The Evolution of the Federal Reserve Swap Lines Since 1962

31 Pages Posted: 22 Dec 2014

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

Owen Humpage

Federal Reserve Bank of Cleveland

Thomas Juster

University of Oxford

Multiple version iconThere are 2 versions of this paper

Date Written: December 2014

Abstract

In this paper, we describe the evolution of the Federal Reserve’s swap lines from their inception in 1962 as a mechanism to forestall claims on U.S gold reserves under Bretton Woods to a means of extending emergency dollar liquidity during the Great Recession. We describe a number of consequences associated with swap operations. We argue, for example, that swaps calm crisis situations by both supplementing foreign countries’ dollar reserves and by signaling central-bank cooperation. We show how swaps exposed the Federal Reserve to conditionality and raised fears that they bypassed the Congressional appropriations process.

Suggested Citation

Bordo, Michael D. and Humpage, Owen and Juster, Thomas, The Evolution of the Federal Reserve Swap Lines Since 1962 (December 2014). NBER Working Paper No. w20755. Available at SSRN: https://ssrn.com/abstract=2541531

Michael D. Bordo (Contact Author)

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Owen Humpage

Federal Reserve Bank of Cleveland ( email )

PO Box 6387
Cleveland, OH 44101-1387
United States

Thomas Juster

University of Oxford

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