European officials are considering centralizing the US Dollar to reduce reliance on the Federal Reserve.

On November 14th, European financial stability officials are engaged in discussions regarding the creation of an alternative to the Fed's funding mechanism. The aim is to consolidate the US dollars held by central banks outside the United States. Under the leadership of the Trump administration, central banks worldwide are striving to reduce their dependence on the US. The Fed's mechanisms offer dollar loans to other central banks, serving as a lifeline to the markets during times of stress and ensuring global financial stability. Interviews with more than a dozen European central bank and regulatory officials have revealed their concerns that these mechanisms could potentially be "weaponized" by the Trump administration. European officials' concerns started to increase around April but then subsided later due to assurances provided by the Fed. The practice of consolidating the dollar presents practical challenges and may not be feasible. A White House spokesperson stated that Trump has "repeatedly reaffirmed his dedication to maintaining the strength and influence of the dollar." (FXStreet)