In the Blind Spot: Breaking the People’s Bank of China

— Why the 90-day pause and exemptions on U.S. tariffs don’t represent capitulation but are rather classic “art of the deal”. **(Updated)**

— Reminder that the Trump administration’s whole objective is transforming exorbitant privilege from a right into a service.

— Now is probably a good time to familiarize ourselves with the dollar’s prominent role in Belt & Road development and lending.

Good morning subscribers,

As per the famous line from Airplane, looks like I picked the wrong week to… go on school holidays! It’s definitely not been short of drama. But also endless speculation and projection. We’ve got a lot to say, and not very much time.

Before we get to it, I’d encourage readers to consider the parallel between Trump’s agenda to disrupt a global economic system built on the quiet exploitation of suppressed labour in authoritarian regimes like China and that of Abraham Lincoln’s agenda during the U.S. Civil War. Call me crazy. But yes, really.

Just as Lincoln’s tariffs were designed not only to build up Northern industry but to sever the economic incentives underpinning slavery, Trump’s trade agenda — however clumsily framed — can be read as a challenge to supply chains that rely on coerced or underpaid labor, especially in China and parts of the Global South. The tariffs don’t just shield — they provoke a reckoning. In this light, they function less as tools of isolation and more as weapons of emancipation, aimed at altering the cost calculus that keeps exploitative systems humming.

No, you won’t read that anywhere else. But the parallels are clear, and perhaps it’s about time someone took a stand against exploitative practices in the global economy. Whatever ESG was, it certainly wasn’t a movement dedicated to liberating anyone.

This edition of the newsletter is written by Izzy.

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CAPITULATION OR ‘ART OF THE DEAL’? It took 11 whole hours for mainstream press, notably Bloomberg, to unearth that the U.S. Customs and Border Protection department had put out a note at 10:36 p.m. EDT on Friday outlining a number of significant exemptions — mostly electronics that go into laptops and phones — on Trump’s Chinese tariffs.

Since coming out, the story has significantly boosted the “Trump is capitulating due to the stupidity of his actions” narrative among the never-Trumper camp. Many of these people were already convinced the 90-day pause announced on Wednesday, April 9, was evidence of Trumpian backpedaling and panic or China having the upper hand.

But there is another perspective. As ever, The Blind Spot’s mandate is to point it out. Not because we take a partisan position, but because investors cannot afford to be blindsided by political agendas in the media and commentariat space.

A more cool-headed reading of events, for example, would suggest that everything that has transpired this week fits the classic “art of the deal” template (something Treasury Secretary Scott Bessent has also explicitly stated). In case readers are still unclear about how that works, here’s ChatGPT’s explainer:

Applying the “art of the deal” framing suggests Trumpian concessions were always going to be on the cards. The strategic objective, as Bessent explained to Tucker Carlson, was ultimately to escalate to de-escalate.

But, but, what about the exemptions? Trumpian rhetoric has been strategically ambiguous about exemptions from the outset, with both Trump and Howard Lutnick seemingly contradicting each other at times. On one hand, Lutnick publicly floated several exceptions, especially for steel and aluminium early on; on the other hand, Trump was heard ruling out anything but blanket tariffs.

But if Liberation Day was a high-level test devised to see which nations would retaliate and which would not, then the subsequent period following the confirmation of 125 percent tariffs against China was arguably a similar invitation for negotiation, but this time to corporations, rather than nations.

Indeed, as POLITICO Pro reported on early on Friday, Big Tech lobbyists immediately interpreted the 90-day pause as a signal that deals were to be done. By Wednesday, Trump himself was signaling he was open to concessions, noting, “as time goes by, we’re going to take a look at it. There are some [industries] that have been hit hard. There are some that, by the nature of the company, get hit a little bit harder. And we’ll take a look at that”.

As my colleagues explained, meanwhile, “Trump previously drew a red line against allowing trade exemptions for U.S. companies affected by tariffs, but his executive order pausing ‘reciprocal’ tariffs appears to have opened the door for companies to ask. That’s left lobbyists, lawyers and executives scrambling for more details”.

