Video: The History of Credit Cards
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Video: The History of Credit Cards

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Today, credit cards are one of the most important sources of big bank profits. However, a look at the history of credit cards shows that things weren’t always that way.

The History of Credit Cards

While it may seem today that credit is impersonal and calculated, credit was once a privilege built around personal trust and long-lasting relationships. In the late 19th century, stores began offering credit to their best and most trustworthy customers. Instead of paying each time they visited the shop, a regular could defer payments to the future by using store-issued metal coins or plates that had their account number engraved. Shops would record the purchase details, and add the cost of the item bought to the customer’s balance owed.

By the 1920s, shops started issuing paper cards instead of metal plates, but even these became cumbersome. Consumers had to hold different cards for each shop, and this made the sector ripe for disruption.

Diners Club, the first independent credit card company in the world, did just that in the 1950s. Their cards allowed people to make travel and entertainment purchases, even with different vendors.

Bank of America took this idea and ran with it, forever changing the history of credit cards. They launched the “BankAmericard” in Fresno, California, by sending it out to all 60,000 residents at once. Soon all consumers and vendors in the city were using the same card, and the concept of mass-mailing cards to the public spread like a wildfire.

After these risky mass mailings of credit cards eventually culminated in the Chicago Debacle of 1966, they were outlawed in the 1970s for causing “financial chaos”. With no applications required, many people including compulsive debtors, crooks, and narcotics addicts were able to receive easy credit. By the time such mass airdrops became illegal, 100 million cards had already been unleashed on the U.S. population without a need for an application.

In 1976, the BankAmericard system eventually became Visa. It was soon after this point that credit cards would enter their golden age for banks: as savings rates fell in the early 1980s, the interest rates on debt did not. Credit cards became a “cash cow”, and they’ve been a key source of bank profits ever since.

Today, 80% of U.S. households own multiple cards, and they account for just under $1 trillion of consumer debt.

Original video by: &Orange

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Ranked: The World’s 100 Biggest Pension Funds

The world’s 100 largest pension funds are worth over $17 trillion in total. Which ones are the biggest, and where are they located?

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A preview image of some of the largest pension funds in the world. The Government Pension Investment Fund in Japan is the biggest at $1.7 trillion in assets.

Ranked: The World’s 100 Biggest Pension Funds

View the high-resolution of the infographic by clicking here.

Despite economic uncertainty, pension funds saw relatively strong growth in 2021. The world’s 100 biggest pension funds are worth over $17 trillion in total, an increase of 8.5% over the previous year.

This graphic uses data from the Thinking Ahead Institute to rank the world’s biggest pension funds, and where they are located.

What is a Pension Fund?

A pension fund is a fund that is designed to provide retirement income. This ranking covers four different types:

  • Sovereign funds: Funds controlled directly by the state. This ranking only includes sovereign funds that are established by national authorities.
  • Public sector funds: Funds that cover public sector workers, such as government employees and teachers, in provincial or state sponsored plans.
  • Private independent funds: Funds controlled by private sector organizations that are authorized to manage pension plans from different employers.
  • Corporate funds: Funds that cover workers in company sponsored pension plans.

Among the largest funds, public sector funds are the most common.

The Largest Pension Funds, Ranked

Here are the top 100 pension funds, organized from largest to smallest.

