? Bank of England worries about the future of the dollar and urges banks to prepare for shocks
The Bank of England has unexpectedly asked the largest British banks to test their resilience against potential currency shocks related to the US dollar. The reason – possible sudden events in the political arena of the United States.
According to insiders, this involves stress tests and impact assessments in case the dollar sharply weakens or temporarily loses its status as the main reserve currency. This scenario has been discussed following reports about possible changes in the US administration and fiscal policy.
The Bank of England does not specify exact risks, but analysts believe this is preparation for a “black swan” – a rare but very powerful economic shock that could shake global finances. This especially concerns banks tied to dollar transactions, derivatives, and dollar liquidity.
In other words, the regulator is asking banks to be ready for a scenario where the dollar is no longer the king of the balance sheet.
? And this is quite a worrying signal for the global financial system.
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