The European Central Bank (ECB) is currently scrutinizing the dollar exposure of banks within the euro zone, according to statements made by ECB Vice President Luis de Guindos on Wednesday. Despite recent criticisms of the U.S. Federal Reserve by President Donald Trump, de Guindos expressed confidence in the Fed’s continued provision of liquidity in stressful times.
The U.S. President’s comments have sparked uncertainty regarding the independence of the U.S. central bank and its historical commitment to prevent foreign banks from running out of dollars during periods when funding markets are strained. The ECB’s supervisory division is investigating these potential risks.
However, de Guindos remains confident in the ongoing effectiveness of the so-called swap lines between the Federal Reserve and major central banks, including the ECB. These swap lines have historically been beneficial for both parties involved.
In a press conference where he presented the ECB’s Financial Stability Review (FSR), de Guindos said, "The agreement that we have with the Federal Reserve, I do not have any doubts that will continue being an important pillar for financial stability globally."
He added, "These agreements, these swap lines, have been very positive for financial stability on both sides of the Atlantic."