By Friday evening, details of exceptions for electronics and smartphones had been discreetly published on the U.S. Customs and Border Protection website. Yet, it wasn’t until Saturday afternoon that the story was largely picked up by the mainstream media, a curious fact in its own right. So why might that be? And what does it signal about strategy? That is definitely not a journalistic norm and hints at cat and mouse play.

One (admittedly tempting) interpretation is that the Trump administration didn’t want to draw attention to the concessions it was making because they really were capitulating and wanted to save face. But if that were the case, would it really make sense to bury the announcement? Everyone knows it would come out eventually, ensuring major reputational blowback (as there is now) anyway.

The alternative explanation is more calculated: the delay was part of a broader signaling strategy. The administration is leaving easter eggs in primary sources and obscure releases, prompting attentive players to decipher its real intentions. This aligns neatly with “Art of the Deal” logic.

After all, in any hardball negotiation, ambiguity is a weapon. If your counterpart doesn’t know exactly where the lines are or when you’ll bend, you maintain the edge. It also leaves other governments or firms unsure whether you’re really backing down or just playing favorites. Overall, it signals: The rules are flexible… but only if you talk to us. At the same time it encourages hedge funds and traders to scour the releases and primary sources themselves rather than depend on journalistic repackaging and spin.

Consider the timing of the exemption communication too. It came late Friday, after markets had well and truly closed. Then consider how Apple has been trading since Wednesday: first up, then down, then up again:

Is this Trump capitulating under pressure? Or is this Apple getting the industrial exemptions it wants because it’s been negotiating and promising to relocate as much of its industrial production as soon as possible to the U.S. in exchange? We might never know for sure. But the chances a quid pro quo was executed are not insignificant.

***UPDATE Monday 0800 BST*** Trump has since claimed that “NOBODY is getting ‘off the hook’ for the unfair Trade Balances, and Non Monetary Tariff Barriers, that other Countgries have used against us…” and that “There was no Tariff ‘exception’ announced on Friday.”

Does this bulldoze our analysis? We don’t think so. Ambiguity continues to reign. As do the conflicting messages and the keep them guessing nature of the comms. Our instinct about there being something off about how the original exemption story was reported was correct too. The news release wasn’t an official announcement for a reason. It came in the form or an operational update. So were they trying to bury the exceptions or is something else going on?

We asked ChatGPT, neutralizing the prompts by asking both perspectives. One perspective: why there might have been a misunderstanding (ChatGPT says the issuance of tariff exclusions is a standard component of trade policy, even with aggressive tariff regimes.) The other: why journalists were right to call it a rollback (ChatGPT says even if it wasn’t technically a U-turn, it looked like a softening.)

What’s certain, we think, is that the ambiguity invites lobbying and negotiation, which we think is the key point.

But, but, even if that’s true, who wants those sorts of jobs in America? Haven’t you seen the memes? Yes, we’ve all seen the memes. China has belatedly figured out that meme warfare works.

But a dispassionate analysis that gives Trump the benefit of the doubt suggests this is tactical propaganda purposefully released to misdirect U.S. citizens and the world from the true state of affairs.

China, for its part, appears to be wagering that the Western media’s entrenched anti-Trump bias will do much of the heavy lifting to get its spin across. A carefully placed memetic nudge — casting Trump’s economic agenda as chaotic, incoherent, or regressive — may be all that’s needed to drown out more nuanced or strategic messaging emerging from within the administration.

Take, for example, the media treatment of Howard Lutnick’s April 6 appearance on CBS, during which he said: “The army of millions and millions of human beings screwing in little screws to make iPhones — that kind of thing is going to come to America.” The quote was widely circulated, often as evidence of economic fantasy or nationalist delusion.

What was rarely included, however, was the full context of the quote. That went like this (emphasis ours):

SEC. LUTNICK: I’m- not that I’ve- I have not participated in any meetings with respect to that. The country is focused on- you realize, trillions of dollars of factories are going to be built in America. That’s huge GDP. The factories being built in America are huge GDP–

MARGARET BRENNAN: That takes years–

SEC. LUTNICK: And that is going to matter to us.

MARGARET BRENNAN: And you said that robots are going to fill those jobs. So those aren’t union worker jobs.

