Document Type

Case Study

Case Series

Central Bank Swap Lines


The September 11, 2001, attacks on New York City damaged much of the infrastructure that powered US bank payments systems and the government securities market. The Federal Reserve responded quickly with several measures to inject liquidity and promote confidence in the domestic financial system. It also created or expanded swap lines with foreign central banks between September 12 and 14 to provide dollar liquidity to financial institutions with US dollar funding needs. The swap agreements allowed the European Central Bank (ECB) to draw up to USD 50 billion, the Bank of England (BoE) up to USD 30 billion, and the Bank of Canada (BoC) up to USD 10 billion in exchange for an equivalent value of their domestic currency. The central banks could then lend US dollars to institutions in their jurisdictions. After 30 days, the ECB and BoE agreements expired, and the BoC agreement reverted to its prior level of USD 2 billion. Ultimately, the ECB was the only institution to draw on the lines, but the Fed’s timely response was praised for mitigating the immediate economic impacts of the attacks.