"At end-September 2014, credit in US dollars to
non-financial borrowers outside the United States totalled $7.3 trillion, an
increase of 9.3% over a year earlier. Bank loans in US dollars to non-US
non-financial borrowers rose 9.7% in the year to September 2014 to $4.9
trillion, while securities issued by these borrowers rose 8.6% to $2.4
trillion. When non-bank financial borrowers are added, the total comes to $9.2 trillion. The latter figure may give a better picture of non-resident
US dollar credit, since many of these non-bank financial entities provide
dollar funding directly to non-financial corporations."[1]
Our Comments:
With the dollar on a
fast, upward move, repayment risk and re-pricing risk of dollar denominated
loans should be causes of concern for banks and for emerging economies. Funding
dollar loans is going to be a major problem for corporate borrowers in
economies from China and India to Latin America. Emerging economies and bankers ought to be worried; so should regulators prepare!
Views expressed are without any risk or responsibility
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