Central banks to offer US dollar funding via daily swap lines
20 March 2020 London
Image: Shutterstock
Several central banks are doubling down on cross-border efforts to ensure their local markets have enough liquidity to minimise disruption amid the coronavirus outbreak.
The US Federal Reserve, the European Central Bank, and the Bank of England were among those to
sign up to further coordinated action to enhance the provision of liquidity via the standing US dollar liquidity swap line arrangements.
The joint action also includes the Bank of Canada, the Swiss National Bank and the Bank of Japan.
Today’s action includes an agreement by the group to introduce daily swap lines for dollar funding for seven-day maturity operations. Until now operations have been available on a weekly basis.
The daily operations will begin on 23 March and will continue “at least” until the end of April, the banks confirm.
The central banks will also continue to hold weekly 84-day maturity operations.
In a joint statement, the banks say the increased frequency in seven-day maturity operations is aimed at improving the effectiveness of swap lines in getting funding to financial institutions and serve as an important liquidity backstop to ease strains in global funding markets.
Today’s plans for daily operations build upon the coordinated action by the same banks announced earlier in the week
which saw them agree to lower the pricing on the standing US dollar liquidity swap arrangements by 25bps.
This meant the new rate is the US dollar overnight index swap rate plus 25bps.
The US Federal Reserve, the European Central Bank, and the Bank of England were among those to
sign up to further coordinated action to enhance the provision of liquidity via the standing US dollar liquidity swap line arrangements.
The joint action also includes the Bank of Canada, the Swiss National Bank and the Bank of Japan.
Today’s action includes an agreement by the group to introduce daily swap lines for dollar funding for seven-day maturity operations. Until now operations have been available on a weekly basis.
The daily operations will begin on 23 March and will continue “at least” until the end of April, the banks confirm.
The central banks will also continue to hold weekly 84-day maturity operations.
In a joint statement, the banks say the increased frequency in seven-day maturity operations is aimed at improving the effectiveness of swap lines in getting funding to financial institutions and serve as an important liquidity backstop to ease strains in global funding markets.
Today’s plans for daily operations build upon the coordinated action by the same banks announced earlier in the week
which saw them agree to lower the pricing on the standing US dollar liquidity swap arrangements by 25bps.
This meant the new rate is the US dollar overnight index swap rate plus 25bps.
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