ECB supervisors step up checks on dollar funding at banks over Trump concerns – report

It is being reported that ECB supervisors have pressed banks in the region to assess their dollar funding needs especially if there is market distress. The idea here is that they are fearing a possible scenario in which they cannot tap into Fed facilities if Trump decides to pressure the Fed into blocking that. For some context, it’s not the first time this concern has been brought up.

During times of financial stress, the Fed typically provides lending facilities to major counterparts to alleviate shortages in the dollar. But amid the erratic policy rollout by Trump, officials are fearing that this funding source could be shut down abruptly.

So far, two sources said that the Fed had never suggested that it would not stand by those backstops.

Funnily enough, the recent market swings seem to be suggesting an aversion to the dollar though. And at least for the time being, the ECB can take in some comfort of better developments from the US-China trade conflict. We’ve definitely bought some temporary reprieve on the trade front but who’s to say what might come next.

This article was written by Justin Low at www.forexlive.com.