citizen's nose. If we can help to turn it around we will, otherwise our children will have nothing. Our investigations show there is no 'government' of the people for the people of Australia. The removal of the Crown from Australian Parliaments, followed by the incorporation of Parliaments aided by the Australia Act 1987 has left us with corporate government with policies not laws, that apply only to members of political parties and the public service. There is no law, other than the Common Law. This fact will be borne out in the near future as numerous legal challenges in place now, come to a head soon.

Posted on September 23, 2022, in coronavirus, Corporate Government, Covid-19, General, RBA, Reserve Bank, United States. Bookmark the permalink. 18 Comments.

  1. Oh jee, imagine my suprise 😂🍿

    Like

  2. Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget

    Unsurprisingly, the evidence was fairly well buried. Naturally, the government does not want you to know what they are doing.

    Just like the Canadian government did in March, and just as Europe, the USA and the UK have now done, the Australian government too is now beginning to make good on its 2010 G20 commitment to implement the Goldman Sachs-chaired, internationalist Financial Stability Board’s new regime for bailing out the banks using depositors’ money.

    On page 134 of the Australian Government Budget 2013-14 Portfolio Budget Statements, under the section for the Australian Prudential Regulation Authority, we find the first of APRA’s main strategic objectives for 2013-14. It can be effectively summarised as “business as usual”.

    Their second strategic objective for 2013-14, is to:

    consolidate the prudential framework by enhancing prudential standards where appropriate, in line with the global reform initiatives endorsed by the G20 and overseen by the Financial Stability Board; [see image at top of this post]

    Those “global reform initiatives endorsed by the G20” include the FSB plan to “bail-in” insolvent banks:

    FSB: ‘Key Attributes of Effective Resolution Regimes for Financial Institutions’, Annex III (click to enlarge)

    In the waffle that follows, we find further that:

    APRA will focus on implementing the new global bank liquidity framework in Australia…

    page 134, Portfolio Budget Statements, Australian Prudential Regulation Authority, Australian Government Budget 2013-14.

    This is likely referring in particular to the Basel III International Framework For Liquidity Risk Measurement, Standards, and Monitoring.

    When published in combination with the previously mentioned strategic objective to “consolidate the prudential framework… in line with the global reform initiatives endorsed by the G20 and overseen by the Financial Stability Board”, the implication is crystal clear.

    “Global bank liquidity framework” is really just technocrat-ese for “global bankster plan to prop up insolvent banks using other people’s money, and so instantly impoverish everyone who still has any savings left”

    For further proof that what this all means is the Australian government planning to steal your money to “bail-in” so-called “systemically-important financial institutions” (SIFI’s) — under the orders of an unelected international body (of bankers and bureaucrats) you’ve never heard of; a body funded by the Bank for International Settlements (BIS), and chaired consecutively by Goldman Sachs alumni — then please study the detailed primary source evidence in this blog’s original breaking story published on April 1st –

    G20 Governments All Agreed to Cyprus-Style Theft Of Bank Deposits … In 2010

    That’s something else to thank our recently-deposed PM Julia Gillard for doing, without our knowledge or permission.

    https://barnabyisright.com/2013/07/10/australia-plans-cyprus-style-bail-in-of-banks-in-2013-14-budget/ (No longer on the internet)

    Liked by 1 person

  3. Australia to begin implementing global-elitist economic system by directly confiscating citizens’ savings

    http://www.naturalnews.com/049696_australia_taxes_savings_account.html

    Like

  4. Australia to begin implementing global-elitist economic system by directly confiscating citizens’ savings

    http://www.naturalnews.com/049696_australia_taxes_savings_account.html
    .
    .
    Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget

    Unsurprisingly, the evidence was fairly well buried. Naturally, the government does not want you to know what they are doing.

    Just like the Canadian government did in March, and just as Europe, the USA and the UK have now done, the Australian government too is now beginning to make good on its 2010 G20 commitment to implement the Goldman Sachs-chaired, internationalist Financial Stability Board’s new regime for bailing out the banks using depositors’ money.

    On page 134 of the Australian Government Budget 2013-14 Portfolio Budget Statements, under the section for the Australian Prudential Regulation Authority, we find the first of APRA’s main strategic objectives for 2013-14. It can be effectively summarised as “business as usual”.