RankFundMarketTotal Assets
1Government Pension Investment Fund🇯🇵 Japan$1.7T
2Government Pension Fund🇳🇴 Norway$1.4T
3National Pension🇰🇷 South Korea$798.0B
4Federal Retirement Thrift🇺🇸 U.S.$774.2B
5ABP🇳🇱 Netherlands$630.4B
6California Public Employees🇺🇸 U.S.$496.8B
7Canada Pension🇨🇦 Canada$426.7B
8National Social Security🇨🇳 China$406.8B
9Central Provident Fund🇸🇬 Singapore$375.0B
10PFZW🇳🇱 Netherlands$315.5B
11California State Teachers🇺🇸 U.S.$313.9B
12New York State Common🇺🇸 U.S.$267.8B
13New York City Retirement🇺🇸 U.S.$266.7B
14Local Government Officials🇯🇵 Japan$248.6B
15Employees Provident Fund🇲🇾 Malaysia$242.6B
16Florida State Board🇺🇸 U.S.$213.8B
17Texas Teachers🇺🇸 U.S.$196.7B
18Ontario Teachers🇨🇦 Canada$191.1B
19National Wealth Fund🇷🇺 Russia$180.7B
20AustralianSuper🇦🇺 Australia$169.1B
21Labor Pension Fund🇹🇼 Taiwan$168.9B
22Washington State Board🇺🇸 U.S.$161.5B
23Public Institute for Social Security🇰🇼 Kuwait$160.0B
24ATP🇩🇰 Denmark$155.4B
25Wisconsin Investment Board🇺🇸 U.S.$147.9B
26Future Fund🇦🇺 Australia$147.9B
27Boeing🇺🇸 U.S.$147.2B
28Employees' Provident🇮🇳 India$145.0B
29New York State Teachers🇺🇸 U.S.$144.4B
30North Carolina🇺🇸 U.S.$137.1B
31Alecta🇸🇪 Sweden$136.7B
32GEPF🇿🇦 South Africa$129.1B
33California University🇺🇸 U.S.$125.3B
34Bayerische Versorgungskammer🇩🇪 Germany$122.0B
35Ohio Public Employees🇺🇸 U.S.$121.6B
36AT&T🇺🇸 U.S.$119.5B
37Public Service Pension Plan🇨🇦 Canada$117.9B
38National Federation of Mutual Aid🇯🇵 Japan$117.1B
39Metaal/tech. Bedrijven🇳🇱 Netherlands$115.8B
40IBM🇺🇸 U.S.$115.4B
41Universities Superannuation🇬🇧 UK$111.2B
42Virginia Retirement🇺🇸 U.S.$110.0B
43Pension Fund Association🇯🇵 Japan$109.8B
44Raytheon Technologies🇺🇸 U.S.$108.9B
45Michigan Retirement🇺🇸 U.S.$108.0B
46Aware Super🇦🇺 Australia$107.5B
47New Jersey🇺🇸 U.S.$104.5B
48Minnesota State Board🇺🇸 U.S.$102.9B
49PFA Pension🇩🇰 Denmark$102.7B
50Kaiser🇺🇸 U.S.$101.0B
51Georgia Teachers🇺🇸 U.S.$100.9B
52Oregon Public Employees🇺🇸 U.S.$100.4B
53Massachusetts PRIM🇺🇸 U.S.$98.5B
54Qsuper🇦🇺 Australia$96.5B
55General Motors🇺🇸 U.S.$96.1B
56Ontario Municipal Employees🇨🇦 Canada$95.7B
57Ohio State Teachers🇺🇸 U.S.$95.1B
58AP Fonden 7🇸🇪 Sweden$94.4B
59Healthcare of Ontario🇨🇦 Canada$90.5B
60General Electric🇺🇸 U.S.$90.5B
61Employees' Pension Fund🇮🇳 India$89.5B
62Bouwnijverheid🇳🇱 Netherlands$88.5B
63UPS🇺🇸 U.S.$86.8B
64United Nations Joint Staff🇺🇸 U.S.$86.2B
65Lockheed Martin🇺🇸 U.S.$85.7B
66Quebec Pension🇨🇦 Canada$81.4B
67National Public Service🇯🇵 Japan$79.9B
68Tennessee Consolidated🇺🇸 U.S.$79.0B
69Royal Bank of Scotland Group🇬🇧 UK$78.3B
70Bank of America🇺🇸 U.S.$76.3B
71BT Group🇬🇧 UK$74.3B
72Keva🇫🇮 Finland$73.3B
73Ford🇺🇸 U.S.$72.8B
74PME🇳🇱 Netherlands$72.7B
75Los Angeles County Employees🇺🇸 U.S.$72.7B
76Quebec Government & Public🇨🇦 Canada$72.4B
77UniSuper🇦🇺 Australia$72.1B
78Northrop Grumman🇺🇸 U.S.$72.0B
79Pennsylvania School Employees🇺🇸 U.S.$70.4B
80Lloyds Banking Group🇬🇧 UK$69.7B
81Ilmarinen🇫🇮 Finland$69.1B
82Colorado Employees🇺🇸 U.S.$68.6B
83Maryland State Retirement🇺🇸 U.S.$68.5B
84AMF Pension🇸🇪 Sweden$67.3B
85Varma🇫🇮 Finland$67.1B
86Wells Fargo🇺🇸 U.S.$66.0B
87Sunsuper🇦🇺 Australia$66.0B
88Verizon🇺🇸 U.S.$64.1B
89Illinois Teachers🇺🇸 U.S.$64.0B
90J.P. Morgan Chase🇺🇸 U.S.$62.8B
91Electricity Supply Pension🇬🇧 UK$62.5B
92FedEx🇺🇸 U.S.$60.7B
93Nevada Public Employees🇺🇸 U.S.$58.8B
94B.C. Municipal🇨🇦 Canada$58.7B
95AP Fonden 4🇸🇪 Sweden$57.7B
96Missouri Schools & Education🇺🇸 U.S.$57.0B
97AP Fonden 3🇸🇪 Sweden$55.9B
98Social Insurance Funds🇻🇳 Vietnam$55.7B
99Organization for Workers🇯🇵 Japan$55.6B
100Illinois Municipal🇺🇸 U.S.$54.9B

