BIS Warns of $80 Trillion of Hidden FX Swap Debt
By Investment Watch Blog
⚠️ BIS WARNS OF $80 TRILLION OF HIDDEN FX SWAP DEBT
– Full story via Reuters at https://t.co/V0VLasnD2l
— PiQ (@PiQSuite) December 5, 2022
💸 "The missing dollar debt from FX swaps/forwards and currency swaps is huge," the Switzerland-based institution said, describing the lack of direct information about the scale and location of the problems as the key issue.
– Full Story on Reuters at https://t.co/V0VLasFdTT pic.twitter.com/j3EzYDz3Aj
— PiQ (@PiQSuite) December 5, 2022
LONDON, Dec 5 (Reuters) – The Bank for International Settlements (BIS) has warned that pension funds and other 'non-bank' financial firms now have more than $80 trillion of hidden, off-balance sheet dollar debt in the form of FX swaps. https://t.co/ybztnRXgRR
— *Walter Bloomberg (@DeItaone) December 5, 2022
Source – Reuters
The Bank for International Settlements (BIS) has warned that pension funds and other ‘non-bank’ financial firms now have more than $80 trillion of hidden, off-balance sheet dollar debt in the form of FX swaps. Having this much debt off the balance sheet, the BIS warns, leaves policymakers in a fog to avert the potentially disastrous effects of a global dollar squeeze.
They saw funding squeezes during both the global financial crisis and again in March 2020 when the COVID-19 pandemic wrought havoc that required top central banks like the U.S. Federal Reserve to intervene with dollar swap lines.
The $80 trillion-plus “hidden” debt estimate exceeds the stocks of dollar Treasury bills, repo and commercial paper combined, the BIS said, while the churn of deals was almost $5 trillion per day in April, two thirds of daily global FX turnover. For both non-U.S. banks and non-U.S. ‘non-banks’ such as pension funds, dollar obligations from FX swaps are now double their on-balance sheet dollar debt, it estimated.
Original source: https://www.investmentwatchblog.com/bis-warns-of-80-trillion-of-hidden-fx-swap-debt/