European banks increase reliance on US dollar funding, EU regulator finds

By Valentina Za and Stefania Spezzati

MILAN/LONDON (Reuters) -European banks increased their reliance on U.S. dollars last year, Europe’s banking regulator said on Monday, amid growing concerns about the region’s vulnerability should dollar financing dry up.

Banks globally have significant dollar exposure in their balance sheets, making them vulnerable to potential funding shocks.

Dollar funding fears have grown since U.S. President Trump announced a wave of trade tariffs and began putting pressure on the Federal Reserve earlier this year.

That has led some European central banking and supervisory officials to question whether they can still rely on the Fed to provide dollar funding in times of market stress.

The European Central Bank’s Chief Economist Philip Lane said last month that