Macro-economics: ‘Huge, Missing and Growing:’ $65 Trillion in Dollar Debt Sparks Concern

[sharon sanders]

‘Huge, Missing and Growing:’ $65 Trillion in Dollar Debt Sparks Concern

Greg Ritchie
Mon, December 5, 2022 at 10:38 AM·3 min read

(Bloomberg) -- There’s a hidden risk to the global financial system embedded in the $65 trillion of dollar debt being held by non-US institutions via currency derivatives, according to the Bank for International Settlements.

In a paper with the title “huge, missing and growing,” the BIS said a lack of information is making it harder for policy makers to anticipate the next financial crisis. In particular, they raised concern with the fact that the debt is going unrecorded on balance sheets because of accounting conventions on how to track derivative positions.

The findings, based on data from a survey of global currency markets earlier this year, offer a rare insight into the scale of hidden leverage. Foreign-exchange swaps were a flashpoint during the global financial crisis of 2008 and pandemic of 2020, when dollar funding stress forced central banks to step in to help struggling borrowers.

more....

https://www.yahoo.com/now/huge-missing-growing-65-trillion-120025349.html

 

[Emily]

https://www.youtube.com/watch?v=6G34wHSLyFA
NobodySpecialFinance
6,826 views Premiered Dec 5, 2022
The Bank of International Settlements warned today that there is a staggering $80 trillion worth of FX Swaps debt denominated in US dollars. Worse yet, this mountain of debt exists off the balance sheets of the institutions that hold them, and regulators and central bankers alike have very little clarity into who even holds it. This could result in a dollar squeeze that would spell disaster for financial markets. Link to the BIS report: https://www.bis.org/publ/qtrpdf/r_qt2212h.htm
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https://www.minneapolisfed.org/article/2011/liquidity-crises-epp