Brad Setser on Addressing the Global Dollar Shortage and COVID-19’s Implications for Worldwide Trade Imbalances
Macro Musings with David Beckworth
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Is Dollar Funding Needs a Bigger Part of the Global Economy?
There was a big run-up in dollar funding needs ahead of the global financial crisis. Asian insurers who couldn't invest in their own market, they were not enough assets, looked abroad for yield and you get hedge-dealed in the United States. I think there have been periods of build-up where risk has built up through these structures. So unfortunately we went into the COVID-19 pandemic after a period where risk had been built enough. Okay. Brad, as you look at this development over the past few decades, do you see this becoming more pronounced?
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