US Threatens To Cut Off China From SWIFT If It Violates North Korea Sanctions

Tyler Durden's picture

In an unexpectedly strong diplomatic escalation, one day after China agreed to vote alongside the US (and Russia) during Monday's United National Security Council vote in passing the watered down North Korea sanctions, the US warned that if China were to violate or fail to comply with the newly imposed sanctions against Kim's regime, it could cut off Beijing’s access to both the US financial system as well as the "international dollar system."

Speaking at CNBC's Delivering Alpha conference on Tuesday, Steven Mnuchin said that China had agreed to "historic" North Korean sanctions during Monday's United Nations vote. "We worked very closely with the U.N.  I'm very pleased with the resolution that was just passed.  This is some of the strongest items.  We now have more tools in our toolbox, and we will continue to use them and put additional sanctions on North Korea until they stop this behavior."

In response, Andrew Ross Sorkin countered that "we haven't been able to move the needle on China, which seems to be the real mover on this, in terms of being able to apply the real pressure. What do you think the issue is?  What is the problem?"

The stunner was revealed in Mnuchin's answer: "I think we have absolutely moved the needle on China.  I think what they agreed to yesterday was historic.  I'd also say I put sanctions on a major Chinese bank.  That's the first time that's ever been done.  And if China doesn't follow these sanctions, we will put additional sanctions on them and prevent them from accessing the U.S. and international dollar system.  And that's quite meaningful."

And to underscore his point, the Treasury Secretary also said that "in North Korea, economic warfare works. I made it clear that the President was strongly considering and we sent a message that anybody that wanted to trade with North Korea, we would consider them not trading with us.  We can put on economic sanctions to stop people trading."

In other words, to force compliance with the North Korean sanctions, Mnuchin threatened Beijing with not only trade war, but also a lock out from the dollar system, i.e. SWIFT, something the US did back in 2014 and 2015 when it blocked off several Russian banks as relations between the US and Russia imploded.

Of course, whether the US would be willing to go so far as to use the nuclear option, and pull the dollar plug on its biggest trade partner, in the process immediately unleashing an economic depression domestically and globally is a different matter.  So far Washington has been reluctant to impose economic sanctions on China over concerns of possible retaliatory measures from Beijing and the potentially catastrophic consequences for the global economy. Washington runs a $350 billion annual trade deficit with Beijing, while the PBOC also holds over $1 trillion in US debt.

Ironically, the biggest hurdle to the implementation of the just passed sanctions may be the president himself.  “We think it’s just another very small step, not a big deal,” Trump told reporters at the start of a meeting with Malaysian Prime Minister Najib Razak. "I don’t know if it has any impact, but certainly it was nice to get a 15-to-nothing vote, but those sanctions are nothing compared to what ultimately will have to happen,” said Trump who has vowed not to allow North Korea to develop a nuclear ballistic missile capable of hitting the United States.

Separately, at a hearing of the House Foreign Affairs Committee on Tuesday, Republican Chairman Ed Royce said the U.S. should target major Chinese banks, including Agricultural Bank of China Ltd. and China Merchants Bank Co., for aiding Kim’s regime. Russia also came in for criticism. Assistant Treasury Secretary Marshall Billingslea said in prepared remarks to the committee that North Korean bank representatives “operate in Russia in flagrant disregard of the very resolutions adopted by Russia at the UN.”

While China and Russia supported the latest UN sanctions, officials made clear they were troubled by Haley’s comments in the Security Council that the U.S. would act alone if Kim’s regime didn’t stop testing missiles and bombs. They emphasized the world body’s resolution also emphasized the importance of resolving the crisis through negotiations. “The Chinese side will never allow conflict or war on the peninsula,” Foreign Ministry spokesman Geng Shuang said in a statement on Tuesday.

In a soundbite late on Tuesday, Japan's Nikkei quoted prime minister Shinzo Abe who said that "in the end, [the North Korean] problems should be solved through diplomatic dialogue," adding that Japan will "work together with the international community to apply maximum pressure, so that North Korea commits to perfect, verifiable and irreversible denuclearization." For Japan to engage with the regime, he stressed it would have to be "on the condition that North Korea commits to" this complete denuclearization."

