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Razie's answer is great, but let me think from another side and bring some numbers to the table.

An idea to sell all foreign securitiesbonds is quite popular in Russian mass media. According its authors, it is supposed to:

  • Bring down the U.S. government bond market, thus harming the economy;
  • Get rid of securities of foreign states;bonds;

According to the Bank of Russia, by Apr/01/2014 Russia held $429 billion the foreign currency (cash + securities) in the international reserves. Of these, $76 billion is cash and $352 billion is in securities.

Not all of this $352 bn. is invested in U.S. Treasuriesgovernment bonds. As of Nov/11/2013, “more than 40% of gold reserves are nominated in EUR, 45% is in USD, the rest is in other currencies.”

Nevertheless, let us assume that Russia is going to hit not only the U.S., but Europe as well, so it sells an entire amount.

U.S. is currently running the third Quantitative easing, redeeming up to $85 billion monthly or $1.02 trillion annually. Discussed $352 billion is not a large amount in these terms.

The same applies to EU. During the recent 5 years, ECB has issuedemitted more than EUR 2 trillion.

Moreover, during the course of such drastic sellout, the price for US bonds will most likely drop temporarily, so the seller would suffer additional losses.

Side note aboutAs of China. It should not be expected that Bank of China joins this affair. Since they have U.S. TreasuriesGovernment Bonds worth $1 trillion, losses of China in case of dramatic sellout will amount to tens of billions.


Not yet the end of the story. Let’s assume U.S. Treasuriesbonds have been sold. What to do with $352 billion of foreign currency? The only things IOne can image are:

  • Repay external debtdebt;
  • Purchase foreign goodsgoods;
  • Purchase foreign assetsassets;

Repay of external debt

Losses due to large advance repayments (as is happened in 2000-2001). Local currency loses any collateralized currency securitiessecurity, the Bank of Russia would have nothing to oppose attacks on the ruble, its rate drops, unless the country prohibits all forms of trade in foreign currency.

Purchase foreign goods

As above, plus some benefit of obtaining foreign goods worth roughly an amount of annual trade. Plus, obviously, purchase of goods can be hardly considered a harm to Western economy. :-)

Purchase foreign assets

Assets are gold, natural resources, or businesses.

GoldGold is more volatile than U.S. TreasuriesGovernment Bonds. The gold prices are controlled by national banks. Even if Russia buys entire supply of gold on the market, all other players will most certainly start playing against it.
Also, in current price, it would be roughly 8,000 tons of gold. Such amount is not available on the market.

Natural resourcesNatural resources are not needed for a country that actually has 25% of world’sworld's natural resources.

BusinessesBusinesses. In the confrontation with the West, Russia will not be allowed to purchase anything really valuable. In case if Russia builds some artful schemes involving intermediaries, this would introduce barely acceptable risks.

Razie's answer is great, but let me think from another side and bring some numbers to the table.

An idea to sell all foreign securities is quite popular in Russian mass media. According its authors, it is supposed to:

  • Bring down the U.S. government bond market, thus harming the economy;
  • Get rid of securities of foreign states;

According to the Bank of Russia, by Apr/01/2014 Russia held $429 billion the foreign currency (cash + securities) in the international reserves. Of these, $76 billion is cash and $352 billion is in securities.

Not all of this $352 bn. is invested in U.S. Treasuries. As of Nov/11/2013, “more than 40% of gold reserves are nominated in EUR, 45% is in USD, the rest is in other currencies.”

Nevertheless, let us assume that Russia is going to hit not only the U.S., but Europe as well, so it sells an entire amount.

U.S. is currently running the third Quantitative easing, redeeming up to $85 billion monthly or $1.02 trillion annually. Discussed $352 billion is not a large amount in these terms.

The same applies to EU. During the recent 5 years, ECB has issued more than EUR 2 trillion.

Moreover, during the course of such drastic sellout, the price for US bonds will most likely drop temporarily, so the seller would suffer additional losses.

Side note about China. It should not be expected that Bank of China joins this affair. Since they have U.S. Treasuries worth $1 trillion, losses of China in case of dramatic sellout will amount to tens of billions.


Not yet the end of the story. Let’s assume U.S. Treasuries have been sold. What to do with $352 billion of foreign currency? The only things I can image are:

  • Repay external debt
  • Purchase foreign goods
  • Purchase foreign assets

Repay of external debt

Losses due to large advance repayments (as is happened in 2000-2001). Local currency loses any collateralized currency securities, the Bank of Russia would have nothing to oppose attacks on the ruble, its rate drops, unless the country prohibits all forms of trade in foreign currency.

Purchase foreign goods

As above, plus some benefit of obtaining foreign goods worth roughly an amount of annual trade. Plus, obviously, purchase of goods can be hardly considered a harm to Western economy. :-)

Purchase foreign assets

Assets are gold, natural resources, or businesses.

Gold is more volatile than U.S. Treasuries. The gold prices are controlled by national banks. Even if Russia buys entire supply of gold on the market, all other players will most certainly start playing against it.
Also, in current price, it would be roughly 8,000 tons of gold. Such amount is not available on the market.

Natural resources are not needed for a country that actually has 25% of world’s natural resources.

