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...

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
D-plorable's picture

Would this be proof that the yamulke tribe does not control China and Russia?

east of eden's picture




Cutter's picture

Talk about throwing rocks from a glass house.  Tomorrow the Chinese equivalent of Mnuchin will float that China in response will divest all US Treasury holdings.  When the 10 year tops 2.75 percent, just on the threat, Mnuchin will be saying he was "misquoted."

Horse Pizzle's picture

Two year supply of socks and underwear.

Here come the inner city jobs.

east of eden's picture




natxlaw's picture

Yeah,  that'll be the day.

lakecity55's picture

Haha, this whole NK thing looks like it's all about Crashing the Dollar.

So, this is what the Elites are up to!

Trisy's picture

War should be declared by the President only!

What's that mess!

galant's picture

China and Russia have already made it clear – they’re done with the US dollar anyway.

They are supplanting it with yuan/gold, albeit in small steps so far to avoid economic chaos.

Mnuchin can speed up the collapse of the decaying United States dollar with threats to exclude China from trade in the greenback.

But for much of the world a yuan backed by gold or even partially backed is already looking an increasingly attractive option. 

Meanwhile Mnuchin threatens to cut off his nose to spite his face.

Catahoula's picture

It's time to cut the communist Chinese balls off and hang them over their nose. They'd shit dog meat. Enough fleecing of America by communists. 

oncemore's picture

Go ahead and cut them.

Come back and report the results.

Fake Trump's picture

If I were Xi I would just say "go ahead but don't regret".

Greed is King's picture

When are your other grey cells being returned off loan ?.

JailBanksters's picture

The US has interfered with over 80 Elections in other countries, how come there's NO sanctions against the USA ?


luna_man's picture


Let's see how he gets out that corner he painted himself into...Think he'll wait until the paint dries?

oncemore's picture

Sanctions=war declaration.

14 morons want to go in the war, together with the jewish proxy, US?


All of them are Rotschild's puppets.

The jewish fagot is a talking head of GS. China and Russia do not talk. They act. So I am eager to see Chinese reaction on those jewish statements.

Praeda2's picture


Yen Cross's picture

   If you want to torture a bankster, just send him-her an umbrella, or toaster with a gram of crack cocaine, in a package wrapped with Batman or Spiderman gift-paper, and a gift certificate for a nail~gun @ Home Depot.

P.S. *  Make sure you use a spiderman towel as packing material.

richCat's picture

txt..North Korea warned it “will redouble efforts to increase its strength” as it seeks to establish “practical equilibrium” with U.S.


AH! ..Take' that as the hoe-down threat; an attempt to equalize the nuke to nuke ratio ? Looks like a long-haul process coming. Who snaps first ? My reckoning is that China will wiggle around the sanctions with a below-the-radar alternative, just as they have done to competition and business with the West with their replicas and their inherent unreliability. There's an awful amount of their crap everywhere.


Sandmann's picture

So Chinese holding US Treasuries and T-Bills without access to the global payments system or US banking will have what effect on Goldman Sachs ?  It appears Mnuchin is letting his wife draft his utterances. 

Few banks internationally want US customers because of FATCA so it looks as if FinTech will leave the US with Old Tech. After all it was US policy against the USSR that led Moscow-Narodny to deposit US Dollars in London and create the Eurodollar Market decades ago.

SystemicSarcasm's picture

Pretty sure they tried this with Russia; then SWIFT gave Russia an extra two seats?

going to end up cutting the US off SWIFT

Sandmann's picture

When is Mnuchin going to 'fess up about his connection to Chalabi and the shady dealings in Iraq ?

Brazen Heist's picture

Please accelerate the de-dollarisation...this should be a boost towards that direction.

US empire will crumble in a pile of its own self righteous vomit. The idiots at the helm don't realize they are accelerating the multi-polar world order.

africoman's picture

Good, this will fastens the dollar death as the world reserve currency.

The only problem that creeps me out is that what if the new currency<<<Chinese yuan as the new world's reserve currency backed by gold or global crypto currency for oil trade etc>>> is a just mere extension of the old one? Look IMF is helping them standardize all BRICS thing.They aren't helping kill dollar except competing to have a better seat in the upcoming global chess.IMF and WORLD BANK alike will not sit idle un-securing to it, except gradual shift when it happens, by the time when silk road etc happens means America killed off within is all but certain.They will be smitten by man made weather manipulations like the current ones.

Ponder on it, and the segmentation of world into 10 sectors before NWO thing secretly done.Wonder if someone powerful in this world has time machine, everything seemed to be well planned<<<Loook how Kazars infiltrated the current Israel and KSA and Turkey too>>>

I hope Russians and Iran knew this in to the x-D chess

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. 

Kefeer's picture

Spoken like a true democrat and commie.

mrtoad's picture

Thats it for me. Trump is the chosen one to take the blame for the fall of the Empire. 

Brazen Heist's picture

The US simply cannot be trusted at all, by any soveriegn nation. 

Like Putin said, America doesn't need allies, it just seeks vassals.

And that's a sign of weakness, not strength. Can't handle your bullshit getting called or challenged by anyone means you are a fucking weakling that needs to be surrounded by sycophants because you can't hear a different tune.

