Document Type

Case Study

Case Series

Central Bank Swap Lines


Following the 2007-09 financial crisis, dollar funding issues in the euro area reemerged during the first half of 2010. By late April, problems in Greece became serious, and concern about the fiscal conditions and growth prospects in Europe heightened. On May 9 and 10, 2010, the Fed reestablished temporary US dollar liquidity swap lines with the European Central Bank (ECB), Bank of England (BoE), Bank of Canada (BoC), Swiss National Bank (SNB), and Bank of Japan (BoJ); similar previous swap lines had expired in February 2010. The Fed’s press release said the purpose of the swap lines was to “improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and financial centers.” These lines uniquely authorized the Fed to provide dollars to the other five central banks. In November 2011, the Fed and the same five central banks announced a network of bilateral swap lines that allowed each participant to provide liquidity in every other participant’s currency, in exchange for its own currency, should the need arise. In October 2013, the Fed and the other central banks announced that they would convert that network of temporary liquidity swap arrangements into standing arrangements without expiration dates. The Fed swap lines were unlimited in size with the ECB, BoE, BoJ, and SNB, and the swap line with the BoC was for up to USD 30 billion. In 2014, the swap line with the BoC became unlimited as well. Only the ECB, BoJ, and SNB drew on the dollar liquidity swaps, and no central banks borrowed other currencies.