The Fed will “print” dollars to supply leading central banks with them
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The Federal Reserve will begin daily swap line operations with the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank to ensure they have enough dollars.
It was reported press service central banks
“The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve and the Swiss National Bank today announced coordinated actions to improve the provision of liquidity through their standing USD liquidity swap lines,” the statement said.
Thus, to increase the efficiency of swap lines in providing funding in dollars, the frequency of operations with a seven-day maturity will be increased from weekly to daily. These daily operations will begin on March 20 and will continue until at least the end of April.
This should reduce tensions in the global financing markets, and therefore help mitigate the impact of such tensions on the supply of loans for households and businesses, the central banks emphasize in a joint statement. A network of swap lines between these central banks serves as a liquidity support tool.
Dollar swaps foresee, that a foreign central bank sells a certain amount of its currency to the Federal Reserve in exchange for dollars at the market exchange rate. At the same time, the Fed and a foreign central bank enter into an agreement to repurchase the currency at a specified date in the future at the same exchange rate.
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