China doesn't need to sell its holdings of US treasuries, it just has to hold them in a bank account outside the west. If the US refuses to pay interest on them, they would be in default, which they haven't been willing to do with russia. 1 trillion dollars is also not really a lot of money when your GDP is 18 trillion.
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Discussing long term impacts of Ukraine crisis
- Thread starter sndef888
- Start date
China doesn't need to sell its holdings of US treasuries, it just has to hold them in a bank account outside the west. If the US refuses to pay interest on them, they would be in default, which they haven't been willing to do with russia. 1 trillion dollars is also not really a lot of money when your GDP is 18 trillion.
Unfortunately, that's not how it works because theres no realistic(nor practical) way to hold hundreds of billions of USD in physical paper (hundred) dollar bills in this hypothetical "bank account outside of the west". That outside bank will still need to have an USD account at the US federal reserve bank( or at a member bank ) that maintains a balance of how much USD belongs to them and their customers otherwise without holding physical cash, who's to say they actually have the USD reserves that China deposited with them?
You need to think about how "sending" money from a person at one bank to a person at another bank actually works. What is actually being sent? It's not physical paper cash. You're only sending a message between banks to say deduct xyz from the bank's master account at a FED member bank and credit the value to the receiver bank's account at the FED who then credits the final receiver of the money. All USD based transactions go through this process.
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Unfortunately, that's not how it works because theres no realistic(nor practical) way to hold hundreds of billions of USD in physical paper (hundred) dollar bills in this hypothetical "bank account outside of the west". That outside bank will still need to have an USD account at the US federal reserve bank( or at a member bank ) that maintains a balance of how much USD belongs to them and their customers otherwise without holding physical cash, who's to say they actually have the USD reserves that China deposited with them?
You need to think about how "sending" money from a person at one bank to a person at another bank actually works. What is actually being sent? It's not physical paper cash. You're only sending a message between banks to say deduct xyz from the bank's master account at a FED member bank and credit the value to the receiver bank's account at the FED who then credits the final receiver of the money. All USD based transactions go through this process.
sorry, I just read the statement and mistook it as USD currency reserves when it was originally brought up as US Treasuries. But a similar situation still applies, when those treasuries mature or interest is paid, the dollars paid out still needs to go through the USD banking system which puts the assets at risk.
Yes, there is a risk that the interest payments would be withheld. But that would mean that the US government is officially in default.sorry, I just read your statement and mistook it as USD currency reserves when it was originally brought up as US Treasuries. But a similar situation still applies, when those treasuries mature or interest is paid, the dollars paid out still needs to go through the USD banking system which puts the assets at risk.
My understanding is that the Russian central bank kept its reserves at an account with the Federal reserve so that they could easily intervene in the currency market. This makes it easy to freeze them. If a country manages their foreign reserves from a neutral country like the UAE or Singapore, the country imposing the sanctions either has to default or pressure the neutral country into joining the sanctions.
last year upto 70% of Kazakhstan reserves were in Gold. this give you idea what these countries in EEU were thinking ahead of time.
The share of gold in the national reserves reached 67.7 percent. At the same time, freely convertible currency assets of the bank increased by $311 million due to the $297 million decrease in National Bank’s deposits and accounts.
I least some politicians are pointing the hypocrisy.
How is this related to the long term impacts of Ukraine crisis?
I don't know i just didn't find a good place to post it.
But probably will put pressure in the U.S. to accept that the region is the sphere of influence of Russia as much Latin America is of the United State.
But probably will put pressure in the U.S. to accept that the region is the sphere of influence of Russia as much Latin America is of the United State.
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I don't think it's them changing nature. They're been shipping TB2s to Poland as fast as they can make them since the war started and are only now wondering whos going to be picking up the bill.changing nature of Turkey. while Korea need permission as it cannot make things fully 100%.