China's dollar holdings may be obscured by non-US custodians

Former US Treasury official Brad Setser says Bloomberg has drawn attention to China's use of non-US custodians. He argues China has been “much better at hiding its dollars” than getting out of the dollar. Setser cites a jump in Canada's holdings and a detailed June survey as evidence China uses a Canadian custodian for some of its agency bonds. He says custodians in Luxembourg, and possibly France, are also significant for those bonds.