Russia Explains Why It Liquidated Its US Treasurys

As we detailed here first, during the months of April and May, as the Yuan-denominated oil futures were launched, trade war threats escalated, and sanctions were unleashed, Russia liquidated almost 90% of its US Treasury holdings.

The question most had was simple - why?

Speculation ran the gamut from this action being a dress-rehearsal - carefully coordinated with Beijing to field test what would happen if/when China also starts to liquidate its own Treasury holdings; to forced sales to cover liquidity needs on sanctioned Russian entities.

But now we have an "insider's" view on why Putin was puking his T-Bonds.

Andrei Kostin, chairman of Russia's second-largest bank VTB, told RIA Novosti that there are three reasons behind Russia's decision to dump its bonds...

"Look, the latest sanctions, which have already been touched upon by our leading enterprises such as Rusal, Renova, undoubtedly shows us that we need to be more cautious. I think that the Central Bank reacts to this too, because the Central Bank the bank is often criticized for keeping money abroad, I think that it's partly correct, everyone does it, but, of course, it's necessary to somehow minimize risks, reduce these risks

... because today the US represents the largest threat... from the point of view of imposing sanctions of any kind is greater than all others."

"I think that this, too, probably the Central Bank and the Ministry of Finance take into account in its policy,"

The head of VTB also recalled that the bank had prepared proposals aimed at de-dollarization and de-orphanization of the Russian economy.

"I recently met with the president, I told him the proposals of our bank to reduce the dollar in the calculations, in general, in the economy of our country."

This is a measure that, in my opinion, has two sides: on the one hand, it is good for developing its own market: if we will create our derivatives and we will hedge the risks on the whole instrument within the Russian market, it will be very good, as well as calculations.

"On the other hand, life makes us," Kostin said.

Additionally, Elvira Nabiullina, head of the Bank of Russia, said in June, responding to a question from Duma deputies about the sale of almost half of the US debt by the regulator in April, explained that the Central Bank is pursuing a policy of diversifying international reserves and taking into account all risks, including financial, economic and geopolitical decisions.

So to sum it all up, Russia liquidated its US Treasury holdings:

  • The rise of the mulipolar world - to send a geopolitical message to the world over US sanctions bullying;

  • Dedollarisation - to enable the redistribution of reserves in favor of gold; and

  • Preparation for a global reset - due to "the feeling of impending trouble in the world economy."

Do those sound like the kind of events that you should be acting on too? Is it any wonder that Putin is public enemy no.1 given the possibility that these risks may translate into actions by the worlds' investors?

Remember, it was  just last week that Putin officially warned his "American partners" that:

"...the restrictions they impose involving the dollar... are a major strategic mistake because they’re undermining confidence in the dollar as a reserve currency.”

"We will continue to use the US dollar unless the United States prevents us from doing so."

And given the volume of noise coming from Washington's establishment, that could be sooner than many - aside from the Russians themselves - may be thinking.


SamAdams Free This Mon, 07/30/2018 - 16:11 Permalink

Or maybe Russia sold because interest rates are going up?  I'm sure there are other factors in play as well, but rates are of utmost concern.


OR, it might be that Trump colluded with Putin to sell US paper in an effort to destroy America.... OMG!!!!

In reply to by Free This

Giant Meteor SamAdams Mon, 07/30/2018 - 16:36 Permalink

Historical norms where art tho? Or generally accepted accounting principles for that matter , now merely agreed upon lies of snake oil salesmen. 

Maybe that’s why a lot of folks were jumpin up and down awhile back announcing the end of history. And you know, for a lot of folks that is probably true.

History now is based upon last quarter unicorn  sightings and FED, and everyone else’s jawboning ....


yeah yeah, don’t fight the FED buy the fucking dip etc.

Everything is peachy !

In reply to by SamAdams

Brazen Heist II chunga Mon, 07/30/2018 - 16:07 Permalink

Russia is under sanctions threats, this liquidation gave them more peace of mind by not having assets tied up in the weaponized US financial system.

China on the other hand, has $1 trillion of reserves, mostly because of a fixed peg. They cannot liquidate as fast as Russia. But once they get off the peg, they will start doing so.

In reply to by chunga

Balance-Sheet silverer Mon, 07/30/2018 - 16:57 Permalink

USD and UST-Bills are interchangeable so the Fed as indicated in the comments can absorb these and the T-Bills have never moved since the day they were created as the fed has always had custody of them. Fed just peels the address code off and drops them onto the balance sheet. Interest payable then stays right with the US Treasury. 

In reply to by silverer

Thordoom mtl4 Mon, 07/30/2018 - 15:55 Permalink

Its ties to everything. The whole Russiagate is based on this. It ties to offshore banking. HSBC, politicians, mainstream medias. Everybody is complicit in it. Left and Right. Politicians in US as well in UK EU. It is the greatest story hidden in plain sight. 

It is the ultimate redpill. 


I forgot to mention that Ukraine is a big part of it, Chalupa sisters clan working for Clintons. Clintons are  big part of it that looted Russia in the 90s with their Harward boys and creating Oligarchs.

Just a little treat for you.... James Comey worked for HSBC. HSBC is Browder's boss   

In reply to by mtl4

Giant Meteor chunga Mon, 07/30/2018 - 16:42 Permalink

American collusion. The tricky part is, bringing the shit show to some kind of resolution without mutually assured destruction. 

The coverup is massive, both teams heavily indicated in the corruption that takes them all out. The rest is mere window dressing, and no, that does not make Putin a saint by proxy. 


In reply to by chunga

Thordoom Giant Meteor Mon, 07/30/2018 - 16:28 Permalink

I wouldn't feel down about it. It is getting exposed more and more. Bill is scared. You can tell because he is on Fox News all the time telling his story. He is specifically focusing on Trump base which is clueless and ignorant as well. But since Putin personally mentioned Bill Browder, the hoards of autistic researchers looking into Bill now.

Not even sudden death( murder) of Bill will help to burry this story. It is too big and too obvious when you look into it.You don't even have to be that smart to see Bill Browder lies. He is just the face of it, not the real cartel who pull the strings. Never forget about it.

In reply to by Giant Meteor

Giant Meteor Thordoom Mon, 07/30/2018 - 17:08 Permalink

Watching the deposition now .. thanks for the link. No, I don't get down about such things. I am fortunate enough to be alive to bear witness to it, something really, I never thought I would see in my lifetime ..

Fuck them ALL, with a long pole ..

Understandably, there will be blood .. and these matters are far, far from settled. I do not on the other hand fall for the daily headfakes, in attempts of these fucks to cover their tracks. It is good to see them squirm, spit venom and invectives like cobra's and will be better as they massively continue to turn on one another, which has already started ..

Snakes in the woodpile ..

Burn em out ..

Edit: Holy Shit, the Browder deposition ..


Thanks Again ..

In reply to by Thordoom

shizzledizzle Mon, 07/30/2018 - 15:35 Permalink

That's a cordial way of saying "The dollar is about to be worthless". Seriously, does anyone believe that it's sanctions and not solvency that is the concern?  

BandGap Mon, 07/30/2018 - 15:36 Permalink

People who buy gold and silver are idiots for following the examples of Russia, China and India, countries who comprise roughly 1/3 of all the people on the planet...….