An unimaginable scenario is playing out in the global financial markets in 2025 as allies are turning into foes. Reuters reported that some European central banking and supervisory officials are questioning whether they can continue to rely on the US Federal Reserve to provide dollar funding in times of market stress. The development comes amid the de-dollarization agenda kick-started by emerging economies and now European agencies are questioning the US dollar’s usage amid tariff and trade tensions.

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Six people familiar with the matter said on the condition of anonymity that some European officials have held informal discussions as their faith in the White House is shaken. Two sources close to the development revealed that European authorities are discussing whether they can find alternatives to the US central bank. The move coincides with the de-dollarization initiative which has inadvertently reached European shores.

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De-Dollarization: European Officials Cast Doubt on US Dollar & Federal Reserve

European authorities are now casting doubt over what was a solid bedrock of financial stability – the US dollar. “Trump’s trade and foreign policies have forced Europe on a path towards reduced reliance on the US and this is likely to imply a desire for reduced reliance on the dollar,” said Rabobank’s FX Strategy head Jane Foley. Click here to know how many sectors in the US will be affected if European officials consider de-dollarization.

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“Trump threatened countries that tried to de-dollarise with extra tariffs. Ironically, his isolationist policies may drive the trend,” said Foley. If the de-dollarization agenda begins to grow on European shores, the US economy and the dollar could experience catastrophic events. The financial world as we know it would begin to fall apart dimming the power of American supremacy. Read here to know why Jane Foley thinks that de-dollarization will soon spread throughout the globe, including Europe.