Report: Russia Withdrawing Billions Out Of U.S.

There are reports that Russia is pulling billions of dollars out of a custodial account at the Federal Reserve for fear their assets will be frozen, reports Peter Coy at Bloomberg.

The Fed doesn’t say who its custodial customers are. I spoke today to Marc Chandler, global head of currency strategy at Brown Brothers Harriman, who suspects Russia accounts for a big share of the draw-down. “It’s just to avoid being frozen,” Chandler says, not a protest against the U.S. He adds, ”You don’t let your politics dictate these decisions.”

In a note to clients, Chandler wrote, “The logic now is that Russia is bracing for the next round of sanctions.” He pointed out that this has happened before. In 1957, Russia shifted dollars from the U.S. to London, he said, fearing the U.S. would punish Russia financially for its invasion of Hungary. According to some accounts, that event gave birth to what’s known today as the Eurodollar market—dollar-denominated assets stashed outside of U.S. borders.

By: Alan

Alan Colmes is the publisher of Liberaland.