Concerns are mounting over the U.S. Federal Reserve's potential loss of independence under the Trump administration, which could undermine the reliability of dollar access for international banks.

Regulators across Europe are reevaluating their dependence on the Fed for dollar liquidity, as recent U.S. policy shifts introduce uncertainties about the stability of dollar support.

In response, a major global bank was asked to conduct stress tests simulating a complete freeze of the U.S.-dollar swap market, highlighting fears about dollar availability.

Experts warn that no bank could survive more than a few days without access to dollar funding, given the dollar's dominance in the global financial system.

The scale of dollar exposure is immense, with the global currency derivatives market valued at $130 trillion, underscoring the systemic importance of the dollar.

If banks encounter difficulties in securing dollars, they risk failing to meet cash demands, which could erode depositor confidence and trigger bank failures.

As part of stress testing, the Bank has asked lenders to evaluate their dollar funding plans, especially their reliance on the U.S. dollar for short-term needs.

The U.S. dollar's central role in global trade and finance makes recent policy changes concerning, raising doubts about the effectiveness of dollar emergency provisions during crises.

The Bank of England is actively scrutinizing lenders' resilience to potential dollar shocks, reflecting broader regulatory concerns amid the shifting U.S. political landscape.

This renewed focus by the Bank of England is part of a wider trend among regulators to reassess dollar risks in light of recent U.S. policy uncertainties.