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Central bank swap line effectiveness during the euro area sovereign debt crisis

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  • Moessner, Richhild
  • Allen, William A.
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    Abstract

    The Federal Reserve re-established a swap line with the European Central Bank in response to the international liquidity stresses created by the euro area sovereign debt crisis. We examine the swap line's effectiveness in addressing these stresses in 2010–11. We find that announcements about the swap line had a significant effect in reducing euro-dollar FX swap spreads during the 2010–11 crisis, but that the swap line only had limited effectiveness in alleviating the stresses, probably owing to some stigma being attached to its use.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Money and Finance.

    Volume (Year): 35 (2013)
    Issue (Month): C ()
    Pages: 167-178

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    Handle: RePEc:eee:jimfin:v:35:y:2013:i:c:p:167-178

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    Web page: http://www.elsevier.com/locate/inca/30443

    Related research

    Keywords: Financial crisis; International liquidity; Foreign exchange swaps; Central bank swap lines;

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