Top central banks launch new bid to keep dollars flowing
LONDON, United Kingdom – Leading central banks on Friday, March 20, announced a new effort to keep dollars pumping through the virus-plagued world economy.
Starting on Monday, March 23, certain dollar liquidity operations among the banks will occur daily rather than weekly, according to a joint statement from the United States Federal Reserve, European Central Bank, Bank of Japan, Bank of England, Bank of Canada, and the Swiss National Bank.
The banks first said on March 15 that they were stepping up their cooperation on dollar swap lines, when banks agree to exchange currencies to ensure liquidity in stressed markets.
"To improve the swap lines' effectiveness in providing US dollar funding, these central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily," the latest statement said.
"These daily operations will commence on Monday, March 23, 2020, and will continue at least through the end of April," it said.
"The swap lines amongst these central banks are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad."
At the same time, the governments of major economies have announced huge spending plans to limit the damage, and world stock markets on Friday showed a measure of recovery. – Rappler.com