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Global banks' dollar funding needs and central bank swap lines

Author

Listed:
  • Iñaki Aldasoro
  • Torsten Ehlers
  • Patrick McGuire
  • Goetz von Peter

Abstract

At $13 trillion, the gross dollar liabilities of banks headquartered outside the United States at end-2019 were nearly as high as before the Great Financial Crisis. Most of their dollar funding was booked outside the United States. We measure non-US banks' short-term dollar funding needs by comparing short-term dollar liabilities (including off-balance sheet FX swaps) with holdings of liquid dollar assets. The scale of the central bank swap lines are of similar magnitude to banks' short-term dollar funding needs. Swap line usage peaked in May at $449 billion and has subsided since. However, dollar funding needs of corporates may yet reveal a broader need for dollars outside the banking system.

Suggested Citation

  • Iñaki Aldasoro & Torsten Ehlers & Patrick McGuire & Goetz von Peter, 2020. "Global banks' dollar funding needs and central bank swap lines," BIS Bulletins 27, Bank for International Settlements.
  • Handle: RePEc:bis:bisblt:27
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    References listed on IDEAS

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    1. Iñaki Aldasoro & Torsten Ehlers, 2018. "The geography of dollar funding of non-US banks," BIS Quarterly Review, Bank for International Settlements, December.
    2. Boris Hofmann & Ilhyock Shim & Hyun Song Shin, 2020. "Emerging market economy exchange rates and local currency bond markets amid the Covid-19 pandemic," BIS Bulletins 5, Bank for International Settlements.
    3. Patrick McGuire & Goetz von Peter, 2012. "The Dollar Shortage in Global Banking and the International Policy Response," International Finance, Wiley Blackwell, vol. 15(2), pages 155-178, June.
    4. Nicola Cetorelli & Linda S. Goldberg & Fabiola Ravazzolo, 2020. "Have the Fed Swap Lines Reduced Dollar Funding Strains during the COVID-19 Outbreak?," Liberty Street Economics 20200522, Federal Reserve Bank of New York.
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    Cited by:

    1. Iñaki Aldasoro & Wenqian Huang & Esti Kemp, 2020. "Cross-border links between banks and non-bank financial institutions," BIS Quarterly Review, Bank for International Settlements, September.
    2. Bryan Hardy & Elod Takáts, 2020. "International banking amidst Covid-19: resilience and drivers," BIS Quarterly Review, Bank for International Settlements, December.
    3. Iñaki Aldasoro & Egemen Eren & Wenqian Huang, 2021. "Dollar funding of non-US banks through Covid-19," BIS Quarterly Review, Bank for International Settlements, March.

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