Wall Street Journal
March 14, 2014
Foreign central banks’ Treasury bond holdings parked at the Federal Reserve dropped by the most on record in the latest week. Some analysts think the crisis in Ukraine is sparking the move.
Their theory: Russia is shifting its Treasury bond holdings out of the Fed and into offshore accounts. That way, Russia would be able to buy or sell its portfolio if the U.S. and its European allies impose economic sanctions amid growing geopolitical tensions in Ukraine.
Treasury securities held in custody for foreign official and international accounts tumbled by $105 billion in the week that ended Wednesday, according to weekly data released late Thursday. That shrank Treasury bond holdings by foreign central banks to a 15-month low of $2.855 trillion, though still near a record high of $3.02 trillion set in December.
Relations between the West and Russia have deteriorated sharply in recent days as Crimea prepares to hold a referendum Sunday on whether to split from Ukraine and join Russia. Ukraine, the European Union and the U.S. view that vote as illegal. The U.S. and Germany warned that Russia could face economic sanctions if the crisis worsens.
This article was posted: Friday, March 14, 2014 at 3:42 pm