Europe Questions Fed’s Dollar Support

London/Madrid/Frankfurt:

Some European Central Banking and Supervisory employees dispute whether they can still rely on the American Federal Reserve to provide dollars in the market for periods of the market, six people familiar with the issue report some doubt about what was a background of financial stability.

Sources told Reuters that they find it extremely unlikely that the Fed would not honor the funding backstops and the US central bank itself did not signal it to indicate it.

However, European officials have had informal discussions about this possibility because their confidence in the United States government has been shaken by some of Trump’s administration policies.

Some officials have played if they can find alternatives to the US Central Bank, two sources said. In times of stress on the market, the Fed has provided the European Central Bank and other major counterparts with access to dollars.

The route from these discussions: there is no good substitute for the Fed, said the six sources, which include the ECB and the European Union’s senior staff, with first -hand knowledge of talks.

Sources have asked all anonymity to speak honestly about private discussions.

The Fed is an independent institution responsible for Congress. The Central Bank never suggested that it would not stand behind its backstops, which it supports as the first line of defense against foreign financial or financial wounds in the US.

One of the sources said the discussions come amid “the possibility of less international cooperation on the part of the US authorities”.

Discussions on alternatives to funding are part of a broader analysis of vulnerable points in the European Zone’s financial system, which of course the ECB regulatory principles and other EU.