The News
European finance officials are reportedly discussing the possibility that the US Federal Reserve may not provide dollar funding in a future global financial crisis.
The behind-the-scenes talks, Reuters reported, cast doubt “over what has been a bedrock of financial stability.”
It remains highly unlikely that the Fed would stop honoring its funding backstops, but President Donald Trump has broken with enough other long-standing US policies to spark concern across the Atlantic.
The worry reflects how Trump’s weaponization of Washington’s dominance over the global financial system could ultimately erode US financial hegemony: “Economic dominance flows more from attraction than coercion. To reinforce U.S. economic power, Trump should lean into his dealmaking instincts,” an expert argued.