Tags: federal reserve | central banks

Fed, Central Banks Announce Emergency Cash Measures Sunday

Sunday, 19 March 2023 10:45 PM EDT

The U.S. Federal Reserve on Sunday said it had joined with the Bank of Canada, Bank of England, Bank of Japan, European Central Bank, and Swiss National Bank in a coordinated action to enhance the provision of liquidity through the standing U.S. dollar swap line arrangements.

The move came on the heels of a deal brokered by Swiss authorities to have UBS buy rival Swiss bank Credit Suisse to prevent its disorderly collapse and signals the depth of concern central bankers have over the recent turmoil in the financial system on both sides of the Atlantic.

"To improve the swap lines' effectiveness in providing U.S. dollar funding, the central banks currently offering U.S. dollar operations have agreed to increase the frequency of seven-day maturity operations from weekly to daily," the Fed said in a statement issued alongside announcements from the other five central banks.

Operations will commence on Monday and will continue at least through the end of April, the Fed said.

Swap lines, according to the The Balance, are arrangements between two central banks to have currency available for each country's member banks.

"These agreements stabilize markets when markets become stressed," according to the financial website. "They reassure banks that there won't be a run on a specific currency that they won't be able to meet. Swap lines keep plenty of currency available during times of stress."

The swap line between U.S. Federal Reserve and the European Central Bank (ECB) lets the ECB get U.S. dollars in exchange for an equal value of euros, CNN noted. "The ECB can then distribute those dollars to commercial banks in the 20 countries that use the euro."

Newsmax staff contributed to this report.

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
The U.S. Federal Reserve on Sunday said it had joined with the Bank of Canada, Bank of England, Bank of Japan, European Central Bank, and Swiss National Bank to enhance the provision of liquidity through the standing U.S. dollar swap line arrangements.
federal reserve, central banks
282
2023-45-19
Sunday, 19 March 2023 10:45 PM
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