The White House is rumoring a change in leadership at the Federal Reserve, and the Supreme Court's ruling may further shake Powell's position. Is the global financial market brewing the next storm?
[The rest of the translation continues in the same manner, maintaining the original structure and translating all text to English while preserving any HTML tags.]If Trump gains the power to dismiss the Federal Reserve Chairman, the government can influence the swap mechanism's operation through personnel appointments and "moral persuasion". Once this tool is selectively used in geopolitical games, the cornerstone of the global financial system will be shaken.
Taking Europe as an example. Relevant data shows that the dollar shortage in the Eurozone banking system has long existed. Without swap line support, European financial institutions may face liquidity disruption, triggering a chain reaction similar to Lehman Brothers. If the Federal Reserve uses the withdrawal of swap lines as a bargaining chip, weaponizing this mechanism, Europe may be forced to make concessions in trade, energy policies, and even affect US-European tariff negotiations.
Dollar "Nuclear Weapon" More Powerful Than Tariffs
Wall Street previously mentioned that Deutsche Bank's analysis considers the Federal Reserve's dollar swap mechanism a "nuclear weapon" more deterrent than tariffs.
Deutsche Bank states that the Federal Reserve's dollar swap lines control approximately $97 trillion in foreign exchange swap markets, equivalent to the global GDP total, serving as a lifeline for non-US institutions to obtain dollar liquidity during crises.
If Trump targets the Federal Reserve's dollar swap "nuclear button" - refusing to provide dollar liquidity at critical moments - it will trigger a severe global financial crisis.
