Financial Times/Gillian Tett/7-9-2022
“As the latest BIS quarterly report notes, forward dollar payment obligations ‘do not appear on balance sheets and are missing in standard debt statistics’, because they are not classified as a ‘loan’ in accounting systems. They are off-balance sheet — in other words, a black hole.”
USAGOLD note: It’s an $80 trillion black hole that needs closer regulatory scrutiny, says Tett, though that, she adds, might be easier said than done. This is the best analysis we’ve seen thus far on the danger lurking in the currency swap market – a whale that surfaced early last week. After all, if there was ever a moment when central bankers needed to understand the real vulnerabilities arising from dollar-linked debt,” she warns, “it is when the world faces geopolitical risks, economic pain and political challenges to the supremacy of the dollar. That is precisely what 2023 could bring.”
