Fed Opens "The Money Spigot" to Foreign Central Banks

Fed Opens "The Money Spigot" to Foreign Central Banks

The net position has been recorded as $ 396 billion since the Fed expanded its swap lines for foreign central banks. Central banks from Seoul to Oslo are taking advantage of the Exchange's swap line facilities that the Fed has recently expanded. With this expansion, the biggest users of the swap facility are still said to be the Central Bank of Japan (BoJ) and the European Central Bank (ECB). According to the data given by the New York Fed on Thursday, the global central banks announced that they received a total of $ 177 billion between the Fed's foreign exchange swap lines between March 26 and April 2. Following the recent fluctuation triggered by the coronavirus (Covid-19) outbreak in the dollar funding markets, the Fed is increasing on a daily basis, increasing the frequency of its seven-day operations on a weekly basis with the central banks of the Eurozone, Japan, the UK, Switzerland, and Canada. On top of the swap lines found, a statement by the Fed this week announced it was opening up the possibility of a temporary repo for foreign central banks to keep their financial markets running without a hitch. The program, which is separate from the existing swap lines, will allow participants to temporarily swap US dollars against the dollar. The central banks that have been using swap and continue to use are Japan, Euro Zone, England, Switzerland, Norway, Denmark, Australia, Mexico, South Korea, Singapore. Sweden, New Zealand, Brazil, and Canada are those who have the opportunity but do not use it. According to the figures, the biggest user is BoJ with $ 188 billion. Then comes the ECB with $ 142 billion and the Bank of England with $ 38 billion.