    Their second strategic objective for 2013-14, is to:

    consolidate the prudential framework by enhancing prudential standards where appropriate, in line with the global reform initiatives endorsed by the G20 and overseen by the Financial Stability Board; [see image at top of this post]

    Those “global reform initiatives endorsed by the G20” include the FSB plan to “bail-in” insolvent banks:

    FSB: ‘Key Attributes of Effective Resolution Regimes for Financial Institutions’, Annex III (click to enlarge)

    In the waffle that follows, we find further that:

    APRA will focus on implementing the new global bank liquidity framework in Australia…

    page 134, Portfolio Budget Statements, Australian Prudential Regulation Authority, Australian Government Budget 2013-14.

    This is likely referring in particular to the Basel III International Framework For Liquidity Risk Measurement, Standards, and Monitoring.

    When published in combination with the previously mentioned strategic objective to “consolidate the prudential framework… in line with the global reform initiatives endorsed by the G20 and overseen by the Financial Stability Board”, the implication is crystal clear.

    “Global bank liquidity framework” is really just technocrat-ese for “global bankster plan to prop up insolvent banks using other people’s money, and so instantly impoverish everyone who still has any savings left”

    For further proof that what this all means is the Australian government planning to steal your money to “bail-in” so-called “systemically-important financial institutions” (SIFI’s) — under the orders of an unelected international body (of bankers and bureaucrats) you’ve never heard of; a body funded by the Bank for International Settlements (BIS), and chaired consecutively by Goldman Sachs alumni — then please study the detailed primary source evidence in this blog’s original breaking story published on April 1st –

    G20 Governments All Agreed to Cyprus-Style Theft Of Bank Deposits … In 2010

    That’s something else to thank our recently-deposed PM Julia Gillard for doing, without our knowledge or permission.

    https://barnabyisright.com/2013/07/10/australia-plans-cyprus-style-bail-in-of-banks-in-2013-14-budget/ (No longer on the internet)

    Like

  5. Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget

    G20 Governments All Agreed to Cyprus-Style Theft Of Bank Deposits … In 2010

    “………That’s something else to thank our recently-deposed PM Julia Gillard for doing, without our knowledge or permission
    .
    https://barnabyisright.com/2013/07/10/australia-plans-cyprus-style-bail-in-of-banks-in-2013-14-budget/
    .
    https://barnabyisright.com/tag/bail-in/
    .

    Like

  6. Australia’s Banks Are Preparing for Bail-Ins of Retail Bank Deposits

    Australia’s Authourised Deposit-taking Institutions (ADIs) are quietly taking action to prepare for a potential bail-in of retail bank deposits if a domestic or global financial crisis were to occur.

    …………..As noted in my recent article, Deposit Insurance Is No Protection Against Bail-in[2], both Labor and Coalition Governments in the post-Global Financial Crisis era have been part of a global effort to implement a bail-in regime within Australia as part of the crisis resolution framework that would enhance the loss absorbing capacity of systemically important financial institutions.

    Moreover as I noted, Martin North from Digital Finance Analytics and I (confirmed by the legal analysis of independent solicitor Robert H. Butler) highlighted that the passage of the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 has provided APRA and Australian ADIs with a legal pathway to implement a bail-in of retail bank deposits through the amendment of deposit accounts T&Cs that would then incorporate suitable legal ‘conversion or write-off’ clauses……………

    Read on –

    https://www.adamseconomics.com/post/australia-s-banks-are-preparing-for-bail-ins-of-retail-bank-deposits

    Like

  7. “Central banks are not (like) Commercial entities” but they are daughter banks connected to the Private Federal Reserve in the USA.

    So in essence one could argue they are in fact private, but not ‘Commercial’ for commercial sake.
    Private but not Commercial and guaranteed by Government.

    But the Government is broke.
    So private, but not Commercial and guaranteed by the Government by bail in laws?

    Where do bail in laws become applicable in this scenario?
    Or is that just with the big 4 banks when they eventually roll over?

    And bail in by who? Mum and Dad investors, mortgage holders, and savers chipping in their hard earned money?
    Was here today, now gone tomorrow?

    What credentials does one need to allow a debt to ride into the billions?
    Where is their accountability?

