The world’s top financial watchdog has uncovered US$14 trillion of global dollar debt hidden in derivatives and swap contracts, a startling sum that doubles the underlying levels of offshore dollar credit in the international system. The scale of this lending greatly increases the risk of a future funding crisis if inflation ever forces the U.S. Federal Reserve to tighten in earnest and drain worldwide liquidity, potentially triggering a dollar surge. A forensic study by the Bank for International Settlements (BIS) says enormous liabilities have accrued through FX swaps, currency swaps, and “forwards.” The data is ... (full story)