The Bank of England, in coordination with European supervisors, is now asking major banks to run internal stress tests for a once unthinkable scenario: a full scale U.S. dollar funding shock. This includes modeling situations where access to dollar liquidity, even via swap lines could freeze entirely. These requests, made quietly through the BoE’s Prudential Regulation Authority, reflect growing concerns over the global system’s overreliance on the dollar and its exposure to U.S. political volatility. Behind this shift is a deeper anxiety: that the U.S. may no longer be a reliable or apolitical provider of emergency dollar liquidity during global crises. The trust that underpinned the dollar’s role as the lifeblood of global finance is eroding, not from economic weakness, but from geopolitical instability and policy unpredictability out of Washington.
President Trump’s repeated attacks on Federal Reserve Chair Jerome Powell, alongside rumors he could be fired, have reignited fears over the politicization of the Fed and shaken foreign confidence in U.S. monetary stewardship. Combined with Trump’s departures from long standing U.S. doctrine on trade and defense, European regulators are now questioning whether they can still rely on the dollar during moments of financial stress. The Fed insists it will maintain global dollar liquidity, but officials abroad aren’t willing to take that on faith anymore. It’s a major turning point: when even the Bank of England starts war gaming a dollar shortage, it’s not about ideology, it’s about survival. Would have thought? lol.
@SantiagoAuFund 🧐https://t.co/Idv5jxkkbr
— EndGame Macro (@onechancefreedm) July 18, 2025