EU firms fear dollar liquidity becoming tariff bargaining chip
Trade war escalation could affect ECB's access to Fed swap lines
European financial institutions are concerned that any renewed escalation of trade tensions with the US could spill over into actions that would limit their ability to source dollar funding.
A chief risk officer (CRO) at a European wealth manager says this scenario remains “extreme”, but not impossible.
“One of the scenarios I have been starting to play with is if all US dollars have to be held in US banks,” says the CRO. “You have to understand your third-party risk dependencies on large banks.”
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