BoE Warns Banks of Potential Dollar Shock Amid Global Currency Rethink
The Bank of England has instructed lenders to urgently assess their dollar funding strategies as global markets reel from shifting US policies. Former President Trump's departure from traditional trade and defense positions has eroded confidence in the dollar's dominance, prompting European regulators to reconsider reliance on the currency.
While the Federal Reserve maintains its dollar operations, European trading partners are exploring alternatives. The BoE's directive includes stress testing for potential disruptions in dollar swap markets—a MOVE underscoring growing systemic concerns. London Business School's Richard Portes, former chair of the European Systemic Risk Advisory Committee, highlights the unprecedented nature of this currency reckoning.
