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Started By
Message
A Chinese Belgian Waffle?
Posted on 12/21/14 at 7:41 am
Posted on 12/21/14 at 7:41 am
In an earlier topic, poster TerryDawg03 linked a listing a of the Major Foreign Holders of Treasury Securities. Good stuff.
When one grazes through the data a WTF moment occurs when it appears that Belgium is the third-greatest holder of US paper. No points for guessing the first two, but Belgium? A country with a GNP of $508 billion owns $348 billion in US Treasury securities? Uh, wait...
Upon Googling, some earlier guesses were found with Zero Hedge, Bloomberg and an off-brand but they all seem to point to the Chinese using a Belgian-based proxy for their purchases. As per CNN:
"One player in this great Belgian mystery is clearinghouse Euroclear, which holds onto securities like Treasuries for clients, including central and commercial banks. If they hold onto bonds for the People's Bank of China, it would show up in the Treasury data as Belgian instead of Chinese. The company declined to say outright if that is the case.
"It's not unreasonable to assume that we're behind it because we're an international securities depository and our role is to hold finance securities for final institutions all over the world," said Aki Vlahodimos, a Euroclear spokesman.
He said Euroclear can't speak for what their clients' holdings are or why they're putting them in Brussels."
Ok, my question is why? Is there a simple, innocuous explanation such as China just changing to a non-US purchasing agent? Or are there other considerations? If so, do the Chinese really think they can hide this? I mean, $200 billion tends to catch the eye. Before I show my behind with conspiratorial guesses, I'll ask for the MB valued opinion. TIA.
When one grazes through the data a WTF moment occurs when it appears that Belgium is the third-greatest holder of US paper. No points for guessing the first two, but Belgium? A country with a GNP of $508 billion owns $348 billion in US Treasury securities? Uh, wait...
Upon Googling, some earlier guesses were found with Zero Hedge, Bloomberg and an off-brand but they all seem to point to the Chinese using a Belgian-based proxy for their purchases. As per CNN:
"One player in this great Belgian mystery is clearinghouse Euroclear, which holds onto securities like Treasuries for clients, including central and commercial banks. If they hold onto bonds for the People's Bank of China, it would show up in the Treasury data as Belgian instead of Chinese. The company declined to say outright if that is the case.
"It's not unreasonable to assume that we're behind it because we're an international securities depository and our role is to hold finance securities for final institutions all over the world," said Aki Vlahodimos, a Euroclear spokesman.
He said Euroclear can't speak for what their clients' holdings are or why they're putting them in Brussels."
Ok, my question is why? Is there a simple, innocuous explanation such as China just changing to a non-US purchasing agent? Or are there other considerations? If so, do the Chinese really think they can hide this? I mean, $200 billion tends to catch the eye. Before I show my behind with conspiratorial guesses, I'll ask for the MB valued opinion. TIA.
This post was edited on 12/21/14 at 7:46 am
2
Posted on 12/21/14 at 8:10 am to Coeur du Tigre
quote:It facilitates trade with European and other western countries.
Ok, my question is why?
It might also be an indication that China wants some insurance in case it is ever hit with sanctions by the west (ala, Russia currently) and its assets held in China become frozen out by the West. As such the Euroclear holdings are a diversification of risk tactic.
The Chinese may claim to be communists, but they are damn good capitalists when it comes to their money.
Posted on 12/21/14 at 9:08 am to LSURussian
quote:
The Chinese may claim to be communists, but they are damn good capitalists when it comes to their money.
That's sig worthy
Posted on 12/21/14 at 9:14 am to ItNeverRains
Posted on 12/21/14 at 11:59 pm to LSURussian
Ok, thanks Russian, that makes sense. It seems the Chinese are not suspect.
Posted on 12/22/14 at 3:03 pm to Coeur du Tigre
As Russian has quoted its good for diversification, but the primary benefit of this was simply operational efficiency.
When you have a segregated account at a clearinghouse, it becomes much easier to post collateral and settle transactions compared to if the PBoC had to post and/or hypothecate collateral back and forth from mainland China or their outsourced managers to a clearinghouse. It cuts out a step that can sometimes be a pain in the arse, and allows China a good relationship with the European clearinghouse. From there it becomes easier operationally if they want to trade anything with Europe or the US. If the question is "why Treasuries?", that's because US Treasuries are far and away the primary source of collateral globally with the smallest haircuts across the board.
When you have a segregated account at a clearinghouse, it becomes much easier to post collateral and settle transactions compared to if the PBoC had to post and/or hypothecate collateral back and forth from mainland China or their outsourced managers to a clearinghouse. It cuts out a step that can sometimes be a pain in the arse, and allows China a good relationship with the European clearinghouse. From there it becomes easier operationally if they want to trade anything with Europe or the US. If the question is "why Treasuries?", that's because US Treasuries are far and away the primary source of collateral globally with the smallest haircuts across the board.
Posted on 12/22/14 at 4:20 pm to BennyAndTheInkJets
quote:
it becomes much easier to post collateral and settle transactions compared to if the PBoC had to post and/or hypothecate collateral back and forth from mainland China or their outsourced managers to a clearinghouse.
I'm sure somebody knows what this means, but it's not me
Plus, I think inkjet made that word, hypothecate, up
Posted on 12/22/14 at 6:31 pm to white perch
Posted on 12/22/14 at 8:42 pm to LSURussian
quote:
LSURussian
thank you, I understand the house analogy. How and why a country like china would go through a european country to hold debt, I have no idea.
I'll stick to being a doctor and let you and inkjet worry about that
PS - any time you have any quick stock tips, please post them here.
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