    If they look bankrupt and act bankrupt, then they are probably bankrupt.
    So shut them down.
    Obviously they have the hallmarks of a failed non ‘Commercial’ model.

    Having said that it is not the end of the world.
    Every Country has the capacity as we know historically, to create their own monetary system that is not points based on credit and behaviour or a system of Communist control.
    That’s just ‘their’ idea.

    There is more than one way to get out of ‘their’ controlled demolition.

    The Great Reset is all about deleting those who have done this to us.
    One by one.
    Because spending like a drunken sailor can never be an excuse.

    Like

  8. That will be why they all want another WORLD WAR

    Like

  9. All nations seated in the United [Communist] Nations are welded to that seat because they are owned as corporate assets of the Central Banking Cartel with its foundation in the City of London Corporation and its Apex in the BIS. This is a private money trust as Congressman Louis T McFaddon reported to the US Congress in the 1930s – later assassinated – when he called for a full audit of The Fed. And the dynastic families who are the Owners of that trust are acknowledged in Carroll Quigley’s work “Tragedy and Hope”.

    The Owners of this Money Pyramid (and its world hegemon) might assign the overlords of their vassal nations different scripts in their consolidation of the wealth PLAN and its geopolitics but that basically is the structure in terms of Ownership by Monopoly Capital.

    With this structure in mind all of this post is of great interest because right at the beginning of the UN Corona Baloney Hoax called by former Ethiopian Gook Tedros (March 15 2020) The Fed started just printing money cutting interest rates to near zero and buying bonds (Quantitative Easing or QE). The Australian Reserve Bank followed suit in Nov 2020)
    https://www.reuters.com/article/australia-economy-rates-int-idUSKBN27J0AQ

    QE is also known as ‘large scale asset purchases’ – is a consolidation of the CBC wealth. In the context of the Fake Pandemic it was a move of Monopoly Capital in the West to provide the financial engine for the Western CoVID Regimes to build their UN required infrastructure – their Semashkos [communist health system], their police states, DNA data base – that was the up-the-nose PCR test, break the economies and production supply chains. Lots of boxes to tick here before primary production can be collectivized in the West.

    All of that including the secret cities is already built in the Communist Eastern Bloc – they used all that money blast from their Central Bank to shore up the gold reserves that will peg their digital currencies in phase 2: transition to the world CBDC for the world soviet.

    #History Repeating Itself in #Ukraine #Bykivnia #genocide #russia

    Like

  10. Right on Daviddd2.

    In times gone by they would be wound up and the trustees held to account for their crimes, that’s one of their own rules…

    Like

  11. All going as they planned.. collapse the economy, demonise democracy, oh and the Australia Act courtesy of the Chinese Labor party..

    Like

  12. So buying Australian Bonds will incur a huge loss? Australian Bonds are a poor investment, yes?

    >

    Like

  13. J Madison: “Way past time to close down this Jewish money control scam, repudiate all debts as the English King did in about 1530 and place the “Reserve” banksters under arrest for treason and fraud.”

    Who was the cretin Einstein who carte blanche gave away Australia’s power to create money to P R I V A T E interests and operators?

    Liked by 1 person

  14. Nice haircut, eh girls and boys? lol Dire Times… “Money for nuthin’ and pricks for free”.

    Like

  15. Way past time to close down this Jewish money control scam, repudiate all debts as the English King did in about 1530 and place the “Reserve” banksters under arrest for treason and fraud.
    Make the treasury of the elected Government of the people the sole body responsible for creating the credit for National development.
    Restore a gold reserve to the currency. And repeal all corrupt tax laws granting foreign corporations huge advantages over Australian companies which Masonic Bob Menzies put in place.

    Liked by 1 person

  16. Somebody got her name wrong. It is Piecemeal Bollocks. And that entire article is bollocks because the RBA and Australian Treasury are owned by the Rothschild-owned Bank for International Settlements (BIS), which is situated in Basel Switzerland. The owners are the prime financiers of the World Bank, the International Monetary Fund, the WEF, and the UN. They can do whatever they want.

    Meanwhile, the German Bundestag was told there is to be a major global event on Sunday the 25th. It may well be financial. Be warned.

    Liked by 2 people

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