I've heard stories about bank failures, flaws and errors but this one is quite comical not because of anything other than it includes the facilitation of a sum of money that far exceeds the combined GDP of the top 17 economies in the world.
Certainly, it doesn't take any unique kind of smarts to understand that this is a lot of money, money that Citigroup can't even dream of having, but somehow, they managed to credit a client that much.
Citigroup mistakenly credited a customer's account with $81 trillion last year when it meant to send just $280.
The payment, which took place last April, was missed by two employees but caught 90 minutes after it was posted, the Financial Times reported Friday.
The mistaken payment was reversed several hours later and reported to the Federal Reserve and Office of the Comptroller of the Currency as a "near miss.”
Originally reported by Financial Times but this is from CNBC
First off, Citigroup has a market capitalization of $150.66 billion and a total asset under management of $2.43 trillion — as of September 2024 data, reported by companiesmarketcap.com.
This tells us that Citigroup, by this “near miss” transaction, printed 32x more money that they don't have and this kind of error simply results in a 375.7% increase of the United States M2 money supply, considering that the numbers are currently reported to be $21.56 trillion.
This is the type of banking error to show that these institutions are built on shit techs simply because it is the only design that allows them to create money they do not have. This stupid mistake would send shockwaves through the US economy.
Now I know that Citigroup has claimed that the money would not be withdrawable as reported:
The bank said its “detective controls promptly identified the inputting error between two Citi ledger accounts and we reversed the entry” and that these mechanisms “would have also stopped any funds leaving the bank”. FT.com
But it would be a mistake to simply trust that this is true. The inability of anyone to cash this kind of money would be because that kind of money simply doesn't exist.
But this could have been easily moved into crypto because in this case, the money just goes into new bank accounts whilst the original bank holder receives crypto assets that the bank cannot access.
In this scenario, Citigroup cannot demand that receiving banks return the funds because that would pass the debt onto the parties involved in facilitating the trade of the dollars for crypto.
Crypto is an important upgrade to our financial system
People look at crypto and they don't seem to understand why it is such an important technology and shits like this are happening in the traditional finance system.
A stupid mistake as this puts every US citizen in a $238.16 Million debt coupled with the instant economic burden that is assured to cause an extensive chaos.
There are many ways something like this could be avoided using crypto and blockchain. Now we understand that banks are allowed to print a certain amount of money provided they have a certain amount of deposits.
This could be built atop crypto, it's just a matter of deploying tokens that represents deposits sum and signals to smart contracts handling the printing of new transacting currencies that the banking platform has a specific amount of assets under management and should be able to initiate the printing of X more tokens.
The fun part is that several layers of limits can be implemented, from soft to hard limits that restrict the immediate printing and circulation of a certain amount of tokens.
Every past banking error you could think of would have been avoided because it would have required manual sign offs from multiple private keys.
That said, judging from the fact that this was a matter of wrong input, the blockchain would have prevented this because the moving balance would simply not have been present in the sending address, hence could not have possibly been validated by nodes.
The banking system has a lot of flaws that are an easy fix with crypto and blockchain technology. Rather than allow ourselves into economic chaos we quite simply can't afford, it's an urgency to move a chunk(preferably the entirety) of our financial operations to the blockchain.