Which, of course, won't happen: “sanctions of any kind are useless and ineffective,” Russian President Vladimir Putin told reporters earlier this month at a summit in Xiamen, China. “They’ll eat grass, but they won’t abandon their [nuclear] program unless they feel secure.

Predictably, North Korea's Foreign Ministry slammed the sanctions saying it “condemns in the strongest terms and categorically rejects” the United Nations adding more sanctions, North Korea’s state-run KCNA reported on Wednesday morning. Instead, North Korea warned it “will redouble efforts to increase its strength” as it seeks to establish “practical equilibrium” with U.S.

And so, not only is the entire geopolitical circle jerk back at square one, but the ball is again back in North Korea's court, while the decision on whether or not to launch another ICBM really depends on whether China will give it the quiet go ahead; a China which responds notoriously poorly to being threatened in the global financial arena, like for example when the US threatens to kick it out of the global dollar system...

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FoggyWorld's picture

So then the Tribes are leaving us and moving into China?

roddy6667's picture

We don't have Jews here in China. Any non-Chinese person is forever an outsider. A Jew can't change his name from Cohn to Kong and try to blend in. 

Victor999's picture

Think again, motherfucker.  The Jews have always had folks in high influential positions near the Chinese Communist government.  One, Sidney Shapiro was even made a member of the Politburo!  Here are just some examples of Jews taking leading roles in China:

 

http://www.jewwatch.com/china.html

 

These fuckers are everywhere!

gregga777's picture

His homeland, the racist paradise of Apartheid Israel.

pluto the dog's picture

Is Israel a Mafia State?

The Times of Israel last year that an estimated 25 percent of the revenue of Israel’s lauded high-tech sector comes from shady or fraudulent industries, including online gambling, binary options, forex, downloaders/injectors (companies that put malevolent software on your computer without your knowledge), and the payment, affiliate marketing and adtech companies that service these industries.

 

https://diversitymachtfrei.wordpress.com/2017/09/11/this-times-of-israel...

Victor999's picture

The Jews have always capitalised on the Goys' moral shortcomings - drugs, alcohol, pron, slavery, sex trade, moneylending, etc.  They thrive on it.   Sad thing is, we let them do it.

ICValue's picture

Monetary end game

Hillarys Server's picture

The US has been an unrepentant killer for a long time.

Killing 500,000 children in Iraq for a lie and saying "It was worth it" and rubble-izing Libya, sodomizing Qaddafi with a bayonet and clapping hands like a Toys R Us monkey toy while having a giggle fit.

So now the US is a self harm bully too. "We will stop Swift!"

That should be the title of every American history textbook, "The Self Harm Bully That Kills".

With a picture in the cover of the "I want you" guy dressed up as a scary clown with cut scars on his wrists.

So that's why the US makes such good "It" movies.

By the way, I feel for the 3,000 or so that died in 911 but where is the memorial for the 500,000 small children that Madaline killed and whose work Hillary continued?

That's almost 200 times the number killed in 911 and all of them children,

Where are the commemorative pieces of bent metal from the parents banging their heads against the wall when the small bodies of their children were wrapped in a carpet and brought home to them?

Lizardking's picture

Call the bluff, US will never do anything to hurt the stock market. PPT can't handle that sell side load at this point in time. Maybe a year and change from now it could, but at this moment China, NK, Russia can pretty much do whatever they want and US will not respond. To much money at risk and the players are not ready for the sell side pressure. 2019 will be a different story, US will be ready to fire and disrupt financial markets by then. Bears should keep powder dry until 2019 then start taking positions.

onmail1's picture

America and its ratatouille Zewish Rats
are begging for World War
A nuclear Holocaust for zewish
and end of white domination
========
China Russia BRICS its time
for an alternate SWIFT
Dump the dollar
Dump the euro
Dump the pound
Dump western currencies

and create a new world of own currencies
BRICS produces everything to run the world

IT IS TIME

onmail1's picture

America and its ratatouille Zewish Rats
are begging for World War
A nuclear Holocaust for zewish
and end of white domination
========
China Russia BRICS its time
for an alternate SWIFT
Dump the dollar
Dump the euro
Dump the pound
Dump western currencies

and create a new world of own currencies
BRICS produces everything to run the world

IT IS TIME

bass ackwards's picture

Is poor baby sick of sitting in the back seat? Do you feel the world owes you a place in it?  fkn moron

 

The ultimate consumers end-user customers in this world are  in America and Europe....go ahead shoot yourself if the foot, and sell you cheap copycat shit to Russia india and brazil...see how well your peaceful rise works out.

