Some European officials weigh if they can rely on Fed for dollars under Trump

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Some European central banking and caretaker officials are asking whether they can still rely on the US Federal Reserve to provide dollar financing at the time of market pressure, six people who are familiar with the matter have raised some doubts that financial stability is a benefit.

Sources told Reuters that they do not consider it very likely that the Fed will not respect its funding back stop – and that the US Central Bank itself has not given any indications for the proposal.

But European officials have made informal talks about the possibility – in which Writers are reporting for the first time – because some of the Trump administration’s policies have shaken their confidence in the United States government.

President Donald Trump has long been devoid of US policy in several fields, such as endorsing Russia’s position on Ukraine, raising questions about US commitment to European security and imposing taxes on its allies.

In some European forums, where participants assess the potential threats to the financial system, these officials have discussed scenicism that the US government can pressure the feed to suspend the dollar back stop. Both sources said some officials are playing whether they can find alternatives to the US Central Bank. At the time of market pressure, the Fed has provided access to the dollar with the European Central Bank and other major counterparts.

Taking advantage of these discussions: There is no good alternative to the feed, six sources said, including senior ECB and EU banking caretaker staff, who have the first hand to know about the conversation.

Sources all requested a repay to speak clearly about private talks.

The ECB and Fed refused to comment on this article. The White House did not respond to a comment.

The feed is an independent body, which is responsible for the Congress. The central bank has never suggested that it will not stand behind its back, which it maintains as the first line of defense against foreign economic or financial trauma that spreads to the United States.

Separately, five senior euro zones central bank officials said informal conversations – which were out of regular gatherings of policy makers – did not run any indications by the Fed or the ECB leadership.

One of the sources with direct knowledge of the conversation said that the matter has been discussed in the working groups in recent weeks that help officials check the problems, and that includes senior European central banking and caretaker staff.

Another said the question whether Europe could rely on the back stop of the Fed, it is expected that more formal conversations will come soon.

One of the sources said that “US officials have discussed the possibility of low international cooperation”.

ECB President Christine Legarde has not changed relations with Fed since Trump took office in January, since relations with Fed have not changed.

Risk assessment

As the central bank of 20 euro zone countries, the ECB determines the monetary policy and is responsible for expanding the flexibility of the financial system and identifying potential risks. It also oversees the region’s top banks, one of the world’s largest.

Sources said talks about alternatives to funding are part of a broader analysis of risks in the Eurozone financial system, which of the ECB and other European Union regulators certainly. Do The US dollar is the dominant currency for economic trade and capital flow. At the time of stress, investors, companies and financial institutions run away to protect the world’s reserve currency. Recently, in 2023, the Fed provided billions of dollars to the Swiss Central Bank, making Credit Swiss able to meet cash demand. Analysts say that although Credit Swiss had to be recovered, Fed helped prevent a spelling that could have destroyed the financial system.

According to five officials of the Eurozone Central Bank, who also spoke to Reuters on condition of anonymity, according to the suspicions expressed by banking officials in a private conversation, it is likely to reduce its financing with European officials.

The reason for this is that such a move of the feed will have a profound impact on the global markets, financial stability and the economy. Several sources said that it would potentially return to the US economy, threatening the demand for dollar domination and depression for US government debt.

Although the independence of the feed has not been questioned, four of the six sources familiar with the debates said some European officials found that it was possible that the Trump administration could increase pressure on the central bank over time, which caused the scenario where it did not provide dollars.

The Fed declined to comment on the possibility, while the White House did not respond to a comment.

One of the sources said that EU officials are concerned about the short -term loan of European banks in the dollar, which provides constant access to the Fed’s credit lines. The euro zone is about $ 17 % for banks for financing.