Two weeks ago, in a move that went unnoticed because “the lady did not protest too much” (the lady being the ECB), the U.S. sold Euros to sustain the Japanese currency without previously informing the Europeans. This has been seen almost as a hostile move, given Bessent’s record (serial currency killer—remember the Sterling Pound and the Italian Lira in 1992), and certainly as a breach in the consolidated praxis among central banks.
“Some senior ECB officials viewed the U.S. decision to use euros in its trade as an unprecedented breach of longstanding conventions on co-operation between western monetary authorities,” the FT wrote.
“Washington’s sales of euros, carried out by the New York Federal Reserve on behalf of the U.S. Treasury, were ‘very striking‘ and ‘sad,’ one person familiar with discussions among European policymakers told the FT.”
Christine Lagarde and Bessent spoke about the transaction on July 31, after the fact.
