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US euro sale to defend yen surprises ECB, breaks convention
🇰🇷 South Korea /Economy & Trade

US euro sale to defend yen surprises ECB, breaks convention

From Dong-A Ilbo · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Named sources New plan
  • The US sold euros to defend the Japanese yen, a move that reportedly surprised the European Central Bank (ECB).
  • The ECB was informed about the transaction only after it was completed, leading to confusion and criticism.
  • The US Treasury stated that decisions on allocating funds from the Exchange Stabilization Fund (ESF) are made independently.

The United States reportedly sold euros to support the Japanese yen, a unilateral action that has caused consternation within the European Central Bank (ECB). According to reports, the ECB was only notified of the currency transaction after it had concluded, leaving officials surprised and reportedly "dismayed."

Sources suggest that the lack of prior coordination between the US and the ECB marks a significant departure from established practices. This joint intervention, the first of its kind between the US and Japan in approximately 30 years, was carried out without consultation, raising questions about inter-central bank cooperation. Some senior ECB officials are said to view the US sale of euros as an "unprecedented act that breaks with convention" among Western monetary authorities.

The allocation of ESF assets is made by the Treasury Department based on its assessment of market liquidity and valuation, and the Treasury redistributed ESF reserve assets last week consistent with its authorities.

— US Treasury spokespersonA US Treasury spokesperson explained the rationale behind the unilateral decision to sell euros, stating that such financial decisions are made independently and based on internal assessments.

Traditionally, since World War II, Western central banks and finance ministries have emphasized mutual trust and consultation. Currency market interventions have typically been coordinated. A source described the US Treasury's decision to sell euros through the Federal Reserve as "shocking and regrettable," noting the absence of such actions in the past and warning of potential damage to the cooperative relationship.

In response, a spokesperson for the US Treasury stated that decisions regarding the allocation of assets within the Exchange Stabilization Fund (ESF) are not coordinated with foreign authorities. The spokesperson clarified that such decisions are based on the Treasury's assessment of market liquidity and valuation, and that the fund's reserve assets were redistributed as authorized. A former Trump administration official also commented that the US adheres to confidentiality in private discussions with international partners, unlike the ECB.

We adhere to the confidentiality of private discussions with international partners, unlike the ECB.

— Former Trump administration officialA former high-ranking US official contrasted the US approach to international financial discussions with that of the ECB, highlighting a perceived difference in transparency and confidentiality.
DistantNews Editorial

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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