According to the Financial Times, citing sources familiar with the matter, the United States used euros from its foreign exchange reserves to buy yen, and only notified the European Central Bank after the transaction was fully completed. This news, disclosed on August 7, adds a European perspective to the US intervention in the yen's exchange rate; the Financial Times had already reported on this intervention on August 1. The US government and Japanese authorities coordinated to support the yen, but the US did not sell dollars to complete the purchase; instead, it chose to sell euros. Both the European Central Bank and the Federal Reserve Bank of New York declined to comment on the notification process. A spokesperson for the US Treasury Department told the Financial Times that the Treasury does not coordinate with foreign institutions on decisions regarding the allocation of reserve assets of the Exchange Stabilization Fund. The focus of the disagreement is not control over the euro reserves, but rather the prior communication mechanism. The euro is part of the US official foreign exchange reserves, and the US has the authority to buy and sell these assets. However, the European Central Bank in Frankfurt questioned whether the US should have communicated in advance when using euros to intervene in the exchange rate of another major currency.

The reasons why the United States chose to use the euro for intervention

Foreign exchange intervention is the operation by which monetary authorities influence exchange rate levels by buying and selling currencies. The Federal Reserve Bank of New York executes foreign exchange transactions for the Federal Reserve and also acts as a fiscal agent, carrying out related operations according to the instructions of the U.S. Treasury Department. The U.S. could have sold dollars to buy yen, but by using euros instead, it could have supported the yen while avoiding directly injecting more dollars into the market. The U.S. Treasury's Exchange Stabilization Fund already holds both euros and yen in assets. The Treasury Department states that its foreign currency deposits and securities assets are currently only allocated to euros and yen, held in accounts with central banks in various countries, and also invested in foreign government bonds. Therefore, this operation used existing U.S. reserves, not newly purchased euros specifically for this intervention. Japan's exchange rate policy is now deeply intertwined with broader U.S. financial interests. The EU Today news website previously reported that Japan holds a large amount of U.S. Treasury bonds, and using these bonds would be highly politically sensitive.

The key lies in communication and negotiation, not in obtaining permission.

Foreign governments do not need the approval of the European Central Bank (ECB) to dispose of euros in their reserves. The euro is an international reserve currency, and ownership of euro assets held by different countries belongs to their respective governments and central banks. However, when intervention affects multiple major currencies, central banks often coordinate their interventions. For example, after the 2011 earthquake and tsunami that struck Japan, the yen experienced sharp fluctuations, and the US, UK, Canada, and the ECB jointly intervened with Japan. The ECB itself views foreign exchange intervention as a policy tool that can be implemented within a pre-existing framework, including cooperation with other monetary authorities. According to the Financial Times, some ECB officials believe that notifying Frankfurt only after the transaction is completed violates long-standing practice. The ECB has not publicly commented on the incident. This disagreement does not mean the ECB has the right to veto the US's disposal of its euro assets; the point of contention is whether information should be shared before the transaction is executed when intervention involves the currency of another major monetary authority.

This action did not exert sustained downward pressure on the euro.

Selling euros will exert downward pressure on the euro during the transaction, but the long-term impact depends on the scale of the sell-off, overall market expectations, and the reaction of private investors. The purpose of this operation is to boost the yen, not to implement a policy of suppressing the euro. Currently, there is no public evidence that this transaction has caused a lasting shock to the Eurozone's financial environment. The European Central Bank (ECB) itself faces exchange rate fluctuations, trade frictions, and external shocks, all of which affect its assessment of inflation and economic growth. The EU Today news website previously analyzed that the euro's trajectory and US trade policy have already been incorporated into the ECB's monetary policy considerations. This intervention brings a new practical problem: even if the ECB does not make any policy adjustments, the reserve management behavior of other countries can still affect the euro.

Further details are pending disclosure by the United States.

The Federal Reserve Bank of New York releases quarterly reports on the Treasury and Federal Reserve's foreign exchange operations, covering intervention actions and the management of U.S. foreign exchange reserves. Subsequent reports are expected to reveal more details of this transaction, including how the operation was recorded in reserve accounts. However, the report may not answer a key diplomatic question: when exactly did the European Central Bank receive the notification? Based on available information , the U.S. used its domestically managed euro reserves to intervene and support the yen, while the ECB only received the news after the transaction was finalized. The core of the current conflict is not about control of the euro, nor does it represent a large-scale currency confrontation, but rather a common practice among major global monetary authorities: what communication rules should be followed when one party uses another's currency to intervene in a third currency?