Published by Global Banking & Finance Review®
Posted on November 14, 2025
2 min readLast updated: January 21, 2026
Add as preferred source on GoogleDWS warns of global financial risks if the US restricts dollar access, impacting emerging markets. Discussions on alternative funding are underway.
By Iain Withers and Tommy Reggiori Wilkes
LONDON (Reuters) -Executives at DWS, one of Europe's largest money managers, are thinking through the potential impacts in the unlikely event that the U.S. Federal Reserve limits access to dollar funding, the firm's CEO told Reuters.
Any move to cross that "red line" would have a big impact particularly on emerging markets that are more reliant on dollar funding, Stefan Hoops said in an interview, adding that he believed any such action was highly unlikely.
"We are thinking what (restrictions to dollar funding) would mean. That would have a profound impact on smaller countries, it would have a profound impact on emerging markets," he said.
Hoops was speaking before Reuters reported on Thursday that European financial officials are debating whether to create an alternative to Fed funding backstops by pooling dollars held by non-U.S. central banks in an effort to reduce their reliance.
The talks have come in response to policies pursued by U.S. President Donald Trump that have upended long-standing ties, put the Fed's independence in doubt and underlined the dominant role the U.S. plays in global finance.
Fed Chair Jerome Powell told a European Central Bank-hosted conference in July that the U.S. central bank had no plans to change how it offered dollar liquidity to other official entities. A White House spokesman said Trump had "repeatedly affirmed his commitment to maintaining the strength and power" of the dollar.
Hoops said China's interventions in financial and economic markets, such as in rare earth processing where it is dominant, had shown the world that countries could use market levers as "geopolitical tools".
"The U.S. has an incredible toolkit for anything around dollar-clearing payments," he said. "I think Fed swap lines are a... red line, meaning, once you do that then it changes forever."
Hoops said any interventions would undermine faith in previously neutral market processes such as clearing.
"My personal view is that it's difficult to see because this is almost like a last resort."
(Reporting by Iain Withers and Tommy WilkesEditing by Gareth Jones)
Dollar funding refers to the process of obtaining U.S. dollars for various financial transactions, often crucial for businesses and countries that rely on the dollar for trade and investment.
Emerging markets are economies that are in the process of rapid growth and industrialization, often characterized by increasing investment opportunities and higher risks compared to developed markets.
Risk management is the identification, assessment, and prioritization of risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events.
Currency hedging is a financial strategy used to protect against potential losses due to fluctuations in exchange rates, often involving the use of financial instruments like options and futures.
Capital markets are financial markets where long-term debt or equity-backed securities are bought and sold, providing companies with access to capital for growth and expansion.
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