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| Major Central Banks Take Coordinated Action to Enhance U.S. Dollar Liquidity |
Six leading central banks have come together to boost the provision of liquidity via standing U.S. dollar liquidity swap line arrangements. The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank announced the coordinated action, which aims to improve the effectiveness of the swap lines in providing U.S. dollar funding.
The central banks will increase the frequency of 7-day maturity operations from weekly to daily, starting from Monday, March 20, 2023. This move is expected to help ease strains in global funding markets and support the supply of credit to households and businesses.
The network of swap lines among these central banks serves as an important liquidity backstop to ease strains in global funding markets. The announcement is a reflection of the central banks' commitment to ensuring sufficient access to U.S. dollars to meet demand and supporting the continued smooth functioning of financial markets.
This coordinated action is not the first time central banks have collaborated in such a way. During the global financial crisis in 2008, they also worked together to ease funding pressures on banks and financial institutions. The announcement has been welcomed by market participants and is expected to help stabilize the global financial system.
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