U.S. fund data are as of Sep. 30, 2021, and non-U.S. fund data are as of Dec. 31, 2021. There are some exceptions as noted in the graphic footnotes.

Japan’s Government Pension Investment Fund (GPIF) is the largest in the ranking for the 21st year in a row. For a time, the fund was the largest holder of domestic stocks in Japan, though the Bank of Japan has since taken that title. Given its enormous size, investors closely follow the GPIF’s actions. For instance, the fund made headlines for deciding to start investing in startups, because the move could entice other pensions to make similar investments.

America is home to 47 funds on the list, including the largest public sector fund: the Thrift Savings Plan (TSP), overseen by the Federal Retirement Thrift Investment Board. Because of its large financial influence, both political parties have been accused of using it as a political tool. Democrats have pushed to divest assets in fossil fuel companies, while Republicans have proposed blocking investment in Chinese-owned companies.

Russia’s National Wealth Fund comes in at number 19 on the list. The fund is designed to support the public pension system and help balance the budget as needed. With Russia’s economy facing difficulties amid the Russia-Ukraine conflict, the government has also used it as a rainy day fund. For instance, Russia has set aside $23 billion from the fund to replace foreign aircraft with domestic models, because Western sanctions have made it difficult to source replacement parts for foreign planes.

The Future of Pension Funds

The biggest pension funds can have a large influence in the market because of their size. Of course, they are also responsible for providing retirement income to millions of people. Pension funds face a variety of challenges in order to reach their goals:

  • Geopolitical conflict creates volatility and uncertainty
  • High inflation and low interest rates (relative to long-term averages) limit return potential
  • Aging populations mean more withdrawals and less fund contributions

Some pension funds are turning to alternative assets, such as private equity, in pursuit of more diversification and higher returns. Of course, these investments can also carry more risk.

Ontario Teachers’ Pension Plan, number 18 on the list, invested $95 million in the now-bankrupt cryptocurrency exchange FTX. The plan made the investment through its venture growth platform, to “gain small-scale exposure to an emerging area in the financial technology sector.”

In this case, the investment’s failure is expected to have a minimal impact given it only made up 0.05% of the plan’s net assets. However, it does highlight the challenges pension funds face to generate sufficient returns in a variety of macroeconomic environments.

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Visualized: FTX’s Leaked Balance Sheet

As Sam Bankman-Fried’s crypto exchange FTX files for bankruptcy, this graphic visualizes FTX’s balance sheet leaked by the Financial Times.

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Visualizing FTX’s Balance Sheet Before Bankruptcy

In a difficult year for the crypto space that has been full of hacks, failing funds, and decentralized stablecoins going to zero, nothing has compared to FTX and Sam Bankman-Fried’s (SBF) rapid implosion.

After an astronomical rise in the crypto space over the past three years, crypto exchange FTX and its founder and CEO SBF have come crashing back down to earth, largely unraveled by their misuse of customer funds and illicit relationship with trading firm Alameda Research.

