Sources say China’s biggest banks are readying contingency plans in case Washington proceeds with a slew of sanctions against them over Beijing’s launch of a National Security Law (NSL).
At least five state-owned banks in China are preparing for the imposition of US sanctions against them, said sources to Reuters according to a 9 July report.
Bank of China (BOC) and the Industrial and Commercial Bank of China (ICBC) are readying themselves for the possibility of losing access to settlements in US dollars, as well as broader exclusion from the greenback.
As the Chinese bank with the biggest international presence and the greatest exposure to the US dollar, BOC had around USD$433 billion in greenback liabilities at the end of 2019.
BOC is reportedly looking at the impact on Iranian banks of US sanctions since 1979, as well as preparing for a bank run in Hong Kong should customers believe it could run out of US dollars.
Big state-owned lender Agricultural Bank of China (ABC) is also looking at contingency plans to deal with the impacts of US sanctions.
On 2 July the US House of Representatives unanimously passed a bill outlining a total of ten potential sanctions against Chinese financial institutions in response to Beijing’s unveiling of the National Security Law (NSL)
The bill specifically mentions the NSL’s violation of the Joint Declaration and the Basic Law of Hong Kong as its rationale for action, and mandates that the Secretary of State identify Chinese officials that are involved.