SEC. LUTNICK: No, it’s really automated jobs. It’s automated factories- automated factories. But the key is, who’s going to build the factories? Who’s going to operate the factories? Who’s going to make them work? Great American workers. You know, we are going to replace–

MARGARET BRENNAN: You said robots on other networks. You said that to FOX.

SEC. LUTNICK: –the armies of millions of people- well, remember, the army of millions and millions of human beings screwing in little- little screws to make iPhones, that kind of thing is going to come to America. It’s going to be automated and great Americans- the tradecraft of America, is going to fix them, is going to work on them. They’re going to be mechanics. There’s going to be HVAC specialists. There’s going to be electricians, the tradecraft of America. Our high school educated Americans- the core to our workforce, is going to have the greatest resurgence of jobs in the history of America to work on these high-tech factories, which are all coming to America. That’s what’s going to build our next generation of America.

It’s all about the new economy, stupid! As we xplained in our previous newsletter, the real takeaway from Howard Lutnick’s comments— and what should have dominated the headlines — is that tariffs aren’t merely about punishing China for trade infractions. They’re about preparing America and the West for a fundamental transformation in the global economy.

And here’s the crux: if we fail to adapt to that reality now by rethinking supply chains and reclaiming industrial capacity, we risk losing any ability to shape how the gains from automation are distributed. That failure wouldn’t just have economic consequences. It could erode the foundations of Western sovereignty.

BOND YIELD DRAMA: Since the standard narrative doing the rounds is that Bessent and Trump caved on tariffs because of spiking U.S. bond yields, it’s our job here at the Blind Spot to consider the alternative narrative. H/T to my former colleague Tracy Alloway at Bloomberg for articulating the counter-narrative so eloquently in a single meme.

So what’s really going on? As we’ve maintained for a while, the current admin no longer considers the dollar’s reserve status an exorbitant privilege. On the contrary, it sees U.S. fiscal deficits as largely being driven by the demands of lower credit-quality countries that need access to high-quality collateral for trading purposes. Due to how offshore eurodollar markets amplify that demand, U.S. taxpayers inadvertently end up underwriting the risk embedded within such countries’ trade and lending practices, albeit without any say over their lending standards or protocols.

Burden sharing of public goods: Economist Steve Miran, now the chair of the Council of Economic Advisers, spoke at the Hudson Institute went viral last week, laying out that America’s twin deficits are global public goods provided to the world at a cost to American taxpayers that Washington is no longer prepared to fund unilaterally. “There needs to be improved burden-sharing at the global level,” Miran said. “If other nations want to benefit from the U.S. geopolitical and financial umbrella, then they need to pull their weight and pay their fair share. The costs cannot be solely borne by everyday Americans who have already given so much.”

The transcript soon went viral, with many drawing attention to point number five below:Exorbitant privilege as a service: The idea of writing checks to Treasury to help finance global public goods won’t come as a surprise to Blind Spot readers. We’ve dubbed it a push to turn an exorbitant privilege into “exorbitant privilege as a service”.  Ultimately, Miran and co. believe that all highly developed nations have a responsibility to underwrite the global “float” of safe assets. This is the implicit collateral that lubricates trade and commerce across borders, and which operates like a swing balance in the system. At present, this float is overwhelmingly composed of dollar-denominated assets, principally U.S. Treasuries, which serve as the foundation for counterparty confidence. This is due to the belief the U.S. dollar will not be debased, confiscated, undermined, or defaulted upon by its issuer.

The stance of the administration is that all countries that make use of such public goods must commit to the rules of international commerce, walking the walk when it comes to contract law — not just talking the talk.

At a minimum, countries benefiting from this system have a duty not to exploit it for unilateral gain.

And this, precisely, is where China falls short. The litany of grievances from the West’s side is long: persistent currency manipulation, aggressive market intervention, financial repression via a state-directed banking system, and — perhaps most egregiously — the strategic use of industrial tariffs to distort trade and weaken counterparties.

“The challenge is not whether the US should act to correct these imbalances, but rather how it should do so in a way that is both effective and sustainable. The best solution lies in a more co-ordinated approach to global economic governance, perhaps in the formation of a new customs union along the lines proposed by Keynes in 1944. To join, countries must recognise the external consequences of their policies and must take steps to keep domestic demand and domestic supply in overall balance.

