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Why Europe Will Never Dump Treasuries And What Would Happen If They Tried
These headlines always land like a shock, but when you look at how Europe’s financial system works, the idea falls apart almost immediately. Treasuries aren’t just an investment for Europe, they’re the backbone of how European banks survive stress. They’re dollar collateral, dollar liquidity, and the easiest way to tap dollar markets when things get shaky. That’s not something you toss overboard to make a political point.
And the recent reporting makes that even clearer. The ECB isn’t gearing up to punish the U.S., it’s quietly bracing for the possibility that the Fed’s dollar swap lines could get tangled up in politics. That fear changes the whole conversation. When the thing you rely on most might get pulled back, you don’t start selling the only asset that gives you access to it. You do the opposite…you build buffers, run stress tests, and look for backup plans.
What Would Happen If They Tried
If Europe ever dumped Treasuries in size, they’d feel the blow long before the U.S. would. Funding stress tends to hit European banks first, and losing Treasuries would make that pressure even worse. The euro would whip around, credit conditions would tighten, and the very dollar shortage they worry about would show up instantly. And at the end of the day, the Fed would still step in to stabilize the Treasury market, leaving Europe with the damage and the U.S. with the backstop.
So the “nuclear option” makes for a loud headline, but it’s not a real strategy. Europe’s entire system is built on access to dollars, and Treasuries are the key to that access. Selling them would only weaken Europe’s position and highlight the one thing they already know…for now, the global dollar plumbing still runs through the United States.
If anything, the recent reporting shows the opposite of the headline. Europe isn’t preparing to walk away from Treasuries, it’s preparing for a world where it might need them more than ever.
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Why Europe Will Never Dump Treasuries And What Would Happen If They Tried
These headlines always land like a shock, but when you look at how Europe’s financial system works, the idea falls apart almost immediately. Treasuries aren’t just an investment for Europe, they’re the backbone of how European banks survive stress. They’re dollar collateral, dollar liquidity, and the easiest way to tap dollar markets when things get shaky. That’s not something you toss overboard to make a political point.
And the recent reporting makes that even clearer. The ECB isn’t gearing up to punish the U.S., it’s quietly bracing for the possibility that the Fed’s dollar swap lines could get tangled up in politics. That fear changes the whole conversation. When the thing you rely on most might get pulled back, you don’t start selling the only asset that gives you access to it. You do the opposite…you build buffers, run stress tests, and look for backup plans.
What Would Happen If They Tried
If Europe ever dumped Treasuries in size, they’d feel the blow long before the U.S. would. Funding stress tends to hit European banks first, and losing Treasuries would make that pressure even worse. The euro would whip around, credit conditions would tighten, and the very dollar shortage they worry about would show up instantly. And at the end of the day, the Fed would still step in to stabilize the Treasury market, leaving Europe with the damage and the U.S. with the backstop.
So the “nuclear option” makes for a loud headline, but it’s not a real strategy. Europe’s entire system is built on access to dollars, and Treasuries are the key to that access. Selling them would only weaken Europe’s position and highlight the one thing they already know…for now, the global dollar plumbing still runs through the United States.
If anything, the recent reporting shows the opposite of the headline. Europe isn’t preparing to walk away from Treasuries, it’s preparing for a world where it might need them more than ever.
EUROPEAN OFFICIALS EYE ‘NUCLEAR OPTION’ OF DUMPING U.S. TREASURIES IF TRUMP CUTS UKRAINE DEAL WITHOUT ALLIES — WSJ tweet
AkhenOsiris
OpenAI $GOOGL $MSFT $NVDA $AMZN
Behind Altman’s “code red” declaration, however, are tensions between camps inside the company that have been festering for years, according to people familiar with the matter.
A group including Fidji Simo, a former Meta Platforms executive who leads OpenAI’s product efforts, and Chief Financial Officer Sarah Friar, have pushed the company to pour more resources into ChatGPT. Simo has also told staff that OpenAI needs to do a better job of making sure its users discover the value of ChatGPT’s existing features before the company goes on to build new ones, and also wants to improve the chatbot’s speed and reliability.
Researchers meanwhile have prioritized state of the art technology that could lead to artificial general intelligence, or AGI, but don’t do as much to improve the basic chatbot experience.
OpenAI is set to release a new model, called 5.2, this week that executives hope will give it new momentum, particularly among coding and business customers. They overruled some employees who asked to push back the model’s release so the company could have more time to make it better, according to people familiar with the matter.
The company also plans to release another model in January with better images, improved speed and a better personality, and to end the code red after that, Altman said.
An OpenAI spokeswoman says there’s no conflict between the two philosophies, and that broad adoption of AI tools is how the company plans to distribute AGI’s benefit.
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OpenAI $GOOGL $MSFT $NVDA $AMZN
Behind Altman’s “code red” declaration, however, are tensions between camps inside the company that have been festering for years, according to people familiar with the matter.
A group including Fidji Simo, a former Meta Platforms executive who leads OpenAI’s product efforts, and Chief Financial Officer Sarah Friar, have pushed the company to pour more resources into ChatGPT. Simo has also told staff that OpenAI needs to do a better job of making sure its users discover the value of ChatGPT’s existing features before the company goes on to build new ones, and also wants to improve the chatbot’s speed and reliability.
Researchers meanwhile have prioritized state of the art technology that could lead to artificial general intelligence, or AGI, but don’t do as much to improve the basic chatbot experience.
OpenAI is set to release a new model, called 5.2, this week that executives hope will give it new momentum, particularly among coding and business customers. They overruled some employees who asked to push back the model’s release so the company could have more time to make it better, according to people familiar with the matter.
The company also plans to release another model in January with better images, improved speed and a better personality, and to end the code red after that, Altman said.
An OpenAI spokeswoman says there’s no conflict between the two philosophies, and that broad adoption of AI tools is how the company plans to distribute AGI’s benefit.
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My family: You spend a lot of time studying Crypto you must be making a lot of money.
Me living paycheck to paycheck: https://t.co/ub7xsfpeq4
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My family: You spend a lot of time studying Crypto you must be making a lot of money.
Me living paycheck to paycheck: https://t.co/ub7xsfpeq4
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