Document Type

Case Studies


The financial crisis that began in late 2007 with the decline in the United States (U.S.) subprime mortgage markets quickly spread to other markets and eventually disrupted the interbank funding markets in the U.S. as well as overseas. To address the strain in the U.S. dollar (USD) funding markets, the Federal Reserve worked with foreign central banks around the world to provide USD liquidity to affected overseas markets by entering into currency swap agreements. Following the bankruptcy of Lehman Brothers in September 2008, and the resulting further destabilization of the world’s financial systems, the size and utilization of these swaps expanded significantly. Ultimately, the Federal Reserve would enter into currency swap agreements with central banks in 14 major economies and lend an unprecedented total of $10 trillion pursuant to them. In terms of commitment and usage, the currency swaps were one of the most significant efforts by the Federal Reserve to combat the crisis. These extraordinary actions succeeded in maintaining the availability of USD liquidity internationally and helped to moderate the stresses in the financial markets.