The bank for International Settlements (BIS) is warning of ‘off the books’ debt from FX swap debt. They estimate the debt stands somewhere near $80 Trillion dollars (US). Part of the danger is that a missed repayment by a debtor could cause large liquidity issues. The GFC was started with a debt of around $920 billion dollars (US) which is less than 1% than these current FX swap debts. BIS warn that this hidden debt is leading to liquidity decisions by Central Banks being made in a “fog”.
BIS report
Dollar debt in FX swaps and forwards: huge, missing and growing (bis.org)
Reuters report on the issue
