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The House recently passed a bill entitled the PROTECT Taiwan Act, which would, if signed into law, order the Department of the Treasury, the Federal Reserve, and the Securities and Exchange Commission (SEC) to do their utmost to exclude China from 6 key international institutions if the President determines “China’s actions threaten Taiwan and pose a danger to US interests”.
The 6 organizations include the Group of 20, the Bank for International Settlements (BIS), the Financial Stability Board, the Basel Committee on Banking Supervision, the International Association of Insurance Supervisors, and the International Organization of Securities Commissions.
The bill passed by 395 votes to 2, with only Kentucky Republican Thomas Massie, and Texas Democrat Lizzie Fletcher voting against.
The G20 is a forum of the world’s 20 largest economies, which, compared with the G7 in which all nations are America’s allies, operates much more according to the international relations principle of multilateralism.
The BIS is the world’s oldest international settlement organization, and is owned today by 63 world central banks. It operates as a counterparty, trustee, asset manager, and agent for central banks in the course of their financial transactions and for the purpose of achieving financial stability worldwide.
The other organizations may be less known to readers. The Financial Stability Board (FSB) was created by the G20 in 2009, and was described as a “fourth pillar” of the architecture of global economic governance, alongside the International Monetary Fund, World Bank, and the World Trade Organization, by US Treasury Secretary Tim Geithner.
The International Organization of Securities Commissions (IOSC), which includes the American SEC, is a forum of similar organizations which together are responsible for regulating 95% of the world’s securities and futures markets. Endorsed by both the FSB and the G20, its offices include that of the IOSC Monitoring Board, which provides public oversight for the IOSC’s standard-setting bodies, of which it has several—related to financial reporting and accounting standards.
The SEC-equivalent in China sits on the Monitoring Board.
China’s involvement with the Bank of International Settlements is robust, as the nation’s central bankers hold several key committee positions, but also through its support of China’s mBridge project that has pioneered the world’s first digital currency issued by a central bank. Commonly called CBDCs, a central-bank digital currency is a sometimes heralded, sometimes feared innovation that has major implications in world banking and finance.
mBridge uses a cryptocurrency-like code to transact in entirely digital RMB without clearing and communication by commercial banks. Its code is available to all BIS members, and is also compatible with the Ethereum Virtual Machine that powers the popular Ether cryptocurrency.
The BIS, which oversees the project, announced that Saudi Arabia joined the UAE, Hong Kong, China, and Thailand in adopting the mBridge platform, meaning it was likely the world’s largest oil exporter was settling payments in digital yuan—a huge sea change from the dollar-denominated oil trade of the last 50 years. In 2024, the BIS announced that it had reached the “minimum viable product” stage, and that partner central banks could manage it independently without China or the BIS’ involvement.
Uptake of CBDCs is extremely low around the world, and in fact the US Congress passed a law forbidding any President from making a digital dollar; although it hasn’t passed the Senate. The most commonly cited fear is that a CBDC creates a direct account between the central government and consumers, and would therefore remove any intermediary that can protect consumer or investor privacy.
Regulatory warfare
Ostensibly advanced in the name of Taiwan’s national security, the PROTECT Taiwan Act is another piece in a string of legislative moves that aggressively seek to alienate China from world, and particularly from any Western forums where she is prominent. WaL has previously reported on the Cox Amendment that forbids any employee of NASA from collaborating, or even communicating, or even obtaining the capacity to communicate, with a member of the Chinese space program. This precludes Chinese membership in the Artemis Accords, the US and NASA’s international union/forum on the future of space exploration, or involvement with onboard the ISS.
Economically-speaking, former President Biden passed the CHIPS and Science Act, which restricts private investment into Chinese companies in advanced technologies, particularly computer processors. Before that, a little-known government agency called the Bureau of Industry and Security passed a new dense regulation in 2022 that placed extraterritorial limits on the exportation of goods, namely chips and supercomputing components, into China.
Central to the power of the ruling is the use of the Entity List, which blocks designated firms from importing US goods without a license. Between 2018 and 2022, both the Trump and Biden administrations oversaw a quadrupling in the number of unique Chinese companies on this list, from 130 to 532. Unsurprisingly, all Chinese chip manufacturers, supercomputing organizations, and software and hardware firms are thusly listed. The list also blocks exportation through intermediary nations.
Since 2020 another regulatory body, the US Public Company Accounting Oversight Board, has been auditing hundreds of Chinese companies, prompting many to delist from American stock exchanges. Sinopec, a chemical refiner, and pioneer of green aviation fuel, voluntarily delisted, but others including ChinaPetro, and China Life Insurance have been forcibly delisted.
While it hasn’t passed the Senate, the majority the PROTECT Taiwan Act enjoyed in the House suggests it will, and the hawkishness against China readily embraced by President Trump suggests it will be signed into law. The fact that Congress and the American regulatory apparatus have been squeezing China out of the Western Hemisphere as much as they have suggests that if passed, and if signed into law, the exclusionary measures will be urgently pursued. WaL
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PICTURED ABOVE: The Bank of International Settlements tower in Basel, Switzerland, shot from a drone. PC: BIS.
