Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs

36 Pages Posted: 22 Feb 2010 Last revised: 29 Jul 2010

See all articles by Linda S. Goldberg

Linda S. Goldberg

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

Craig Kennedy

Federal Reserve Banks - Federal Reserve Bank of New York

Jason Miu

Federal Reserve Banks - Federal Reserve Bank of New York

Multiple version iconThere are 3 versions of this paper

Date Written: February 2010

Abstract

Following a scarcity of dollar funding available internationally to banks and financial institutions, starting in December 2007 the Federal Reserve established or expanded Temporary Reciprocal Currency Arrangements with fourteen foreign central banks. These central banks had the capacity to use these swap facilities to provide dollar liquidity to institutions in their jurisdictions. This paper presents the developments in the dollar swap facilities through the end of 2009. The facilities were a response to dollar funding shortages outside the United States during a period of market dysfunction. Formal research, as well as more descriptive accounts, suggests that the dollar swap lines among central banks were effective at reducing the dollar funding pressures abroad and stresses in money markets. The central bank dollar swap facilities are an important part of a toolbox for dealing with systemic liquidity disruptions.

Suggested Citation

Goldberg, Linda S. and Kennedy, Craig and Miu, Jason, Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs (February 2010). NBER Working Paper No. w15763. Available at SSRN: https://ssrn.com/abstract=1556127

Linda S. Goldberg (Contact Author)

Federal Reserve Bank of New York ( email )

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National Bureau of Economic Research (NBER)

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Craig Kennedy

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Jason Miu

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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