BIS Issues Dire Warning as US Dollar Faces ‘Historic Stress Test’ Amid Global Fragility Crisis

Key Points

1. The US dollar has dropped 10% in 2025, marking its largest decline since 1973, alongside rising government bond yields.

2. BIS General Manager Agustín Carstens describes the global economy as entering a 'new era of heightened uncertainty and unpredictability' due to US policy shifts.

3. Trade tensions and US tariff announcements have disrupted global markets, with non-bank entities like hedge funds exacerbating economic instability.

4. The dollar's safe-haven status is under unprecedented stress, with non-US investors increasing hedging activities amid perceived US policy instability.

5. The BIS advocates structural reforms, including stablecoin regulation, to address weaknesses in the global financial system and maintain dollar dominance.