Inte tillgängligt på svenska
Urtė Kalinauskaitė
- 26 November 2025
- FINANCIAL STABILITY REVIEW - BOXFinancial Stability Review Issue 2, 2025Details
- Abstract
- This box presents the business rationale for euro area banks’ US dollar activities and assesses the associated financial stability risks. It finds that euro area banks’ US dollar assets and liabilities are mainly linked to capital market activities and are concentrated in a few global systemically important banks. Banks’ activities represent a diverse set of financial services as they intermediate US dollars to other European parties, in the form of unsecured and secured lending and borrowing, FX swaps and currency hedges. Euro area banks’ US credit exposures are largely limited to holding high-quality debt securities and lending to the non-financial corporate sector. While asset-liability mismatches appear to be limited in extent, banks are exposed to liquidity risks due to mismatches between the specific counterparties providing and receiving funding. These liquidity risks may not materialise in banks’ own balance sheets, as they may deleverage in times of stress, but rather affect their counterparties. Therefore, maintaining adequate balance sheet capacity is necessary to enable banks to act as shock absorbers, given the lack of regulatory requirements for matching asset and liability positions within a given currency.
- JEL Code
- G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
G15 : Financial Economics→General Financial Markets→International Financial Markets
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors
E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
F31 : International Economics→International Finance→Foreign Exchange
F34 : International Economics→International Finance→International Lending and Debt Problems