{"id":64421,"date":"2022-12-09T20:05:23","date_gmt":"2022-12-10T01:05:23","guid":{"rendered":"https:\/\/olduvai.ca\/?p=64421"},"modified":"2022-12-09T20:05:23","modified_gmt":"2022-12-10T01:05:23","slug":"bis-warns-of-80-trillion-of-hidden-fx-swap-debt","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=64421","title":{"rendered":"BIS warns of $80 trillion of hidden FX swap debt"},"content":{"rendered":"<header class=\"article-header\" aria-label=\"Beginning of Article\">\n<div class=\"article-header__detail\">\n<div class=\"article-header__detail__texts\">\n<h3 id=\"articleTitle\" class=\"article-title\"><a href=\"https:\/\/financialpost.com\/pmn\/business-pmn\/bis-warns-of-80-trillion-of-hidden-fx-swap-debt\">BIS warns of $80 trillion of hidden FX swap debt<\/a><\/h3>\n<\/div>\n<\/div>\n<\/header>\n<section class=\"article-content__content-group\">LONDON \u2014 The Bank for International Settlements (BIS) has warned that pension funds and other \u2018non-bank\u2019 financial firms now have more than $80 trillion of hidden, off-balance sheet dollar debt in the form of FX swaps.<\/p>\n<p>Dubbed the central bank to the world\u2019s central banks, the BIS raised the concerns in its latest quarterly report, in which it also said this year\u2019s market upheaval had, by and large, been navigated without many major issues.<\/p>\n<\/section>\n<section class=\"article-content__content-group\">Having repeatedly urged central banks to act forcefully to dampen inflation, it struck a more measured tone this time around and also picked over the ongoing crypto market problems and September\u2019s UK government bond market turmoil.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\"><\/div>\n<section class=\"article-content__content-group\">Its main warning though was what it described as the FX swap debt \u201cblind spot\u201d that risked leaving policymakers in a \u201cfog.\u201d<\/p>\n<p>FX swap markets, where for example a Dutch pension fund or Japanese insurer borrows dollars and lends euro or yen in the \u201cspot leg\u201d before later repaying them, have a history of problems.<\/p>\n<p>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.<\/p>\n<p>The $80 trillion-plus \u201chidden\u201d 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.<\/p>\n<\/section>\n<section class=\"article-content__content-group\">For both non-U.S. banks and non-U.S. \u2018non-banks\u2019 such as pension funds, dollar obligations from FX swaps are now double their on-balance sheet dollar debt, it estimated.<\/p>\n<p>\u201cThe missing dollar debt from FX swaps\/forwards and currency swaps is huge,\u201d the Switzerland-based institution said, describing the lack of direct information about the scale and location of the problems as the key issue.<\/p>\n<\/section>\n<section class=\"article-content__content-group\">\u2026click on the above link to read the rest\u2026<\/p>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>BIS warns of $80 trillion of hidden FX swap debt LONDON \u2014 The Bank for International Settlements (BIS) has warned that pension funds and other \u2018non-bank\u2019 financial firms now have more than $80 trillion of hidden, off-balance sheet dollar debt in the form of FX swaps. Dubbed the central bank to the world\u2019s central banks, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1733,1269,124,7879,33476,33475,33477,683],"class_list":["post-64421","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-for-international-settlements","tag-bis","tag-central-banks","tag-financial-post","tag-fx-swap-debt","tag-marc-jones","tag-off-balance-sheet-dollar-debt","tag-reuters"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/64421","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=64421"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/64421\/revisions"}],"predecessor-version":[{"id":64422,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/64421\/revisions\/64422"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=64421"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=64421"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=64421"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}