BoE Sounds Dollar Alarm Amid Global Currency Concerns

The Bank of England has urged UK banks with international operations to analyze their vulnerability to potential U.S. dollar funding shocks. This request follows shifts in U.S. policies under President Trump, which have raised concerns over the reliability of the U.S. dollar as the central currency in global finance.

Amidst increasing uncertainty, banks are conducting internal stress tests simulating scenarios where access to U.S. dollar liquidity becomes restricted. European supervisors have expressed similar concerns, prompting regulatory bodies to ensure lenders are robust enough to handle currency volatility.

As global banks heavily rely on the U.S. dollar for daily operations, the prospect of limited access could severely impact financial stability. The recent spotlight on dollar risks underscores a growing unease about the implications of policy shifts from Washington on international commerce and finance.

(With inputs from agencies.)