Posted on 04/14/2022 11:14:10 AM PDT by FarCenter
The Western-led freeze on half of Russia's gold and foreign exchange reserves after its invasion came as shock to Moscow -- and an unwelcome surprise to Beijing. The move underscored a brutal truth for China, the world's largest holder of foreign reserves: One day, its international assets could be a tempting target, too.
Despite previous U.S. sanctions on dozens of Chinese corporations including Huawei and ZTE, Chinese policy advisers never believed Washington would go so far as to weaponize the entire world's financial system.
However, that thinking has changed. In the space of a month the United States went from seizing $7 billion from the Taliban regime in Afghanistan central bank reserves to sanctioning Russia and freezing -- according to the country's Finance Ministry -- around $300 billion of its $640 billion in gold and forex reserves.
As of January, China was holding just over $1 trillion of its roughly $3 trillion worth of foreign reserves in U.S. Treasurys, according to the U.S. Department of the Treasury. More than half of China's reserves are denominated in dollars, according to the latest data published by the State Administration of Foreign Exchange (SAFE), which put the figure at 59% as of 2016. The wisdom of this arrangement is now the subject of much internal debate in China, and efforts to sanction-proof its financial system could have far-reaching effects on the global economy.
Yu Yongding, told Nikkei Asia "We never expected that the U.S. would freeze a country's foreign currency reserves one day. And this action has fundamentally undermined national credibility in the international monetary system.
"Now the question is, if the U.S. stops playing by rules, what can China do to guarantee the safety of its foreign assets? We do not have an answer yet, but we have to think very hard."
(Excerpt) Read more at asia.nikkei.com ...
“The Chinese can always take their money from America.”
How exactly. They have about $1.5 trillion, where else can they move that?
There is no market as large or as liquid as that for the USD. About $6 trillion in dollars is traded each day. By contract gold is only $130 billion per day.
“Now the question is, if the U.S. stops playing by rules, what can China do to guarantee the safety of its foreign assets?”
As if China ever gave a (redacted) about rules.
Another attempt by the CCP to dethrone the dollar as the global reserve currency.
They missed the whole point to the sanctions: unilateral invasion of nations will not be tolerated by the west. Use the existing framework or face sanctions. Export based economies such as a China need to pay close attention to this.
The ones who lost all credibility in this invasion was Russia. The CCP needs to stay on their side of the Taiwan Strait.
The US used to lead by example.
Now the US is leading the race to the bottom.
“They missed the whole point to the sanctions”
Nope—you missed the whole point to the sanctions.
The US and the West can make up the rules as they go along—and can change those rules on a whim.
Only a foolish nation would want to be dictated to under those circumstances.
“unilateral invasion of nations will not be tolerated by the west.”
You have a wonderful sense of humor.
In Euros, Japanese Yen, and British pounds?
The EU plus the UK have a GDP at least comparable to the US.
And Chinese foreign reserves are currently over $3.2 Trillion, not $1.5 Trillion. With Biden's massive $Trillion dollar deficits, the US dollar is headed nowhere.
The Euro is certainly the next best in terms of volume, but will it even exist in 10 years?
Pretty much all economists now agree the Euro was mistake. Sure there are risks in betting on the dollar, but the Euro is exponentially more likely to fail.
Joe, you sound like a grammer school kid trying to discuss nuclear physics. Friendly advice, I’d knock that off.
Yeah I don’t get this, didn’t we borrow like trillions of dollars from them? What happens if they decide to call in that note?
Really?
Don't make me laugh.
Friendly advice, I'd knock that off.
Try the “unfriendly” advice. That will be more fun to handle.
The EU has a bigger population too, and the Euro will if anything be even stronger in 10 year’s time.
You’ve been talking to the wrong economists.
Why do countries use the US dollar? You don’t even know. You’ll respond back with some idiotic answer. You’ll only sound like a fool mouthing off why someone should use currency X when you don’t even know why they are using the current one they now use.
There is nothing the US dollar provides as a foreign reserve currency that the EU/Euro doesn’t.
Over coming years, the Euro could will grab a bigger share of the foreign currency reserves destination market as Dementia Joe runs the American economy into the ground.
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