Obama Administration Allows China to Become First Country to Buy Debt Directly from Treasury Dept.
Wednesday, May 23, 2012
When buying portions of the U.S. debt, foreign banks must first go through certain banks on Wall Street certified by the Department of the Treasury for such sales. But the Obama administration decided last year to forego this middle-man process for China’s central government-controlled bank, which now has the exclusive ability to buy U.S. treasuries directly from the federal government.
This arrangement represents the first time a foreign bank has been given direct purchasing power from the Treasury Department, according to Reuters.
The People’s Bank of China now enjoys a type of access that no other central bank in the world possesses, not even the Bank of Japan, which owns a large share of the U.S. debt.
China currently holds $1.17 trillion in U.S. Treasuries compared to Japan’s $1.08 trillion. It is also the largest exporter to the U.S. and America’s largest creditor.
To Learn More:
Exclusive: U.S. Lets China Bypass Wall Street For Treasury Orders (by Emily Flitter, Reuters)
Major Foreign Holders of Treasury Securities (Department of the Treasury)
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