US Dollar Faces Historic Stress Test as BIS Issues Dire Warning on Global Fragility

Key Points

1. BIS General Manager Agustín Carstens stated that the global economy has entered a 'new era of heightened uncertainty,' reversing previous optimism.

2. US policy changes, including broad-based tariffs, have disrupted markets, causing volatility and a depreciating US dollar despite rising bond yields.

3. The unusual market dynamics have led to speculation about the US dollar's long-standing safe-haven status.

4. Carstens emphasized the need for regulatory parity between banks and non-bank financial institutions (NBFIs) in light of digital innovation.

5. The BIS highlighted concerns over trade policy impacts and the entry of big tech into finance as key challenges.