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The Fed’s Swap Linesswap lines: Narrow Circle, Broad Effect?

In: Fault Lines After COVID-19

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  • Joshua Aizenman

    (University of Southern California)

Abstract

Concerns about the GFC provoking global depression induced the FED to extend unprecedented selective bilateral swap lines. The selectivity of these swap lines indicates that countries with significant trade, financial and geopolitical linkages can expect access to ad-hoc swap arrangements on a case-by-case basis. During the COVID-19 crisis, the Fed provided US dollar liquidity to the global economy by reactivating or enhancing swap arrangements with other central banks, and dabbling it down by allowing central banks to temporarily exchange their US Treasury securities held with the FED for US dollars. The impact of major central bank auctions benefitted even the more vulnerable economies, confirm the “Narrow circle, broad effect” of US FED swap lines during the GFC and the COVID-19 crisis.

Suggested Citation

  • Joshua Aizenman, 2023. "The Fed’s Swap Linesswap lines: Narrow Circle, Broad Effect?," Springer Books, in: Robert Z. Aliber & Már Gudmundsson & Gylfi Zoega (ed.), Fault Lines After COVID-19, pages 249-260, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-26482-5_15
    DOI: 10.1007/978-3-031-26482-5_15
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