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European financial institutions are concerned that any renewed escalation of trade tensions with the US could spill over into actions that would limit their ability to source dollar funding.
A chief risk officer (CRO) at a European wealth manager says this scenario remains “extreme”, but not impossible.
“One of the scenarios I have been starting to play with is if all US dollars have to be held in US banks,” says the CRO. “You have to understand your third-party risk dependencies on large banks.”
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