Critical Infrastructure Resilience and Sustainability Reader

11Banking and Finance

CHAPTER MENU

• 11.1 The Financial System
  • 11.1.1 Federal Reserve Versus US Treasury
  • 11.1.2 Operating the System
  • 11.1.3 Balancing the Balance Sheet
  • 11.1.4 Paradox of Enrichment
• 11.2 Financial Networks
  • 11.2.1 FedWire
  • 11.2.2 TARGET
  • 11.2.3 SWIFT
  • 11.2.4 Credit Card Networks
  • 11.2.5 3‐D Secure Payment
• 11.3 Virtual Currency
  • 11.3.1 Intermediary PayPal
  • 11.3.2 ApplePay
  • 11.3.3 Cryptocurrency
    • 11.3.3.1 Nakamoto’s Revenge
    • 11.3.3.2 Double Spend Problem
    • 11.3.3.3 Crypto Challenges
• 11.4 Hacking a Financial Network
• 11.5 Hot Money
  • 11.5.1 Liquidity Traps
  • 11.5.2 The Dutch Disease
• 11.6 The End of Stimulus?
• 11.7 Fractal Markets
  • 11.7.1 Efficient Market Hypothesis (EMH)
  • 11.7.2 Fractal Market Hypothesis (FMH)
  • 11.7.3 Predicting Collapse
• 11.8 The Threat is Existential
• 11.9 Discussion
• References

The Bretton‐Woods agreement of 1944 by the victorious nations of WWII established the dollar as the global currency. It also created the current financial world order through the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which is known today as the World Bank – which established the international currency exchanges and rates. The US dollar became the benchmark for all currencies and led to establishment of the dollar as the currency of international trade – the so‐called reserve currency or “world money.” For example, the price of oil is quoted in dollars and most international trade is done in dollars.

In 2017, ...