Ovunc Kutlu
20 March 2023•Update: 20 March 2023
ISTANBUL
The US Federal Reserve and five other central banks said they are taking action to support the liquidity of the American dollar, as banking crises sweep the US and Europe.
The banks, which include the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank, said their coordinated action is to "enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements."
"To improve the swap lines' effectiveness in providing U.S. dollar funding, the central banks currently offering U.S. dollar operations have agreed to increase the frequency of 7-day maturity operations from weekly to daily," they said late Sunday in a joint statement.
The daily operations will begin Monday and continue at least through the end of April.
"The network of swap lines among these central banks is a set of 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," according to the statement released by the Fed.
The central banks' announcement comes as four US banks have demised in recent weeks and Credit Suisse faces financial troubles.
UBS, a Swiss-based multinational investment bank and financial services company, announced late Sunday it will buy its troubled rival Credit Suisse for 3 billion Swiss francs ($3.2 billion), while the Swiss government guaranteed to assume losses up to 9 billion francs from assets.