However, if the world is unable to come to such an agreement, the US is justified in acting unilaterally to reverse its role in accommodating policy distortions abroad, as it is doing now. The most effective way is likely to be by imposing controls on the US capital account that limit the ability of surplus countries to balance their surpluses by acquiring US assets.”

“The dominance of the dollar in global trade and finance has long been assumed to be a net benefit for the American economy, but this assumption is increasingly being challenged. While it benefits Wall Street and global owners of moveable capital, these benefits come at a cost to American manufacturers and farmers.”

But how does that feed into widening U.S. twin deficits? Since these dollar exposures stem from private and offshore dollar liabilities, they do not require foreign central banks to hold Treasuries on their balance sheets.

And yet, due to post-GFC regulatory reforms — particularly Basel III and the U.S. Liquidity Coverage Ratio (LCR) rules — U.S. correspondent banks are still required to hold increasing amounts of high-quality liquid assets (HQLA) to support these growing exposures.

This regulatory requirement reflexively pulls in more Treasuries — but now from domestic financial institutions rather than foreign reserve managers. As a result, while the fiscal deficit appears to be “domestically” financed, the underlying driver remains the offshore dollar system. It is the regulatory plumbing, in other words, which forces U.S. institutions to backstop the global dollar credit architecture engineered by China that continues to depend on dollar liquidity.

At the same time, the U.S. is forced to respond to the distortions created by this global dollar drain through fiscal compensations — particularly via foreign aid and expanded social spending. Part of this is structural: unlike China, the U.S. supports its population through broad welfare programs, which require constant funding. But it’s also geopolitical. Washington, constrained by legal and political limits, cannot compete with Beijing’s ability to offer concessional, strategically targeted loans to high-risk emerging markets. Lacking that financial agility, the U.S. must rely on grants and non-repayable transfers to maintain influence in dollar-poor regions.

This isn’t just a drain on U.S. financial sovereignty. It’s a structural feedback loop that makes the case for fiscal expansion more persistent, more political, and increasingly unsustainable.

THE GOLDEN FACTOR: Gold traded at fresh highs this week, signaling one of two things:

1) The dollar really is trash and big foreign buyers are switching to gold because that’s the next best thing to support global trade (not RMB or the euro)

or…

2) Countries frozen out of the dollar system, like Russia, prefer to be paid for commodities they sell to China in gold rather than be exposed to RMB risk. As a result, much of that Russian gold is now being directed to Hong Kong to underpin Russian commercial activity within the Sino-system.

How far this shadow-market coordination extends — and how many domestic players have been enlisted in America’s own financial war games — is impossible to know. But the parallels are hard to ignore. When we visited HFT powerhouse Jane Street in New York nearly a decade ago, we couldn’t help but notice the office walls plastered with WWII-era propaganda posters. There was a dedicated room for traders to perfect their games of Poker and Texas Hold’em, and one of the firm’s founders even proudly displayed an original Enigma machine in his office.

In hindsight, the wartime aesthetic was probably indicative of something, not just for Jane Street, but for an entire class of dual-use financial institutions that potentially blur the line between market actor and state proxy. China may be more overt in its coordination, but — given the fortunes at stake — how likely is it that the U.S. is just lying back and doing nothing?

This is all the more the case in a world where the “bad guys” already have no qualms about using hackers, spies, and intelligence advantage to seed secretive hedge funds with a knack for delivering consistent profits.

What’s the risk? Because the offshore entity does not own the underlying Chinese company, shareholders have no direct claim to its assets and only limited legal rights. Chinese courts are not bound to recognize or enforce the VIE contracts, particularly if doing so would conflict with domestic law or national interests. In essence, investors are relying on a legal fiction that works only as long as both the Chinese government and the companies involved agree to maintain the illusion. In recent years, this structure has come under growing scrutiny from both Chinese and U.S. regulators.

A better question might be: why did regulators allow these things to be listed in the first place?

