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>> all USD transactions go through US institutions regardless of where those transacting partners are located. Do they? It is my understanding that the (origin

• chollida1 1y ago
  You are correct and the original poster is wrong in this specific regard. Infact one of the most interesting/scary incidents for the US dollar was China selling USD denominated bonds and getting almost the same rate as the US government gets, which essentially means China can compete for USD with US government. The implications of this is that if CHina wants, they now have another level to compete with the US. They can now issue USD denominated debt along the yield curve in areas where it would hurt the US hte most. In the short term that is the frond end of the yield curve(short term under a year) where the US has to roll about $8 Trillion in debt over the next year. With China competing by offering bonds here they will force up the interest rate the US has to pay pushing yields up with is the exact opposite of what Trump has publicly stated that he wants and making the US's already large fiscal deficit an even larger problem.
  • hunglee2 1y ago
    appreciate the education
  • tcgv 1y ago
    China certainly can issue dollar bills more cheaply than the US and it already does in small size, but scaling that up would concentrate currency, rollover and sanctions risk on Beijing while simultaneously reinforcing the dollar system it ultimately wants to escape. The trade-off is therefore asymmetric: the political sting to Washington would be modest and reversible, whereas the balance-sheet, legal and geopolitical liabilities for China would linger long after the bonds are sold.
    • ta20240528 1y ago
      > Its Western assumption that China wants to escape the USD reserve currency. Nah, they have a lot of them, they don't want their value to drop. What the world wants is to escape (at least in the medium term) is the US oversight that forces the USA's enemies to be everyone else's enemies. From what I can tell, they are going to use (are using) Hong Kong as a ex-USA location to price and trade USD - modeled on the Eurodollar. With a lot of trade-with-China being settled in their e-CNY CBDC. As a poster alluded to - the big loss for the USA is the insights into pricing and demand. Nascent, but that's the trend AFAICT.
• pstation 1y ago
  Correct. You can open up an USD account in maybe Zambia and transfer funds to another USD account in Dubai without it ever touching the US financial system.
  • ty6853 1y ago
    Yet interestingly the USA could put you in jail for wire fraud for 20 years for doing so even if you never interacted with the USA or any US citizens or ever stepped foot on their territory.
    • robocat 1y ago
      The wire fraud laws seem like they are meant to catch everything? The law seems to get used whenever the US wants to jail someone it doesn't like (but doesn't have a good reason)
      • ty6853 1y ago
        Well there has to be something a little softer than the extrajudicial drone executions.
  • thresh 1y ago
    Is that correct? My understanding is that the SWIFT transfer will go through a US correspondent bank in this case.
    • deleted 1y ago
      [deleted]
    • sgjohnson 1y ago
      Not necessarily. A correspondent bank is simply a bank where the recipient bank has an account in the specified currency. For domestic currencies used only in certain countries, that bank will almost always be in that country. For currencies used globally - not necessarily.
• cryptonector 1y ago
  Sure, but London is in the UK, and the UK is a member of the Five Eyes, and so is the U.S. It's pretty safe to say that if the U.S> wants that data, the U.S. gets that data. However, all those transactions are settlements transactions, so it's not that useful.