Japanese Banks at Risk as Dollar Borrowing Doubles, BIS Says
- Report also cites Canada for following similar trend
- Dollar exposure left banks vulnerable to shocks in 2008 crisis
BIS Says Dollar Exposure Leaves Japanese Banks at Risk
Japanese banks have more than doubled their borrowing and lending in dollars since 2007, leaving them vulnerable to funding shocks such as those that exacerbated the last financial crisis, the Bank for International Settlements warned.
Assets denominated in dollars on the balance sheets of Japanese banks surged to about $3.5 trillion by the end of 2016, the coordinating body for the world’s central banks said Sunday in its annual report about the global economy. Those exceed liabilities in dollars by about $1 trillion, creating a massive so-called long position in the currency. The report also cited Canadian lenders for following a similar trend, almost doubling their dollar exposure since the crisis. Their net long positions reached almost $200 billion, the BIS said.