Skip to main content
Personal Finance & Money

Return to Question

Post Closed as "Not suitable for this site" by base64, ChrisInEdmonton, DJClayworth, yoozer8, Chris W. Rea
deleted 460 characters in body
Source Link
pm2482
pm2482
  • 11
  • 2

https://www.reuters.com/article/idUSKCN2AW2MD?il=0

In the above article the Myanmar Military tried to "empty" the account belonging to the Myanmar Central Bank held at the NY Fed. This account is part of Myanmar's foreign exchange reserves and is used to settle international payments according to Reuters. So this account is a deposit liability of the Fed, aka central bank money. Unless they are withdrawing $1B in paper banknotes, they can only move that $1B around to another account held at the Fed. The total amount of deposit liabilities on the Fed's Balance sheet would stay constant.

So how is the transfer of $1B actualized? How can the Myanmar military get the full value of this deposit under their control when theoretically the Fed can reverse any movement of the $1B within it's own system? Since the military is not getting a physical commodity such as paper banknotes or gold, how would they own those dollars that have an ultimate chain of ownership back to the Federal Reserve.

As a side question, are commercial banks offering accounts denominated in USD required to hold reserve accounts at the Federal Reserve? From my understanding the only (or main) way to settle transactions between banks is to debit/credit the respective reserve accounts to "transfer" the money. If so, does that mean that any bank in the world that holds an account denominated in USD is ultimately dependent on the Federal Reserve for moving money around?

I am very curious about the financial plumbing involved here.

https://www.reuters.com/article/idUSKCN2AW2MD?il=0

In the above article the Myanmar Military tried to "empty" the account belonging to the Myanmar Central Bank held at the NY Fed. This account is part of Myanmar's foreign exchange reserves and is used to settle international payments according to Reuters. So this account is a deposit liability of the Fed, aka central bank money. Unless they are withdrawing $1B in paper banknotes, they can only move that $1B around to another account held at the Fed. The total amount of deposit liabilities on the Fed's Balance sheet would stay constant.

So how is the transfer of $1B actualized? How can the Myanmar military get the full value of this deposit under their control when theoretically the Fed can reverse any movement of the $1B within it's own system? Since the military is not getting a physical commodity such as paper banknotes or gold, how would they own those dollars that have an ultimate chain of ownership back to the Federal Reserve.

As a side question, are commercial banks offering accounts denominated in USD required to hold reserve accounts at the Federal Reserve? From my understanding the only (or main) way to settle transactions between banks is to debit/credit the respective reserve accounts to "transfer" the money. If so, does that mean that any bank in the world that holds an account denominated in USD is ultimately dependent on the Federal Reserve for moving money around?

I am very curious about the financial plumbing involved here.

https://www.reuters.com/article/idUSKCN2AW2MD?il=0

In the above article the Myanmar Military tried to "empty" the account belonging to the Myanmar Central Bank held at the NY Fed. This account is part of Myanmar's foreign exchange reserves and is used to settle international payments according to Reuters. So this account is a deposit liability of the Fed, aka central bank money. Unless they are withdrawing $1B in paper banknotes, they can only move that $1B around to another account held at the Fed. The total amount of deposit liabilities on the Fed's Balance sheet would stay constant.

So how is the transfer of $1B actualized? How can the Myanmar military get the full value of this deposit under their control when theoretically the Fed can reverse any movement of the $1B within it's own system? Since the military is not getting a physical commodity such as paper banknotes or gold, how would they own those dollars that have an ultimate chain of ownership back to the Federal Reserve.

I am very curious about the financial plumbing involved here.

Source Link
pm2482
pm2482
  • 11
  • 2

The Military Junta in Myanmar tried to "empty" $1B from the NY Fed. As a deposit liability of the Fed, where would this money have actually gone?

https://www.reuters.com/article/idUSKCN2AW2MD?il=0

In the above article the Myanmar Military tried to "empty" the account belonging to the Myanmar Central Bank held at the NY Fed. This account is part of Myanmar's foreign exchange reserves and is used to settle international payments according to Reuters. So this account is a deposit liability of the Fed, aka central bank money. Unless they are withdrawing $1B in paper banknotes, they can only move that $1B around to another account held at the Fed. The total amount of deposit liabilities on the Fed's Balance sheet would stay constant.

So how is the transfer of $1B actualized? How can the Myanmar military get the full value of this deposit under their control when theoretically the Fed can reverse any movement of the $1B within it's own system? Since the military is not getting a physical commodity such as paper banknotes or gold, how would they own those dollars that have an ultimate chain of ownership back to the Federal Reserve.

As a side question, are commercial banks offering accounts denominated in USD required to hold reserve accounts at the Federal Reserve? From my understanding the only (or main) way to settle transactions between banks is to debit/credit the respective reserve accounts to "transfer" the money. If so, does that mean that any bank in the world that holds an account denominated in USD is ultimately dependent on the Federal Reserve for moving money around?

I am very curious about the financial plumbing involved here.