Hillarys Server's picture

Crazed Mnunchkins singing "Ding Dong the Swift is Dead"

https://m.youtube.com/watch?v=PHQLQ1Rc_Js

DEMIZEN's picture

the end of swift if ever materialized

honestann's picture

BE CAREFUL WHAT YOU WISH FOR... YOU MIGHT GET IT, SCUMBAG.

Step #1:  USSA cuts off China from dollar system.

Step #2:  To the surprise of almost everyone, China replies, "thanks!".

Step #3:  China henceforth requires physical gold, silver or other durable goods in exchange for China exports.

Step #4:  Russia and much of the world says "great, let's pay with gold so nobody can defraud any of us".

Step #5:  The USSA collapses and burns.

-----------

Only the lowest grade moron dares someone to do something that will hurt them, but help everyone else.

This moron just did.

JohannSennefelder's picture

Perfect forward statment.

Thanks!

 

pluto the dog's picture

gold is no global currency at $1340 an ounce. this is garbage talk. gold would need to be $134000 an ounce or maybe even $1.34 million per ounce.

dont hold your breath while you wait

el buitre's picture

Reminds me of the Cleavon Little scene in Blazing Saddles.  "Drop your guns are the nigger gets his head blown off."  The US government as a Mel Brooks comedy.

FreeEarCandy's picture

More uses for oil than gold, but I think China should give it a try so the matter can be settled. Before they do they should pay the world back all the debt it defaulted on. We'll take gold as payment. China can keep their cheep goods.

By the way did you notice that after China announced their future plans to back the Yuan with gold, the price of gold dropped. Doesn't seem to be catching on. However, maybe they can convince Kim to fire off one of those nukes to give Gold a kick up.

 

 

honestann's picture

As soon as the USSA pays back its $222 trillion debt and unfunded obligations... so will (and could) everyone else.

kindasketchy's picture

"Only the lowest grade moron dares someone to do something that will hurt them, but help everyone else."

USA: Hold my beer.

Shhh's picture

Why should Chinese support economic system that dictates rules to them.  Hostile economic moves confirm to DPRK that shared power with USA does not exist .Surrender is not an option. So that leaves?????????????

Obsidian Samctum's picture

I do enjoy the brinkmanship played by these countries.

East Indian's picture

US is disowning all the trillions it owes to China. 

FreeEarCandy's picture

Why should the world lend China money when it has no intentions of paying it back?

litemine's picture

China owns American Debt.

China is building a new silk Road

China is backing their money wth Gold

Your an Idiot.

 

FreeEarCandy's picture

deja vu!

 

 

China owns American Debt. = repayment to USA for 

http://americanbondholdersfoundation.com/

 

 

China is building a new silk Road =

Desperate to find someone to buy their crap, feed their idle factories, and save them from social unrest and bankruptcy. 

 

China is backing their money wth Gold =

Currency is about to collapsing due to credit rating down grade and bad loans by state banks to state firms. To the tune of 14 trillion dollars (USD). 

 

Your an Idiot. = 

But I'm also on the winning side!!! And when someone loses to an idiot that makes the loser what?

 

 

litemine's picture

China owns American Debt.

China is building a new silk Road

China is backing their money wth Gold

Your an Idiot.

 

FreeEarCandy's picture

China owns American Debt. = repayment to USA for 

http://americanbondholdersfoundation.com/

 

 

China is building a new silk Road =

Desperate to find someone to buy their crap, feed their idle factories, and save them from social unrest and bankruptcy. 

 

China is backing their money wth Gold =

Currency is about to collapsing due to credit rating down grade and bad loans by state banks to state firms. To the tune of 14 trillion dollars (USD). 

 

Your an Idiot. = 

But I'm also on the winning side!!! And when someone loses to an idiot that makes the loser what?

 

 

east of eden's picture

OF COURSE YOU REALIZE, THIS MEANS WAR (BUGS BUNNY CIRCA 1962).

