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The Twenty-First Century International Lender of Last Resort

In: Manias, Panics, and Crashes

Author

Listed:
  • Robert Z. Aliber

    (University of Chicago)

  • Charles P. Kindleberger

    (Massachusetts Institute of Technology)

  • Robert N. McCauley

    (Boston University
    University of Oxford)

Abstract

In the crisis of 2008, central bank swaps played a role that had precedents but under circumstances without precedent, and in a size without precedent. The Fed extended unlimited dollar credit to non-US banks through swaps with central banks both to make its monetary policy effective and to meet runs on non-US banks. Central bank swaps during the pandemic crisis in March 2020 confirmed their role as backstops to global dollar banking, as well as ensuring the transmission of Fed policy to key private rates. In addition, the Fed’s new role as buyer of last resort in the US bond market in spring 2020 supported the global market for dollar bonds, including those issued outside the United States by non-US borrowers.

Suggested Citation

  • Robert Z. Aliber & Charles P. Kindleberger & Robert N. McCauley, 2023. "The Twenty-First Century International Lender of Last Resort," Springer Books, in: Manias, Panics, and Crashes, edition 8, chapter 0, pages 321-348, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-16008-0_13
    DOI: 10.1007/978-3-031-16008-0_13
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