This graphic visualizes FTX’s leaked balance sheet dated to November 10th, and published by the Financial Times on November 12th. The spreadsheet shows nearly $9 billion in liabilities and not nearly enough illiquid cryptocurrency assets to cover the hole.

How did FTX wind up in this position?

How FTX’s Bankruptcy Unfolded

FTX’s eventual bankruptcy was sparked by a report on November 2nd by CoinDesk citing Alameda Research’s balance sheet. The article reported Alameda’s assets to be $14.6 billion, including $3.66 billion worth of unlocked FTT and $2.16 billion of FTT collateral.

With more than one-third of Alameda’s assets tied up in FTX’s exchange token FTT (including loans backed by the token), eyebrows were raised among the crypto community.

Four days later on November 6th, Alameda Research’s CEO, Caroline Ellison, and Sam Bankman-Fried addressed the CoinDesk story as unfounded rumors. However, on the same day, Binance CEO Changpeng Zhao (CZ) announced that Binance had decided to liquidate all remaining FTT on their books, kicking off a -7.6% decline in the FTT token on the day.

Back and Forth with Binance’s CZ

While Ellison publicly offered to buy CZ’s FTT directly “over the counter” to avoid further price declines and SBF claimed in a now-deleted tweet that “FTX is fine. Assets are fine.”, FTX users were withdrawing their funds from the exchange.

Less than 24 hours later on November 7th, both SBF and CZ tweeted that Binance had signed a non-binding letter of intent for the acquisition of FTX, pending due diligence.

The next day, the acquisition fell apart as Binance cited corporate due diligence, leaving SBF to face a multi-directional liquidity crunch of users withdrawing funds and rapidly declining token prices that made up large amounts of FTX and Alameda’s assets and collateral for loans.

FTX’s Liabilities and Largely Illiquid Assets

In the final days before declaring bankruptcy, FTX CEO Sam Bankman-Fried attempted a final fundraising in order restore stability while billions in user funds were being withdrawn from his exchange.

The balance sheet he sent around to prospective investors was leaked by the Financial Times, and reveals the exchange had nearly $9 billion in liabilities while only having just over $1 billion in liquid assets. Alongside the liquid assets were $5.4 billion in assets labeled as “less liquid” and $3.2 billion labeled as “illiquid”.

When examining the assets listed, FTX’s accounting appears to be poorly done at best, and fraudulently deceptive at worst.

Of those “less liquid” assets, many of the largest sums were in assets like FTX’s own exchange token and cryptocurrencies of the Solana ecosystem, which were heavily supported by FTX and Sam Bankman-Fried. On top of this, for many of these coins the liquidity simply wouldn’t have been there if FTX had attempted to redeem these cryptocurrencies for U.S. dollars or stablecoin equivalents.

While the liquid and less liquid assets on the balance sheet amounted to $6.3 billion (still not enough to equal the $8.9 billion in liabilities), many of these “less liquid” assets may as well have been completely illiquid.

Relationship with Alameda Research

When looking at FTX’s financials in isolation, it’s impossible to understand how one of crypto’s largest exchanges ended up with such a lopsided and illiquid balance sheet. Many of the still unfolding details lie in the exchange’s relationship with SBF’s previous venture that he founded, trading firm Alameda Research.

Founded by SBF in 2017, Alameda Research primarily operated as a delta-neutral (a term that describes trading strategies like market making and arbitrage that attempt to avoid taking directional risk) trading firm. In the summer of 2021, SBF stepped down from Alameda Research to focus on FTX, however his influence and connection with the firm was still deeply ingrained.

A report from the Wall Street Journal cites how Alameda was able to amass crypto tokens ahead of their announced public FTX listings, which were often catalysts in price surges. Alongside this, a Reuters story has revealed how SBF secretly moved $10 billion in funds to Alameda, using a bookkeeping “back door” to avoid internal scrutiny at FTX.

While SBF responded to the Reuters story by saying they “had confusing internal labeling and misread it,” there are few doubts that this murky relationship between Alameda Research and FTX was a fatal one for the former billionaire’s empire.

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