Market News
Central banks urged to pool dollar reserves as Fed help questioned - REUTERS
Summary
- Trump's attacks on Fed leadership has raised concern among central bankers globally
- Posen says Fed help should not be taken for granted
- Fed renewed liquidity lines with some major central banks
- European central bankers have privately discussed alternatives
FRANKFURT, Sept 3 (Reuters) - The European Central Bank and its peers around the world should pool their reserves for U.S. dollar liquidity as Federal Reserve help cannot be guaranteed given President Donald Trump's attacks, the head of an influential think tank said.
Adam Posen of the Peterson Institute for International Economics told an ECB conference on Wednesday it should not be taken for granted that a politicised Fed would lend dollars to foreign central banks in a crisis, as it did a few times since the 2007-2008 financial meltdown.
He recommended that the ECB and its peers outside the United States pool their reserves in dollars in order to provide emergency liquidity to domestic banks if needed. This option has been raised by European central bankers behind closed doors.