BREAKING THE PBOC? Could Scott Bessent really be trying to break the People’s Bank of China by forcing Beijing into a reckoning over its unsustainable dollar debts and relative lack of hard currency to defend the RMB? Given Bessent’s background helping to break the Bank of England, the notion that he’s been brought in for a similarly strategic operation — one that could simultaneously lay the groundwork for a new Bretton Woods-style overhaul of the global “nonsystem”— is undeniably compelling.

In retrospect, it seems obvious this would be the case.

But if that is the game plan, it’s worth taking a closer look at the tools Bessent might have at his disposal — and how Beijing could be expected to defend itself.

The obvious line of attack is to force Beijing into a reckoning over its impossible trilemma: that involves pushing it to decide whether it should maintain a stable renminbi to allow domestic entities to service their extended dollar liabilities, or devalue with potentially disastrous economic and credit consequences. Neither option is good. Propping up the currency would require draining potentially limited reserves, while devaluation could jeopardize the country’s credit rating if not risking a default by a major state-owned enterprise or bank.

There are other moving parts to consider, too. Fears are growing, for example, that the U.S. has become an untrustworthy ally and that the Fed might even withhold swap lines from its allies at a crunch if it perceives them as forwarding the liquidity to China. It’s worth turning to McCauley again, this time in the FT, to figure out how foreign central banks might break ranks with the Fed in that case.

Funding coalition: To mitigate a destabilizing dollar shortage, McCauley speculates central bankers could form a dollar “coalition of the willing” to get the dollars where they need to go.

The easiest way to do this would be to use their U.S. assets, of which they have a collective $1.9 trillion worth, as collateral in the FIMA repo pool, which — unlike swap lines — is open to a very large pool of foreign central bank players.

But while the coalition could enlist the Bank for International Settlements for technical support as an agent or to act as an intermediary, the exercise wouldn’t be foolproof. McCauley worries that the Fed could still prevent FIMA from being used to provide much-needed same-day (aka intraday) funding, even in a scenario where US bond yields are spiking (as we saw this week).

Conditionality will be key: Our understanding is that the preference within the U.S. policy establishment is to offer term swap lines selectively — to allies only, and strictly on the condition that the resulting liquidity is not redistributed to non-allies, most notably China, and on the condition that tariff concessions are made. This policy posture, we think, is likely to remain in place as long as Beijing refuses to engage in coordinated negotiations. Bank bailouts, meanwhile, appear to be off the table. There is talk, however, that the terms of the FIMA repo facility could be recalibrated to accept bonds at par value, adding further nuance to the evolving framework.

Crucially, it’s under crisis conditions that long theorized “century bonds” are most likely to come into play. These non-marketable instruments — first proposed by former Credit Suisse analyst Zoltan Poszar and later expanded upon in a seminal November 2024 paper by Steve Miran — could become more attractive to global reserve managers if paired with guaranteed access to dollar swap lines. As Miran wrote, “The desire to maintain access to such swap lines will be a powerful long-term incentive for remaining inside the U.S. security and economic umbrella.”

Miran also argues that century bonds, particularly if issued as zero-coupon instruments, offer a far more sustainable way to finance the public goods underpinning global security than conventional short-term Treasury bills.

How do you persuade counterparties to convert short-term debt into ultra-long-dated century bonds? Easy. You make access to dollar swap lines contingent on such a debt exchange within bilateral agreements. In practice, the figure to be swapped would be no more or less than needed to maintain “the lowest comfortable level of international reserves” — aka the international float. This approach ensures that the burden of funding excess dollar reserves falls on those with the greatest need for dollar liquidity, albeit without any compensatory interest. Crucially, the structure preserves the integrity of the U.S. yield curve by allowing shorter-duration Treasuries to remain subject to normal market pricing dynamics.

The Roosa precedent: This type of conditionality is not unprecedented. Roosa bonds were short-term, dollar-denominated debt instruments issued by the U.S. Treasury in the early 1960s and sold to foreign central banks and governments, primarily in Western Europe. Initiated under a program led by Robert Roosa, then U.S. Under Secretary of the Treasury for Monetary Affairs, the bonds were introduced around 1962 as a tool to address the United States’ growing balance of payments deficit and to protect the dollar’s convertibility into gold under the Bretton Woods system. The purpose was to provide foreign official holders of surplus dollars with an alternative to redeeming those dollars for U.S. gold. By purchasing Roosa bonds, these governments effectively lent their dollar reserves back to the U.S. for a fixed term, earning modest interest while agreeing not to convert those funds into gold. 

