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07 December 2019

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None. Just as when all those who forecasted doom for the USD & Treasury bonds if the Chinese ever sold their dollar reserves. Well, they did, to the tune of hundreds of billions and the result - dollar rising and the Treasury bond market unperturbed. And what is not so well understood, is that Chinese did not draw down USD reserves because they wanted to but because they had to.

What those who don't understand trade finance don't get is that any product or commodity can be priced in any convertible currency and can be converted at will. Among convertible currencies none matches the dollars liquidity and depth. There's no other currency that even comes close. And there's no other market that finances trade anywhere close to the scale of the offshore eurodollar market. Why do you think the Fed has to open up swap lines every time there's a hiccup in the global financial system?

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