IDEAS home Printed from https://ideas.repec.org/p/fip/feddwp/101523.html
   My bibliography  Save this paper

Dollar Funding Fragility and Non-U.S. Global Banks

Author

Listed:
  • Philippe Bacchetta
  • J. Scott Davis
  • Eric Van Wincoop

Abstract

Global non-U.S. banks have significant dollar exposure both on and off their balance sheet. We develop a model to analyze their adjustment to dollar funding shocks, whether from reduced direct lending or external dollar shortages. The model provides insight into banks’ responses through borrowing, lending and FX swap positions, as well as the impact on their net worth, their probability of default and CIP deviations. Implications of the model are confronted with data on the response of non-U.S. global banks to major dollar funding shocks. We examine the benefits from buffering these shocks through central bank dollar swap lines or local currency lending by the central bank.

Suggested Citation

  • Philippe Bacchetta & J. Scott Davis & Eric Van Wincoop, 2025. "Dollar Funding Fragility and Non-U.S. Global Banks," Working Papers 2531, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:101523
    DOI: 10.24149/wp2531
    as

    Download full text from publisher

    File URL: https://www.dallasfed.org/~/media/documents/research/papers/2025/wp2531.pdf
    File Function: Full text
    Download Restriction: no
    File URL: https://www.dallasfed.org/~/media/documents/research/papers/2025/wp2531a.pdf
    File Function: Appendix
    Download Restriction: no
    File URL: https://libkey.io/10.24149/wp2531?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:feddwp:101523. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Amy Chapman (email available below). General contact details of provider: https://edirc.repec.org/data/frbdaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.