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The Evolution of the Federal Reserve Swap Lines since 1962

Author

Listed:
  • Michael D Bordo
  • Owen F Humpage
  • Anna J Schwartz

Abstract

This paper describes the evolution of the Federal Reserve’s swap lines from their inception in 1962 as a mechanism to forestall claims on U.S gold reserves under Bretton Woods to a means of extending emergency dollar liquidity during the Great Recession. It describes the Federal Reserve’s successes and failures and argues that swaps calm crisis situations by both supplementing foreign countries’ dollar reserves and by signaling central-bank cooperation. The paper shows how swaps exposed the Federal Reserve to conditionality and raised fears that they bypassed the Congressional appropriations process.

Suggested Citation

  • Michael D Bordo & Owen F Humpage & Anna J Schwartz, 2015. "The Evolution of the Federal Reserve Swap Lines since 1962," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(2), pages 353-372, September.
    • Handle: RePEc:pal:imfecr:v:63:y:2015:i:2:p:353-372
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Ten Years After Bear
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2018-03-12 12:26:11

    Citations

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    Cited by:

    1. Benk, Szilard & Gillman, Max, 2020. "Granger predictability of oil prices after the Great Recession," Journal of International Money and Finance, Elsevier, vol. 101(C).
    2. Perry Mehrling, 2015. "Elasticity and Discipline in the Global Swap Network," Working Papers Series 27, Institute for New Economic Thinking.
    3. Sebastian Horn & Bradley C. Parks & Carmen M. Reinhart & Christoph Trebesch, 2023. "China as an International Lender of Last Resort," NBER Working Papers 31105, National Bureau of Economic Research, Inc.
    4. Mark Choi & Linda S. Goldberg & Robert Lerman & Fabiola Ravazzolo, 2021. "COVID Response: The Fed’s Central Bank Swap Lines and FIMA Repo Facility," Staff Reports 983, Federal Reserve Bank of New York.
    5. Silvia Albrizio & Iván Kataryniuk & Luis Molina & Jan Schäfer, 2021. "ECB euro liquidity lines," Working Papers 2125, Banco de España.
    6. repec:hal:cepnwp:hal-01933930 is not listed on IDEAS
    7. Mitchener, Kris & Trebesch, Christoph, 2021. "Sovereign Debt in the 21st Century: Looking Backward, Looking Forward," CEPR Discussion Papers 15935, C.E.P.R. Discussion Papers.
    8. repec:fip:a00001:94154 is not listed on IDEAS
    9. Duca, John V., 2017. "The Great Depression versus the Great Recession in the U.S.: How fiscal, monetary, and financial polices compare," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 50-64.
    10. Larry D. Wall, 2021. "So Far, So Good: Government Insurance of Financial Sector Tail Risk," Policy Hub, Federal Reserve Bank of Atlanta, vol. 2021(13), November.
    11. Yannis Dafermos & Daniela Gabor & Jo Michell, 2023. "FX swaps, shadow banks and the global dollar footprint," Environment and Planning A, , vol. 55(4), pages 949-968, June.
    12. Michael D. Bordo & Robert N. McCauley, 2019. "Triffin: Dilemma or Myth?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(4), pages 824-851, December.
    13. Trebesch, Christoph & Reinhart, Carmen & Horn, Sebastian, 2020. "Coping with Disasters: Two Centuries of International Official Lending," CEPR Discussion Papers 14902, C.E.P.R. Discussion Papers.
    14. Fernando Eguren-Martin, 2020. "Dollar shortages and central bank swap lines," Bank of England working papers 879, Bank of England.
    15. Benk, Szilard & Gillman, Max, 2020. "Granger predictability of oil prices after the Great Recession," Journal of International Money and Finance, Elsevier, vol. 101(C).
    16. Bahaj, Saleem & Fuchs, Marie & Reis, Ricardo, 2024. "The Global Network of Liquidity Lines," CEPR Discussion Papers 19070, C.E.P.R. Discussion Papers.
    17. Mathis L Richtmann & Lea Steininger, 2023. "From bazooka to backstop: the political economy of standing swap facilities," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 47(4), pages 681-702.
    18. Mark Choi & Linda S. Goldberg & Robert Lerman & Francesco Ravazzolo, 2022. "The Fed’s Central Bank Swap Lines and FIMA Repo Facility," Economic Policy Review, Federal Reserve Bank of New York, vol. 28(1), July.
    19. D. Essers & E. Vincent, 2017. "The global financial safety net :In need of repair ?," Economic Review, National Bank of Belgium, issue ii, pages 87-112, september.
    20. Emmanuel Carré & Laurent Le Maux, 2018. "Globalisation financière et Dollar Swap Lines : la Réserve fédérale et la Banque centrale européenne durant la crise de 2007-2009," Working Papers hal-01933930, HAL.
    21. Perry Mehrling, 2015. "Elasticity and Discipline in the Global Swap Network," International Journal of Political Economy, Taylor & Francis Journals, vol. 44(4), pages 311-324, October.
    22. Scheubel, Beatrice & Stracca, Livio, 2019. "What do we know about the global financial safety net? A new comprehensive data set," Journal of International Money and Finance, Elsevier, vol. 99(C).
    23. Emmanuel Carré & Laurent Le Maux, 2018. "The Federal Reserve's Dollar Swap Lines and the European Central Bank during the global financial crisis of 2007-2009," Post-Print hal-02570211, HAL.
    24. Scheubel, Beatrice & Herrala, Risto & Stracca, Livio, 2016. "What do we know about the global financial safety net? Data, rationale and possible evolution," VfS Annual Conference 2016 (Augsburg): Demographic Change 145676, Verein für Socialpolitik / German Economic Association.
    25. Stracca, Livio & Scheubel, Beatrice, 2016. "What do we know about the global financial safety net? Rationale, data and possible evolution," Occasional Paper Series 177, European Central Bank.

    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • N2 - Economic History - - Financial Markets and Institutions

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