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The BIS ''Hidden USD Debt'' Story Explained

Market Depth

CHAPTER

FX Derivatives Market - Hidden Debt

There are roughly 20 to 25 trillion dollars of dollar denominated funding that sits outside the United States. The FX derivatives market accounts for the lion's share of this off-balance sheet dollar funding, which is called hidden debt. If you're a Japanese insurance company, you want to purchase US Treasuries, you need dollar funding for this transaction. A Brazilian corporate needs dollar funding to boost their international activities in dollars.

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