The Bank of England joins European regulators in warning of dollar risks

The Bank of England has asked some banks to test their resilience to a potential shock to the dollar, three sources said, in the latest sign of how the Trump administration's policies are eroding trust in the US as a cornerstone of financial stability. President Donald Trump has broken with long-standing US policies in areas such as free trade and defence, forcing policymakers to consider whether emergency provision of dollars can still be relied upon in times of financial stress. The Bank of England has asked some banks to review their dollar funding plans and how reliant they are on the dollar, including short-term demand, following similar requests from European regulators, one person familiar with the matter said. A UK-based global bank has been asked to conduct internal stress testing in recent weeks, including a scenario in which the dollar swap market could completely dry up, another source said. One of the sources said that, given the dominance of the US dollar in the global financial system and banks' reliance on it, no bank could withstand such a shock for more than a few days.