Chinese Finance Officials Held Emergency Meetings with Bankers in Response to Sanctions against Russia

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Chinese officials held discussions with leading domestic and foreign bankers last month following the imposition of financial sanctions by the US upon Russia, due to concerns that similar measures might be applied to Beijing in future.

The Financial Times reports that officials from the Ministry of Finance (MOF) and the People’s Bank of China (PBOC) met with bankers on 22 April to address concerns over potential Western sanctions in the case of military conflict.

Chinese officials were particularly concerned about the protection of Chinese-owned overseas assets, in particular its USD$3.2 trillion in foreign reserves, which includes over USD$1 trillion in Treasury bonds.

The discussions arrived after the US led the imposition of financial sanctions upon Moscow in response to the launch of military action in Ukraine on 24 February. Chief amongst these measures was cutting off Russia from Swift’s interbank messaging network, and the seizure of Russian foreign currency reserves worth USD$300 billion.

Sources said that bankers participating in the discussions were unable to provide a fix at the time for the potential contingency.

“No one on-site could think of a good solution to the problem,” said one source to FT. “China’s banking system isn’t prepared for a freeze of its dollar assets or exclusion from the Swift messaging system as the US has done to Russia.”