Foreign exchange derivatives are hiding “huge” debts by banks and other financial firms, creating a serious problem for regulators, analysis published by the Bank for International Settlements finds.

“Embedded” in the FX derivatives market is “huge, unseen dollar borrowing”, write the authors Claudio Borio, Robert McCauley and Patrick McGuire. By allowing firms to borrow dollars in exchange for another currency, FX derivatives resemble repos, creating a potential point of stress during dollar