DoubleLine Sees Risk ‘Accelerant’ in Dollar Loans Outside U.S.
- Foreign banks are using volatile ways to meet greenback demand
- Money manager sees risks. ‘We’re watching it,’ Campbell says
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DoubleLine Capital, the $147 billion money manager, agrees with the International Monetary Fund that U.S. dollar loans made by foreign banks are creating a risk for the global financial system.
Banks based outside the U.S. can’t get enough dollars to satisfy demand for loans denominated in the American currency. Unlike their U.S. counterparts, they don’t have a stable base of dollar deposits so they use foreign-currency swaps, which the IMF says are expensive and occasionally unreliable, to meet borrowers’ needs as a last resort.