Fed Swap Lines, USD Shortage and a Policy Transmission Problem
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Today the Fed made an excellent decision in expanding the list of CBs eligible to USD swap lines. The point of this note is to try and clearly explain the issues in the current dollar shortage and why swap lines by themselves may need to be expanded in terms of definition because the actors are not the same they were in 2008. The USD funding market is 13t dollars according the BIS and it is under huge strain. Today's announcement of the Fed adding nine more CBs to the central bank swap line program is huge and will hopefully alleviate some of the issues below. As a side all the credit for this post goes to Brad Setser and Hyun Song Shin as they set the standard on these dollar issues and how they impact the real economy.
Fed Swap Lines, USD Shortage and a Policy Transmission Problem
Fed Swap Lines, USD Shortage and a Policy…
Fed Swap Lines, USD Shortage and a Policy Transmission Problem
Today the Fed made an excellent decision in expanding the list of CBs eligible to USD swap lines. The point of this note is to try and clearly explain the issues in the current dollar shortage and why swap lines by themselves may need to be expanded in terms of definition because the actors are not the same they were in 2008. The USD funding market is 13t dollars according the BIS and it is under huge strain. Today's announcement of the Fed adding nine more CBs to the central bank swap line program is huge and will hopefully alleviate some of the issues below. As a side all the credit for this post goes to Brad Setser and Hyun Song Shin as they set the standard on these dollar issues and how they impact the real economy.