Dollar deposit mystery highlights non-US bank funding risks

Liquidity resilience is uncertain as offshore deposit financing replaces prime money funds

Questions raised include 'Where have the dollar deposits come from?'

Non-US banks have managed to offset a net loss of $415 billion in dollar funding resulting from US money market fund (MMF) reforms, thanks to a $531 billion growth in their offshore dollar deposit bases, research from the Bank for International Settlements (BIS) suggests. Experts warn, however, that the resilience of this changed funding structure in stressed conditions is untested.

“These structural shifts raise several questions: Where have the dollar deposits come from? Which banks have