Businesses. In the confrontation with the West, Russia will not be allowed to purchase anything really valuable. In case if Russia builds some artful schemes involving intermediaries, this would introduce barely acceptable risks.

Razie's answer is great, but let me think from another side and bring some numbers to the table.

An idea to sell all foreign bonds is quite popular in Russian mass media. According its authors, it is supposed to:

  • Bring down the U.S. government bond market, thus harming the economy;
  • Get rid of foreign bonds;

According to the Bank of Russia, by Apr/01/2014 Russia held $429 billion the foreign currency (cash + securities) in the international reserves. Of these, $76 billion is cash and $352 billion is in securities.

Not all of this $352 bn. is invested in U.S. government bonds. As of Nov/11/2013, “more than 40% of gold reserves are nominated in EUR, 45% is in USD, the rest is in other currencies.”

Nevertheless, let us assume that Russia is going to hit not only the U.S., but Europe as well, so it sells an entire amount.

U.S. is currently running the third Quantitative easing, redeeming up to $85 billion monthly or $1.02 trillion annually. Discussed $352 billion is not a large amount in these terms.

The same applies to EU. During the recent 5 years, ECB has emitted more than EUR 2 trillion.

Moreover, during the course of such drastic sellout, the price for US bonds will most likely drop temporarily, so the seller would suffer additional losses.

As of China. It should not be expected that Bank of China joins this affair. Since they have U.S. Government Bonds worth $1 trillion, losses of China in case of dramatic sellout will amount to tens of billions.


Not yet the end of the story. Let’s assume U.S. bonds have been sold. What to do with $352 billion foreign currency? One can:

  • Repay external debt;
  • Purchase foreign goods;
  • Purchase foreign assets;

Repay of external debt

Losses due to large advance repayments (as is happened in 2000-2001). Local currency loses any security, the Bank of Russia would have nothing to oppose attacks on the ruble, its rate drops, unless the country prohibits all forms of trade in foreign currency.

Purchase foreign goods

As above, plus some benefit of obtaining foreign goods worth roughly an amount of annual trade. Plus, obviously, purchase of goods can be hardly considered a harm to Western economy. :-)

Purchase foreign assets

Assets are gold, natural resources, or businesses.

Gold is more volatile than U.S. Government Bonds. The gold prices are controlled by national banks. Even if Russia buys entire supply of gold on the market, all other players will most certainly start playing against it.
Also, in current price, it would be roughly 8,000 tons of gold. Such amount is not available on the market.

Natural resources are not needed for a country that actually has 25% of world's natural resources.

Businesses. In the confrontation with the West, Russia will not be allowed to purchase anything really valuable. In case if Russia builds some artful schemes involving intermediaries, this would introduce barely acceptable risks.

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Razie's answer is great, but let me think from another side and bring some numbers to the table.

An idea to sell all foreign securities is quite popular in Russian mass media. According its authors, it is supposed to:

  • Bring down the U.S. government bond market, thus harming the economy;
  • Get rid of securities of foreign states;

According to the Bank of Russia, by Apr/01/2014 Russia held $429 billion the foreign currency (cash + securities) in the international reserves. Of these, $76 billion is cash and $352 billion is in securities.

Not all of this $352 bn. is invested in U.S. Treasuries. As of Nov/11/2013, “more than 40% of gold reserves are nominated in EUR, 45% is in USD, the rest is in other currencies.”

Nevertheless, let us assume that Russia is going to hit not only the U.S., but Europe as well, so it sells an entire amount.

U.S. is currently running the third Quantitative easing, redeeming up to $85 billion monthly or $1.02 trillion annually. Discussed $352 billion is not a large amount in these terms.

The same applies to EU. During the recent 5 years, ECB has issued more than EUR 2 trillion.

Moreover, during the course of such drastic sellout, the price for US bonds will most likely drop temporarily, so the seller would suffer additional losses.

Side note about China. It should not be expected that Bank of China joins this affair. Since they have U.S. Treasuries worth $1 trillion, losses of China in case of dramatic sellout will amount to tens of billions.


Not yet the end of the story. Let’s assume U.S. Treasuries have been sold. What to do with $352 billion of foreign currency? The only things I can image are:

  • Repay external debt
  • Purchase foreign goods
  • Purchase foreign assets

Repay of external debt

Losses due to large advance repayments (as is happened in 2000-2001). Local currency loses any collateralized currency securities, the Bank of Russia would have nothing to oppose attacks on the ruble, its rate drops, unless the country prohibits all forms of trade in foreign currency.

Purchase foreign goods

As above, plus some benefit of obtaining foreign goods worth roughly an amount of annual trade. Plus, obviously, purchase of goods can be hardly considered a harm to Western economy. :-)

Purchase foreign assets

Assets are gold, natural resources, or businesses.

Gold is more volatile than U.S. Treasuries. The gold prices are controlled by national banks. Even if Russia buys entire supply of gold on the market, all other players will most certainly start playing against it.
Also, in current price, it would be roughly 8,000 tons of gold. Such amount is not available on the market.

Natural resources are not needed for a country that actually has 25% of world’s natural resources.

Businesses. In the confrontation with the West, Russia will not be allowed to purchase anything really valuable. In case if Russia builds some artful schemes involving intermediaries, this would introduce barely acceptable risks.