Berend van Roijen, CFA, CAIA, CES’ Post

U.S. Treasury Secretary stresses 'urgent' need to allocate Russian assets to Ukraine - from Voice of America: U.S. Treasury Secretary Janet Yellen said on Tuesday that it is "urgent" for the G7, the group of seven leading industrialized nations, to seize some $285 billion worth of frozen Russian assets and redirect the funds to Ukraine. Pressure has been mounting on the United States and Europe to make use of the funds. Although Yellen said that there isn't a "preferred strategy" to address the issue, she added that the G7 makes up more than half the global economy and all action should be taken jointly. Yellen said during a news conference in Sao Paulo, Brazil, that the U.S. and its allies are evaluating ways to move the assets and the risks associated with using them. G7 leaders asked for solutions to be presented in June. While speaking to journalists in Brazil, Yellen said, "It is necessary and urgent for our coalition to find a way to unlock the value of these immobilized assets to support Ukraine's continued resistance and long-term reconstruction." Yellen's comments come before the G20, comprising the 20 biggest economies, is set to meet and discuss the issue on Wednesday and Thursday. G7 officials say they will meet on the sidelines of the meeting in Brazil to discuss ways to support Ukraine. While many have been calling on the West to redirect frozen funds to Ukraine, some fear that taking such actions against Russia would undermine currencies like the dollar, the euro or the Japanese yen. Yellen responded to the concerns, saying that a major shift from currencies is "extremely unlikely," citing the uniqueness of the situation. She added that there is a "strong international law, economic and moral case for moving forward," with redirecting the assets, and that it would show Russia that Ukraine's allies will stand strong in solidarity. She also said that strong joint action could provide an incentive to Moscow to negotiate peace with Ukraine, and that the country needs approximately $486 billion to recover from the war. Full report: https://lnkd.in/egvbvRzB

Representatives from every major domestic and foreign bank, including HSBC, were reportedly summoned to an emergency summit where worried officials from the central bank and finance ministry demanded to know what steps could be taken to protect the country’s economy in the event of Western economic action. Xi’s administration was particularly alarmed by the ability of the US and its allies to freeze the Russian central bank’s dollar assets. They wanted to know how China’s $3.2 trillion in foreign reserves could be protected. - On the one hand, the regime was right to be concerned. Last year, a report published by the Atlantic Council, a Washington DC think tank, and New York-based research firm Rhodium Group, analysed various sanctions scenarios in the event of a major escalation over Taiwan. It found that in the most extreme scenario involving sanctions on China’s major financial institutions, “at least” $3 trillion in trade and financial flows “would be put at immediate risk of disruption”. The risks for both sides are massive. A close examination of President Xi’s economic manoeuvres suggests he has been quietly preparing for years for such a confrontation. - Diana Choyleva, chief economist at Enodo Economics, says it all amounts to “a fundamental rewiring of how the world works”. - “This idea of self-reliance is central to everything that Xi Jinping thinks or says.” This goes hand in hand with an anti-Western approach. “Anti-Americanism is … the foundation stone of Chinese foreign policy,” says Parton. And the touchstone of America’s economic and geopolitical power is the hegemony of the US dollar. The dollar’s position as the world’s reserve currency means countries are intertwined with the US economy. “In China they believe that the Western financial system has always been stacked against them,” says Parton. As well as trying to move to assets outside of the dollar system, China is trying to de-dollarise its international transactions.

US-China: Yellen Takes it Down a Notch: At this point last year, a visit by a senior US government official to China would have created a frenzy of geopolitical speculation in the media here in Asia and elsewhere. As Janet Yellen's just-concluded trip shows, that no longer seems to be the case. #YellenUSChinarelationshipbankingindustry

A great article to share with you!

🙋🏿♂️ how long to a possible Trump? 🗣 10 years in Chinese time!!! 🤖 “It found that in the most extreme scenario involving sanctions on China’s major financial institutions, “at least” $3 trillion in trade and financial flows “would be put at immediate risk of disruption”. The risks for both sides are massive. A close examination of President Xi’s economic manoeuvres suggests he has been quietly preparing for years for such a confrontation. 🙋🏿♂️Can 🇺🇸 hold up keiuteir falls? - Diana Choyleva, chief economist at Enodo Economics, says it all amounts to “a fundamental rewiring of how the world works”. - “This idea of self-reliance is central to everything that Xi Jinping thinks or says.” 🗣 🇨🇳 Trade routes #brics plus 183 + “overcapacity “ + all the ⛽ + currency backed by ⛽+ manufacturing A to Z! 🎤 🇷🇸: 😋🤑 🇫🇷: war OR 🫣❓

Janet Yellen says the US will push China to change its industrial policy of flooding global markets with underpriced goods. The most interesting part of the press conference was the last couple of minutes, where she highlighted China's high saving rate of "close to 45%" and suggested the Chinese government could unleash a demand-side stimulus. Chinese consumer spending is half (38% of the GDP) of the US and Europe, so there is potential demand, but culturally, the Chinese prefer to save their money. Furthermore, low-cost Chinese goods reduce Western exports and margins, which domestic tariffs can't protect against. #china #usa #europe #trade #economics

In a new op-ed from GTS co-founder & CEO Ari Rubenstein, he calls for the passage of a bipartisan bill introduced in the U.S. House that would create a public-private committee to develop a plan to mitigate the economic and market impact of a Chinese invasion of Taiwan. The congressmen cite GTS data in their legislation. You can read the op-ed here: https://lnkd.in/edv-NJMS #markets #China #economy

As the IMF and World Bank meetings continue in Washington this week, foreign governments and market analysts are watching the impending American election to see how monetary and trade policy, particularly with China, will be affected. Other topics of discussion at the summit include the wars in Ukraine and Gaza, as well as generally slowing growth globally and environmental cooperation. https://lnkd.in/eFcXiavu

The Use of Economic Statecraft to Achieve Geopolitical Ends Janine Stouse August 14, 2024 The US government has at its disposal an array of economic policies to incentivize or punish other countries through tariffs, sanctions, import and export controls, and investment restrictions, among other tools. The biggest threats to the dollar include sanctions and tariffs. Because of USD global dominance and US control over the Society for Worldwide Interbank Financial Telecommunications, sanctions are particularly low-hanging fruit for economic statecraft. They are an extremely important tool, particularly when used by the United States and its allies in multilateral coalitions acting together. But frequent unilateral usage of sanctions and overuse has led to more countries desiring an alternative currency, as countries become wary about being too dependent on the USD. The alliance of the aggrieved seek alternatives to sanctions including positive assistance to the injured party, as compared with reprisals against the aggressor or organizing logistical and financial aid to countries in distress. Geoeconomic fragmentation and policy-driven reversal of global integration carry potential adverse economic ramifications that could hamper international cooperation and strain the international monetary system and financial safety nets. Unraveling trade links would most adversely impact low-income countries and less well-off consumers in advanced economies, and US sanctions and tariffs can accelerate fragmentation as countries perceive economic interdependence, particularly with the United States, a vulnerability as interdependence is weaponized. Economic security is national security. Recent commentary on economic statecraft correctly identifies weaknesses in US national economic security priorities, lack of resources, staffing, and organizational design. Deputy National Security Adviser for International Economics, Daleep Singh, one of the primary architects of the Russian sanctions, highlights the necessity for economic statecraft to be grounded in doctrine that enhances global prosperity while safeguarding US national security. Employing economic coercion can be effective, but should be brought to the table with well-defined end goals and long-term ramifications in mind. Currently, there is no whole-of-government effort to counter Chinese and Russian de-dollarization schemes.