Foreign banks as a group moved from a position of receiving funding from their parents on a net basis in 1999 to providing significant funding to non-U.S. affiliates by the mid-2000s – more than $ billion on a net basis by 2008. 9 A good bit of this short-term funding was used to finance long-term, U.S. dollar-denominated project and trade finance around the world.
There is also evidence that a significant portion of the dollars raised by European banks in the pre-crisis period ultimately returned to the United States in the form of investments in U.S. securities.