RedBaron616's picture

Nonsense! This is classic Trump. Run around throwing out threats like the ego-maniac he is. He is doing it to himself. Stop acting like this isn't the REAL Trump. These actions follow his pattern precisely. No one has chosen him for anything. He is screwing up ALL BY HIMSELF. Keep on voting for idiots by what they SAY rather than what they have DONE.

Kefeer's picture

As opposed to the democrat offering - go away!

shutterbug's picture

USA bullies country 1 ... /check

USA bullies country 2 ... /check

USA bullies country 3 ... /check

USA bullies country 4 ... /check

USA bullies country 5 ... /check

World has had enough and isolates USA for 100+ years...

/not yet check but cutting off China would make it a check

BlueHorseShoeLovesDT's picture

Maybe China should just dump our debt.

Blacksunday3's picture

Wonder how many chicoms are in this thread? Inbetween harvesting organs and eating dogs I'm surprised you find the time.

Pasadena Phil's picture

Thank God at least one person is paying attention here.

bjax's picture

They are moving away from the dollar anyway, everyone is, it's tainted with death and destruction. And once the presses stop, it's totally worthless. How much debt does the US have 20 trillion. A third world country masquerading as a first world country using a credit card.

Pasadena Phil's picture

As opposed to the solid Chinese and Russian clams..... I can't believe how many people buy into the proposition that just because the dollar has been debauched it can be replaced by a basket of for more worthless currencies. That is how I know for sure that most of the bullshit on these threads is foreign anti-American propaganda. BTW, the shekel is a pretty good currency compared to all of those new world clams.

JPMorgan's picture

Real smart move duh.

China was already working on a alternative to SWIFT, this will just confirm it was the right call and might be required sooner rather than later.


Fireman's picture

It's already over as China's gold backed Yuan brings the Saudi Barbarian oil peddlers under its wing. Now that the USSAN banksters have stolen back all that "treasury" debt owed to the feudal crypt of Saud and tried to frame them for 9 11..... Kiss the IOU Petroscrip (no longer) I$I$ backed Saudi Mercan toilet paper free loader dollah goodbye. Jim Wille's Scheiß dollah is coming home to Slumville in a tsunami of toxic derivative shit after all the lost judaic wars and bananas republic debt splurge and it's going to guarantee overnight Third World status for 98% of USSANS, already on the edge of ruin. No one likes a slacker and a hustler and the "exorbitant privilege" reserve currency gig is over as the Pentacon mob fizzle out in a swamp of hubris. China's Korea and China's "big, beautiful" South China Sea "resort" islands are bristling with big sticks and USSA can do NOTHING, and the rest of humanity knows it and enjoys seeing the snaggle-toothed, drug-addled, big mouth dumb a$$ mutt get kicked in the face. Ya'll had a good run as long as the anglozionazi abomination lasted but now it's high time to get out while you're still ahead. Dump the petroscrip and prep before the big flush washes you down the Wall St bankster sewer in the imploding shitter of the Potemkin Village idiot "economy" of misery and carnage for the Zero 1% scum that own US.

The only war USSANS will be fighting in the future is the long postponed and much overdue Slumville Civil War reloaded.

Greed is King's picture

Being an English speaker I did not understand a lot of what you said, but the parts I did understand I agree with most fervently.

ChaoKrungThep's picture

Inelegant but not inaccurate...

NaiLib's picture

Threats fron USA comes more and more often now.

Aussiekiwi's picture

, it could cut off Beijing’s access to both the US financial system as well as the "international dollar system."

What a stupid threat, China will now double down on efforts to make itself independent of the US International dollar system in order to preserve its independence in much the same way that Russia is.

Sometimes I suspect that the US is deliberately trying to destroy its own economy, it certainly behaves in a brain dead manner.

Greed is King's picture

The biggest problem for America is that it has only ever understood communicating in threat, intimidation and violence, the result of having a puppet political system ruled by the Mafia and Banksters; the foreign diplomacy price of this is that America is the most hated and resented empire of all time, at least 90% of the rest of the worlds countries are hoping and praying for an opportunity to stick the knife in the American back.

Vimes's picture

It sure seems to be the case that the U.S. is intentionally trying to create a new reserve currency. What is driving this urge? I really don't know, idealism , as in refusal to admit that an alternative to Swift already exists ? Incompetence? Handing over all the patents and factory blue prints hoping to hang on to infinite profits? What lies ahead is not pretty, without the dollar empire it all will fall back to mediocrity. 

cookies anyone's picture

"US intends to shoot itself in the head if the Chinese fail to uphold the N.Korean sanctions"

Zepper's picture

DO IT! Kick them out of SWIFT. Its about time! OMG! Trump is a fucking genius.... if his plan works. People will be studying him for centuries.


He will literally kill two birds with one stone. A magpie and a fucking chicken.


Think of it this way... we are going to war, there is no question of this. The further Trump pushes that stupid fuck in North Korea the further that North Korean will push. And caught right smack dab in the fucking middle. CHINA!

Enjoy the scissor action.


*forgot to add, the chinese better take control of bitcoin exchanges because as soon as the hammer drops the smart chinese will be buying bitcoin, underming chinese currency bigtime and killing the chinese currency, government etc. Its genius. absolutely genius... I think the smart chinese regulators see how dangerous crypto currecy is but their masters dont care because they are fat and stupid!!!

Jack Oliver's picture

You my friend are a supreme FUCKING idiot !

Are you aware of that ???