COVID-19 Exposes Asian Banks’ Vulnerability to US Dollar Funding | Asian Development Bank

COVID-19 Exposes Asian Banks’ Vulnerability to US Dollar Funding

Publication | July 2020
COVID-19 Exposes Asian Banks’ Vulnerability to US Dollar Funding

This brief examines the US dollar funding exposure of Asian banks and suggests how policy makers in the region could support financial stability.

The coronavirus disease (COVID-19) pandemic has put pressure on emerging Asian financial markets and currencies, highlighting their vulnerabilities to US dollar funding risks. This brief explores the role of the US dollar as the dominant currency for international trade and financial transactions and the rise in Asian banks' US dollar funding activities since the global financial crisis. It looks at the implications of Asian banks' exposure to US dollar funding and highlights considerations for policy makers.