A bank can do this already. But it puts them in an awkward position for hedging their currency risk as they can’t be assured that they’ll be able to cover any shortfalls or invest any surpluses.

I actually don’t know the ends and outs of the pboc clearing rules but to get access to the mainland repo funding and official fx rates you have to be in good standing so direct clearing banks like deutche and J.P. Morgan in practice are more under Chinese control, not less.

Eurodollar is based on physical cash reserves outside of the USA, right? Otherwise they can indirectly control it.