On November 14, European financial stability officials were discussing whether to create an alternative funding mechanism to the Federal Reserve, pooling dollar holdings held by central banks outside the United States. Under the Trump administration, central banks worldwide have been attempting to reduce their dependence on the United States.
The Federal Reserve's mechanisms for providing dollar loans to other central banks act as a lifeline to ensure global financial stability during periods of market stress. Interviews with more than a dozen European Central Bank and regulatory officials revealed concerns that these mechanisms could be "weaponized" by the Trump administration.
Concerns among European officials rose around April, but subsequently subsided due to assurances from the Federal Reserve. Centralizing the dollar faces practical difficulties and may not be feasible. A White House spokesperson stated that Trump has "repeatedly reaffirmed his commitment to maintaining the strength and influence of the dollar." (Jinshi)
