Some European central banking and regulatory officials are beginning to question whether they can continue to depend on the U.S. Federal Reserve for dollar liquidity during financial turbulence, according to six individuals familiar with the matter. This uncertainty raises concerns about a longstanding pillar of global financial stability.

Although these officials believe it is highly improbable that the Fed would refuse to uphold its funding backstops—and the U.S. central bank itself has given no indication of such a shift—their confidence in the U.S. government has been shaken. This skepticism stems from policy decisions made by the Trump administration, prompting informal discussions about potential risks.

Trump’s administration has significantly diverged from traditional U.S. policy in key areas, including a more conciliatory stance toward Russia regarding Ukraine, doubts about America’s commitment to European security, and the imposition of tariffs on allied nations. These moves have led some European officials to consider the possibility that political pressures could influence the Fed’s decisions.

In certain European financial policy circles, officials have analyzed scenarios where the U.S. government might pressure the Fed to halt its dollar liquidity support, according to two sources. Some have explored potential alternatives, but they acknowledge that no viable replacement for the Fed currently exists when it comes to ensuring access to dollar funding during financial crises.

Despite these discussions, the Fed remains an independent institution accountable to Congress and has never signaled an intention to withdraw its support. Historically, it has maintained dollar liquidity arrangements as a key measure to prevent financial instability from spreading to the U.S. economy. Neither the European Central Bank (ECB) nor the Fed provided comments on the matter, and the White House did not respond to inquiries.

While these concerns have so far been raised only in informal settings outside of official policymaker meetings, they are expected to surface in more formal discussions in the near future. As the global economic landscape shifts, European officials remain wary of potential disruptions to a financial lifeline they have long taken for granted. (Source) Reuters