Central Bank Swap Lines and Cross-Border Bank Flows
BIS Bulletin No 34
9 Pages Posted: 12 Feb 2021
Date Written: December 14, 2020
Central banks drew heavily on US dollar swap lines with the Federal Reserve in the first half of 2020, contributing to a surge in cross-border banking flows during this period.
The large increase in cross-border claims on banks operating in the United States – in the form of cross-border interbank and intragroup positions – reflected an increase in dollar liquidity demand from non-US banks partly met through use of the swap lines.
In a global financial system heavily reliant on the use of the dollar, the network of central bank swap lines centred on the Fed serves as a critical elastic backstop for the private provision of dollar liquidity.
Keywords: dollar funding, dollar liqudiity, central bank swap lines, cross border capital flows
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