Russia suddenly stopped, to reduce its stake in US debt. This is evident from the statements of the U.S. Treasury, issued on 15 August. In June, Russia had the state bonds of $ 14.9 billion Exactly as we had Treasury securities and by the end of may.
It means that the Kremlin gave the “red light” accelerate the withdrawal of reserves of American securities. Up to this point, the last three months we got rid of the US Treasuries Stakhanov pace. In reality, the pace these were.
At the beginning of 2018, the volume of Russian investments was $ 102,2 billion, as of April 1 — $ 96,1 billion But on April 6 the U.S. Treasury in response to “a variety of malicious activities of the Russian Federation” launched a fundamentally new extension of anti-Russian sanctions. In the new list first came big businessmen that are not related to the oil and gas industry, and their assets. This caused a massive sale of Russian securities and a fall of the ruble. For the week that began on 9 April, the ruble has lost more than 12%.
After that, Moscow and the beginning of an accelerated withdrawal of reserves from us bonds. In April, the Russian investments has halved — from $ 96,1 billion to $ 48.7 billion In may, even three times — to $ 14.9 billion as a result of Russia dropped from the list of 32 largest holders of American debt, which the U.S. Treasury ranks in terms of investment.
As reported by the head of the Central Bank Elvira Nabiullina, the regulator is “pursuing a policy of diversification of reserves, given the economic and geopolitical risks”. Then the question arises: why do we not continue to sell US treasuries?
One of the possible versions — Moscow gives a signal to Washington that it is not necessary to tighten sanctions. Otherwise we resume the process of leaving the U.S. debt.
We will remind, on 8 August, the state Department announced new sanctions against Russia — this time in connection with the case of the poisoning of Skrobala. The first package is scheduled to enter August 22. It will include a ban on the export to Russia of certain goods. In particular, electronic devices, sensors and lasers, equipment for oil and gas production, as well as “technology in the field of information and security.”
The second package is more rigid. Washington could enter it in a few months if Moscow does not provide “safeguards against chemical and biological weapons.” Then, the United States intend to take to reduce the level of diplomatic relations and a major limitation of export and import.
As explained in the state Department, we are talking about the goods on “a few hundred million dollars.” Moreover, restrictive measures “could include a ban on Bank loans from any U.S. Bank.”
On the approach of the “Act for the protection of American security from the aggression of the Kremlin in 2018,” prepared by Republican Lindsey Graham and three of his colleagues. In the economic part of the document the most important requirement of a prohibition on operations in the United States (and the freezing of assets) of seven Russian banks. Including Sberbank, VTB, VEB and PSB. In addition, the text contains the actual ban on operations with Russian debt with a maturity of more than two weeks.
It can be assumed that if the United States will be to tighten the screws too zealously, Russia completely sell out the bonds. And thereby set a bad example Turkey and China. Note: Ankara in June have already reduced the amount of us bonds to $ 28.8 billion — 42% of the total. China — $ 4.4 billion ($ 1.18 trillion).
How serious for Washington, the threat of withdrawal of some countries from US Treasuries? What is behind the suspension of Moscow’s sale of us bonds?
— Russia, of course, sets an example by reducing the reserves in US bonds. But other countries are not very inspired — the Chairman of Russian economic society. SF Sharapova, Professor of international Finance (University) Valentin Katasonov. — China lowered the reserves in U.S. Treasury securities slightly. In contrast, several countries significantly increased the share. Among them UK, Singapore, Cayman Islands, South Korea, Luxembourg, Belgium, Italy. Due to this, total investments of the foreign States in US treasuries compared to may remained the same — $ 6,21 trillion.
Moreover, in the history of the sharp decline in the share of Russia in the American state debt showed a curious turn. The experts of the influential us Council on foreign relations (CFR) claim that Moscow has sold 84% of Treasury securities of the United States, only 45% of the hidden bonds in the offshore. In a statement on the organization’s website notes that 16% are still registered as Russian assets in the U.S., and 39% are hidden in offshore companies in Belgium and the Cayman Islands.
At the same time, according to the CFR, in April and may of this year, possession of the US national debt has risen sharply in Belgium, where the Bank is the Depository for Euroclear. And the Cayman Islands — $ 25 billion and $ 20 billion respectively.
Notice, CFR — reputable organization that has access to reliable sources of information. And if we accept the version of the CFR, it turns out that Russia did not come out of U.S. Treasury securities. They just translated them in the Depository in any other jurisdiction where they become “not visible” to the U.S. Treasury.
Apparently, prior to that, US Treasuries purchased by Russia, were in American depositories.
“SP”: — so be it, but why bonds in the amount of $ 14.9 billion we don’t touch? We play into the hands of Washington?
— $14.9 billion — not the amount that is principal.
Let me remind you, the peak of Russian investments in US government bonds fell in February 2013. Then they made $ 164,3 billion only in 2014, in the Wake of the current geopolitical complexities, the first stage of the withdrawal of the reserves from U.S. government bonds.
It is likely that the current amount of reserves is technical in nature. And is required to pay, which is expected to produce in the near future — for example, the repayment of external debt of Russia.
In any case, the $ 14.9 billion the weather is not. For example, in reserves the people’s Bank of China the sum of US treasuries is $ 1.18 trillion. Now, if the Chinese are “dumping” at least half of these securities, it would have definitely led to the collapse of the current dollar system.
“SP”: — That is, we cannot threaten the United States: stop to tighten the sanctions or we sell out all us Treasury bonds?
For Washington, this sale — that elephant’s grain. Foreign governments have bought US bonds $ 6,21 trillion. Against this background, our sale will harm America in homeopathic doses.
— If a number of countries began to get out of US treasuries, it really would have created the Washington a big problem — said the Director of the Institute of political studies Sergei Markov. — Demarches of Russia with us bonds Washington a little worried. The fact that Russia is now in a special situation: it is added to the “axis of evil” that included Iran and North Korea. Therefore, other countries Russian situation can not stand. And act following the example of Moscow do not intend.
“SP”: — Their reserves of American securities actively removes Turkey. So, the example still valid?
— Against Turkey, the Americans launched the same process, which is already in force against Russia and Iran. Revealing, on the contrary, the situation is different. The national Fund of Kazakhstan Dutch court in December 2017 has frozen $ 22 billion, which were kept in American Bank of New York Mellon. So, after the release of Kazakhstan did not take away from the American Bank a large part of the money.
Most countries, including Kazakhstan, are subject to the Americans. And for them just does not make sense to get out of US Treasuries.
A special place, I will notice, is China. Beijing is not subject to Washington, and has huge reserves in us debt securities. But the Chinese and us economies — a huge mutual integration. Therefore, the arrest of the Chinese part of us debt will cause huge damage to the US economy.
“SP”: — What are we gonna do with the $ 14.9 billion that are still invested in Treasury bills?
— To predict the actions of our financial authorities impossible. One thing is clear: they often make mistakes. For example, on the withdrawal of the greater part of the Russian reserves of US Treasuries, experts say 2014. But this is done only now, with heavy us losses.
And, according to my information, the money invested in European financial instruments. Meanwhile, the EU is the USA’s allies in NATO. In respect of the Russian Federation can make the same decisions that Americans.
“SP”: — How it would be right to place our reserves?
It is rational to do so, as do the developed countries. Which not only invest in foreign debt, but also invest in their own economy.
Money should not accumulate in the pod. They should invest in major projects and infrastructure, construction of refineries, export promotion, development of the Arctic shelf. Then the impact of US sanctions on us will be minimal.
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