February 18, 2014

China Digs Itself Deeper Into Dollar Trap

William Pesek, Bloomberg

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China's $3.8 trillion of currency reserves are the largest stockpile ever amassed. Economists have long seen that money as a strength -- the ultimate rainy-day fund should China's shadow-banking system blow up. Trouble is, the value of those holdings depends on China's $1.3 trillion of U.S. Treasuries. If they plunge in value, all hell breaks loose and officials from Beijing to Brasilia will scramble to exit the American bird cage.

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TAGGED: China, United States, Dollar

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