We’ve covered full-reserve banking in the past, as it offers a major benefit when you’re looking for a solid wealth management strategy, but we’re going to discuss this a little more today.
Full-Reserve Banking and The COVID-19 Pandemic
Full-reserve banking has long played a major part of offshore banking’s success, but now, perhaps more than ever, we’re seeing the true power of full-reserve banking. In full-reserve banking, 100% of assets are kept on hand. For investors, this means peace of mind in knowing that your assets won’t be used for lending purposes.
Full-reserve banking also leads to a more powerful banking system. When we look back at some of the worst economic and financial disasters of our time, fractional banking played a part.
The COVID-19 pandemic has wreaked havoc on financial markets around the world, raising risk to all new levels and causing major losses in short periods of time. While domestic banks seem to be the hardest hit, we’re seeing an interesting trend. Offshore banks seem to be doing better during the COVID-19 pandemic. The reason? Full-reserve banking.
Full-reserve Banking Guarantees Asset Availability
We’re seeing in some systems, such as banks in Switzerland, that having robust assets from high net worth individuals is keeping some banks afloat during the COVID-19 pandemic. Smaller banks, however, such as those lending to small businesses and individuals, are not faring as well. These are the banks who are suffering the worst. In fact, many of these banks are reporting that they are seeing the worst economic times since 2008.
Many governments are offering bailouts to those banks, which are helping to keep them alive. Still, interest rates are dangerously low, and defaults are impending. The only thing keeping them afloat are bailouts from their governments, and those bailouts are going to have long-term impacts on the economy.
When we turn to offshore banks, however, we’re seeing something different happen. For instance, the offshore banking system in the Bahamas is doing great right now. In fact, 65% of their 72 bank and trust companies are reporting that they haven’t been impacted by the COVID-19 pandemic. Turning to Puerto Rico, we’re seeing that offshore banks are thriving. In other offshore jurisdictions, the same trend can be seen.
The main factor here is full-reserve banking. With 100% of assets on hand, these offshore banks are performing wonderfully, and they were very strong before COVID-19 struck. These banking systems are extremely strong because they have all of their assets on hand. The reasons these systems became so strong go far beyond just full-reserve banking.
Which Offshore Jurisdictions?
People have long turned to jurisdictions such as Puerto Rico for a variety of reasons. One reason is that their bank accounts are denominated in gold and silver. In Puerto Rico, a long list of strong investment products are available to investors, especially investments in international markets. If you’re interested in global trading, then investing in a jurisdiction such as Puerto Rico can be the way to go. Plus, jurisdictions like Puerto Rico have a longstanding reputation for offering world-class banking products and services while also being extremely safe.
Of course, there are many offshore jurisdictions out there to choose from, but if you are considering offshore banking right now, just know that there are many safe jurisdictions that are booming - even during the COVID-19 pandemic. Finding the right offshore jurisdiction comes down to finding a reputable jurisdiction that offers the solutions you’re looking for.
Are you looking for lowered tax liability? Are you looking for anonymity? Are you most interested in keeping your assets safe? No matter what you’re looking for, if you’re considering offshore banking right now, it’s extremely important to find an offshore bank that’s offering full-reserve banking.
With full-reserve banking, jurisdictions tend to have fewer money supply issues. You don’t usually see bailouts happening as in other markets. Full-reserve banking is an extremely straightforward and transparent way of investing, as you don’t have to worry about your bank overextending themselves when it comes to lending. At the end of the day, full-reserve banking tends to lead to a more financially sound bank.
Takeaway
While there are many options in terms of wealth management, many of those options are being negatively affected by the COVID-19 pandemic. If you’re looking to invest in offshore right now - no matter the reason - then you’ll want to ensure that your investment is as sound as possible, and perhaps the best and most proven way to do that is to ensure that full-reserve banking is on the table wherever you go.
SEP
2020
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