German financial regulator warns of risk of markets questioning dollar's role

FRANKFURT, Jan 28 (Reuters): Germany's financial regulator BaFin said on Wednesday there was a risk that markets could question the role of the US dollar - currently hovering near a four-year low - as the global reserve currency.
The warning comes a day after US President Donald Trump said the value of the dollar was "great" when asked if he thought the currency had declined too much. His comments added to the pressure on the greenback, which hit a four-year low before edging back up.
Mark Branson, president of BaFin, outlining key risks it had identified for ?2026, said generally the potential for sudden price corrections in financial markets was high.
"There also remains the risk that markets will question the role of the US dollar as the global reserve currency," Branson said.
BaFin said US dollar risks for German banks were "manageable". European ?banks are dependent ?on short-term refinancing in dollars in order to meet their liabilities.
"Bottlenecks or abrupt increases in costs, such as those that occur in times of stress...can trigger liquidity bottlenecks," BaFin said.