Yale School of Management

Posts by Swaps

Reserve liquidity facilities shift from advanced economies to emerging markets

July 1, 2020
On June 19, the European Central Bank (ECB) joined the central banks of England, Japan, and Switzerland in scaling back the frequency of their US dollar liquidity swaps with the Federal Reserve (Fed). Central bank liquidity swap lines facilitate access to foreign capital during periods of international financial stress. While these bilateral swap operations with the Fed have slowed, the ECB announced on June 25 the establishment of the Eurosystem repo facility for central banks (EUREP). The new facility will complement the ECB’s current bilateral swap lines by allowing for less stable currencies to participate in repurchase agreements. This post summarizes the recent activity on Fed swap lines and documents the shift in currency facilities from those aimed at the sturdiest reserve institutions to those aimed at central banks with smaller stocks of dollars. Continue reading “Reserve liquidity facilities shift from advanced economies to emerging markets”

Use of Federal Reserve Programs - 06/25/2020

June 25, 2020
Below we report on operational Fed programs, based on the Fed’s weekly H.4.1 release. Since last week, the Treasury’s equity contribution to the Term Asset-Backed Securities Loan Facility was invested in securities; however, no facility-specific assets have been purchased so far. The Bank of England signifantly decreased its use of the swap lines established with the Fed in March. It is now the Fed’s smallest counterparty. Continue reading “Use of Federal Reserve Programs - 06/25/2020”