EternalAnusocracy's picture

USA is a bankrupt entity with access to a credit card with [almost] no limits.  Without the credit card, America cannot survive for a month.  Most Americans are as poor as sub-saharan bushmen, except that they have access to EBT, welfare, food stamps, and "credit".  Neither the bushman, nor a typical American has any assets.  Most Americans work less than a bushman.

The upper middle class tax donkeys are anally raped daily by the regime.

A82EBA's picture

well stated

i hope that credit card gets cut off so we the self-sufficient can prosper while the gimmedats burn

shinobi-7's picture

Sooner or later the current pile of debt will have to go up in smoke. This can't happen without justification. Great tensions or even a "small" war somewhere would be perfect. Let's hope we don't get a bigger than expected conflagration in which case debt may be the last of our worries!

I am amazed so few people care for "debt" or "war" on such a scale since the impact is potentially far greater than global warming and the effects more immediate. It probably just comes from the inability for people to assess risk correctly. In most countries this unability recede as you go up in responsability. Not so in the US where the very top seems to be as clueless as Joe 6-pack! 

uhland62's picture

People do care about the debt, me thinks. But 'people' cannot do anything. And besides, being hegemon costs money. Now where will they, the rulers, get the money from to have less debt? Cut down the military? Cut down the military adventures? Close schools, prisons, food programs, stop repairing roads, bridges, and dams? Cutting debt means reducing something but what, given that all the expenses that are needed for hegemony are holy?

While we are at risk assessment, someone needs to assess how much in product is needed for rebuilding after the hurricanes, and which portion of building materials is normally supplied by Chinese companies. Can the rebuilding go swiftly and cost effective without SWIFT?  

A82EBA's picture

Theyll do like houston's proposal to increase property taxes 10% to socialize harvey losses

Victor999's picture

Until the system is completely changed, it will be enormously catastrophic to reduce debt significantly, if at all.  In the current system where money is created via debt, reducing debt means a direct reduction in the money supply....you know where I am headed with this.

 

Until we free the monetary system from the Jews, we will be enslaved in it.

dogismycopilot's picture

Munchkin is going to end up apologizing again.

No way, no how are the US Elites going to let the money spigot from China get turned off.

Besides, who the fuck talks about how they are going to hit someone?

Real fighters hit first, talk second.

FreeEarCandy's picture

Ha! China is a blackhole. Debt to gdp ration is 300%. It defaulted on its debt obligation in the past and it is about to do it again. Short on China. 

east of eden's picture

WRONG.

YOU - ARE THE FUCKING BLACK HOLE. JUST ASK ANYBODY IN THE RICHEST STATE'. CONNECTICUT. NOW BANKRUPT, ABANDONED, AND FULL OF POISON.

FreeEarCandy's picture

You caps lock key is stuck or you are about to shit your pants.

east of eden's picture

DEBT TO GDP IN THE US IS ALREADY OVER 700% AND IS PROJECTED TO RISE TO 1,100% IN THE NEXT FEW YEARS.

WHEN WE PULL THE CREDIT PLUG ON YOU, YOU WILL FUCKING IMPLODE.

FreeEarCandy's picture

USA debt to gdp is not 700%.

It is 125%. US economy is twice the size of China. Get a grip on reality, the Chinese dream is just about over. 

Mimir's picture

The American Dream revisited. 

Fake Trump's picture

Americans don't dream anymore as most of them can't even sleep. Wet dreams I suppose as they can't even fuck their wives these days. 

FreeEarCandy's picture

Oh we still dream. We are dreaming of robots & AI at the moment. Soon the demand for slave labor will be a thing of the past and what will China have to offer the world then? Human donut economics? 

Volkodav's picture

      chine debt is internal...most is it not?

FreeEarCandy's picture

China's state owned banks lend money to the state owned firms. When the state owned firms go bankrupt the state repos itself.

To get a clearer understanding of how this works, stick your head up your ass and eat your own shit. This way you will never go hungry and starve to death. It's called human donut economics.

east of eden's picture

MNUCNHIN IS GOING TO HAVE HIS OWN BOWEL MOVEMENTS FED BACK TO HIM. IT IS THE VERY LEAST HE DESERVES.

Fake Trump's picture

This guy is just a fucking idiot. Fire him if I were Trump.