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Switzerland has 300 billion American debt, an asset for commercial negotiations? – Rts.ch

Switzerland has 300 billion American debt, an asset for commercial negotiations? – Rts.ch
Switzerland has 300 billion American debt, an asset for commercial negotiations? – Rts.ch

The American debt is largely in foreign hands. Almost a third of treasury bills are owned outside the country, mainly in Asia. But is also one of the 10 largest creditors in the States

In theory, Switzerland has an asset in its round. It holds $ 300 billion in American debt and is one of the 10 largest creditors in Washington. Could it use it in trade negotiations with Washington, to avoid too high customs duties?

Debt can quite be a negotiation tool between Switzerland and the United States

François Savary, strategist and founder of Genvil

As François Savary, strategist and founder of Genvil, underlines “in the redefinition of world relations by the United States, it is not just trade. To obtain commercial concessions from the United States, there are a set of defense-related measures or linked to the American debt which are integrated into the global plan.” For him, debt “can therefore be completely a negotiation tool not only between Switzerland and the United States, but with other countries”.

Japan and China, the creditors of the United States

At the top of the Creditors of the United States, Japan holds 1000 billion, followed by China. In total, about a third of the American debt, which exceeds 36,000 billion, are foreign hands. A brutal sale of these treasury bills could destabilize this and endanger the American economy.

Because when investors sell, as we saw week, yields increase. The latter define the interest rates of state loans but also mortgages or business loans. An increase in rates is therefore harmful for everyone.

>> Read also: The turbulence of the American debt, one of the keys to the turnaround of Donald Trump

Do not touch the independence of the National Bank

However, in practice, everything is more complicated, as Daniel Varela, chief of investments of the Piguet Galland bank explains: “The Swiss government cannot unilaterally decide to use its power to sell American treasury bills”. We should the National Bank, which holds a large part of this debt, to sell, which is not compatible with its independence.

The Swiss government cannot unilaterally decide to use its power to sell American treasury bills

Daniel Varela, chief of the banks of the bank Piguet Galland

And no one wants to question it, because, continues Daniel Varela, “this can shake one of the foundations that has made Switzerland’s prosperity in recent years, not to say in recent decades”.

Convincing investors to sell would be complicated

It will also be hardly easier to convince other investors: “I can hardly see the Federal Council sending the message that you have to sell the American treasury bills. And even if it would do it: would it be applied by private and institutional customers? I doubt it a lot”.

Laureline Renaud Chatelain, bond expert at Pictet Wealth Management, is of the same opinion: “It would be very surprising to see the BNS interfere in political affairs. And as it is independent, the Federal Council does not have the authority necessary to ask it to liquidate its positions”.

Only China could use this exchange currency

RENAUD CHATELAIN, bond expert at Pictet Wealth Management

The only country that can really use this “exchange currency: China. They have a lot, about 760 billion, in the majority in institutions under government control,” concluded the expert.

Mathilde flour

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