The arrangement included implicit conditions: the bond proceeds had to remain in the U.S. or be spent on U.S. goods and services, and the participating governments were expected to avoid actions that would pressure U.S. gold reserves. The program was a form of bilateral monetary diplomacy that helped recycle dollar surpluses, maintain international confidence in the dollar, and buy time for the U.S. to address its external imbalances without triggering a crisis in the Bretton Woods system.

Would China go for it? It all depends on the conditionality and how much they otherwise stand to lose. Dispensing unlimited swaplines to allies, while withholding dollars to state-owned Chinese banks and enterprises, could in theory trigger a Chinese default.

Whether that outcome would compel Beijing to come to the Mar-a-Lago negotiating table, prompt it to form a rival bloc with other excluded states, or escalate into open conflict remains an open question.

From Washington’s perspective, however, the strategic calculus is clear: the moral high ground would be firmly on the U.S. side. Any resulting default would be framed as self-inflicted — brought on by China’s refusal to engage, not by American action. This positioning becomes even more significant in light of Vice President J.D. Vance’s proposed legislation to designate China as being in “selective default” for failing to honor historic Republic of China debt, now estimated at around $1 trillion.

As we’ve previously argued, the underlying logic is hard to dismiss. Should China choose to liberalize—opening its capital account and eliminating tariffs—the U.S. could offer a path forward: a debt swap converting China’s remaining short-dated U.S. assets into century bonds. Symbolically, it’s a tidy resolution. After all, it would have taken nearly a century for the CCP to acknowledge the legitimacy of its predecessor’s obligations. If those debts are finally honored, the economy liberalized, and democratic reforms introduced, the U.S. could, in turn, support a peaceful reunification with Taiwan—on the basis that the mainland would no longer pose a threat to Taiwan’s democratic way of life.

Okay but what about the basis trade exposure?  It’s not just aggressive hedge funds running these positions. One of the largest participants, we hear from market sources, may be AustralianSuper — Australia’s biggest pension fund, which, as it happens, was  targeted in a mysterious cyberattack just recently. With A$244 billion (£128 billion) under management on behalf of 2.5 million members, the fund represents a key pillar of the country’s retirement system and, by extension, is a strategic financial actor whose stability would likely require government-level engagement in the event of serious stress.

A recent interview with AustralianSuper’s chief investment officer, Mark Delaney, provides a strong hint about its investment preferences. He told the Financial Times last week that “the U.S. has a lot going for it — strong economic performance (though it’s given a bit back), strong productivity growth, strong profit growth, and, by any measure, many of the best companies in the world,” he said. “All that makes it an attractive place to store capital.”

SPEAKING OF SWAP LINES: Much has been made of Argentina renewing its $5 billion activated swap line with China just days before U.S. Treasury Secretary Scott Bessent’s visit to the country. While President Javier Milei took a hard line against Chinese financial entanglements during his campaign, his stance has notably softened since taking office. But does the renewal signal a loss of faith in the U.S.? We’d argue otherwise.

Given that the bulk of Argentina’s external debt is denominated in dollars, access to RMB swap lines arguably hands valuation influence — and monetary flexibility — over to a country friendly to Washington. In June 2023, for example, Argentina used $1 billion in renminbi from the swap facility, alongside $1.7 billion in IMF Special Drawing Rights, to meet a payment to the IMF. The implication: RMB liquidity can be readily converted into other currencies when needed, creating FX impact but not necessarily reflecting a strategic pivot toward China.

Meanwhile, Milei has already signaled a willingness to align more closely with the U.S.-led economic order. Argentina is reportedly prepared to eliminate tariffs on 50 export products — an offer now being echoed by the broader Mercosur bloc.

