(Zerohedge) China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury’s first-ever direct relationship with a foreign government, according to documents viewed by Reuters.
The relationship means the People’s Bank of China buys U.S. debt using a different method than any other central bank in the world.
The other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for U.S. debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions…
I have some disturbing perspective on this ‘development’ – that secure direct link is not so that China can buy securities at a discount, or to hide their purchasing activities from the rest of the world, as has been suggested elsewhere. The primary purpose of this private, secure link is so that China can sell bonds which it already owns *back to the FED* quietly and directly, so as not to cause panic in the greater market.
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