FED may not fund ECB - Reuters: Officials fear Trump's influence at central bank
Some European central bank officials and supervisory authorities are questioning whether they can still rely on the US Federal Reserve to provide dollar funding in times of stress or market crises.
Reuters news agency reports that the news was confirmed by six people familiar with the matter, casting doubt on what has been a cornerstone of financial stability. The sources told Reuters that it is unlikely that the US central bank will not respect its funding reserves and so far has given no signal to pursue such a scenario.
But European officials have been holding informal discussions about the possibility, as their trust in the U.S. government has been shaken by the policies of the Trump administration. The U.S. president has radically changed U.S. policies in several areas, such as supporting Russia's position on Ukraine, withdrawing from a commitment to provide security to Europe and imposing tariffs on allies.
At several European forums where participants assess potential risks to the financial system, officials have discussed scenarios under which the US government could pressure the Federal Reserve to suspend emergency funding, two of the sources said.
Some officials have also discussed the possibility of finding alternatives to the European Central Bank. At times when markets face stress, the Federal Reserve has provided the European Central Bank and other major counterparts with access to dollar funding.
The European Central Bank and the Federal Reserve declined to comment on the report. The White House also did not respond to a request for comment. The US central bank is an independent institution, accountable to Congress.
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