Look mum, no controls! In a further sign of growing U.S. closeness, Argentina announced on Saturday it had sealed a $20 billion, 48-month Extended Fund Facility deal with the International Monetary Fund and, in a major policy move ahead of the deal, dismantled key parts of its years-long currency controls and loosened its grip on the peso.

FUSION ENERGY: China is catching up with the U.S. in the race to create the first grid-scale nuclear fusion energy source. According to CNBC, a huge state-funded Chinese project, CRAFT, is set to reach completion this year and appears to follow a U.S. plan published by hundreds of scientists in 2020.

EU AID WASTE: POLITICO reported this week that the European Union has been handing out billions of euros to nongovernmental organizations each year without properly monitoring how the money is spent — or whether it’s even going to genuine NGOs. According to a damning report from the European Court of Auditors which is likely to intensify a fierce political fight over how nonprofits use EU grant money. Using words like “opaque” and “hazy,” the report found the EU’s entire process for funding NGOs lacked transparency and called for reform in the way grants are provided, monitored and disclosed.

European DOGE necessary? “The picture of EU funding for NGOs remains hazy, as information on EU funding — including lobbying — is neither reliable nor transparent,” said Laima Andrikienė, the ECA member in charge of the report, who is also a former lawmaker with the center-right European People’s Party (EPP). The criticism will give ammunition to conservative lawmakers in the European Parliament who want to overhaul the way EU money is dolled out to NGOs, claiming it lacks transparency and is often used to lobby EU institutions — criticisms echoed in the report.

Hanging over the report is the question of lobbying. Are NGOs using public money to influence EU policymaking? And if they are, is it being done in line with EU values? On these questions, the ECA found the European Commission lacked curiosity and transparency. The Commission “did not clearly disclose the information it held on NGO advocacy activities that were financed by EU grants,” the ECA said.

RHEINMETALL’S AMAZING RAMP UP: We hear from our colleagues at Welt that German artillery maker Rheinmetall has ramped up its production from 70 thousand 155 mm per year to 2 million rounds with three years. A visit to its production site also revealed that many of the old ammunition bunkers from the First World War and other 1940s facilities had never really been fully shuttered. The Economist also has more on the story. 

BTC-E KINGPIN EXCHANGE: A high-profile prisoner swap took place between the U.S. and Russia took place this week, involving American ballerina Ksenia Karelina — detained on treason charges for donating to Ukraine—and Russian national Arthur Petrov, accused of stealing sensitive U.S. technology. But this wasn’t the first exchange under the Trump administration.

Back in February, a quieter but arguably more geopolitically significant swap occurred: Alexander Vinnik, the operator of the notorious cryptocurrency exchange BTC-e, was traded for American schoolteacher Mark Fogel. Vinnik’s extradition had been the subject of years of international legal wrangling, making his return to Russia a notable win for Moscow — and raising questions about the broader crypto-geopolitical chessboard now unfolding.

LIZ TRUSS DOES BEDFORD: The great and the good of crypto descended on Bedford, England, this weekend at the invitation of local crypto evangelist and podcaster Peter McCormack. Among the more unexpected attendees was former U.K. Prime Minister Liz Truss, whose name has resurfaced in recent days amid comparisons between Trump’s tariff revival and her ill-fated mini-budget.

According to sources in the crowd, Truss used the occasion to argue that entrenched systems resist disruption—hence the market backlash to Trump’s policy shift. She framed Bitcoin as a tool for wresting power from government, claiming that bureaucracies recognize it as an existential threat, which is why they’re so keen on pushing CBDCs. She reportedly went further, advocating for a “British DOGE” and drawing comparisons between the U.K.’s bureaucratic culture and that of the Soviet Union.

Truss is also said to be in the early stages of launching a free-speech platform.

— HSBC explores private credit push, sources say (Reuters)

— Top Chinese general removed in Xi Jinping’s latest purge. He Weidong was number-two officer in People’s Liberation Army and member of Communist party politburo. (Financial Times)

 — India’s Minister of External Affairs, S Jaishankar slammed China’s economic attacks on India, including unfair dumping.

— The BoE delayed long-dated gilt auction due to market turmoil (Reuters)

— Why the investing rules have changed.

— The Greenland documentary causing a storm in Denmark.