Unlimited dollar infusions by Central banks

The Central Banks have simply gone berserk in providing liquidity to financial markets.

In a fresh move ECB, BoE, Swiss Central bank and Bank of Japan will now provide unlimited dollars to their financial firms.

The BoE, ECB, and SNB will conduct tenders of U.S. dollar funding at 7-day, 28-day, and 84-day maturities at fixed interest rates for full allotment. Funds will be provided at a fixed interest rate, set in advance of each operation. Counterparties in these operations will be able to borrow any amount they wish against the appropriate collateral in each jurisdiction.  

For this they have revised swap ceilings with Fed.  For a primer on swap lines see this

Accordingly, sizes of the reciprocal currency arrangements (swap lines) between the Federal Reserve and the BoE, the ECB, and the SNB will be increased to accommodate whatever quantity of U.S. dollar funding is demanded. The Bank of Japan will be considering the introduction of similar measures.


One Response to “Unlimited dollar infusions by Central banks”

  1. After dollar, now the turn of Euro Funding « Mostly Economics Says:

    […] dollar, now the turn of Euro Funding So far, the Central banks had set up swaplines with Fed for USD funding. Now, Denmark Central Bank has set up a swap line with ECB for Euro funding upto […]

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