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31 Oct 2013
Central banks make emergency bilateral liquidity swap arrangements permanent
FXstreet.com (London) - Central banks have formed an agreement to maintain currency swap lines opened to provide a liquidity backstop. The agreement makes permanent the measures put in place in November 2011 to try to mitigate the effects of the crisis on economic conditions. The measures were due to expire on 1 February.
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 today that their existing temporary bilateral liquidity swap arrangements are being converted to standing arrangements.
“The standing arrangements will constitute a network of bilateral swap lines among the six central banks,” said the ECB in a statement. “These arrangements allow for the provision of liquidity in each jurisdiction in any of the five currencies foreign to that jurisdiction, should the two central banks in a particular bilateral swap arrangement judge that market conditions warrant such action in one of their currencies.”
The arrangement will allow the Eurosystem to continue to provide euro liquidity to the G7 central banks when required and to provide to its counterparties, when necessary, Japanese yen, pounds sterling, Swiss francs and Canadian dollars in addition to the existing liquidity-providing operations in US dollars.
The ECB announced that it will continue to conduct regular US dollar liquidity-providing operations with maturities of approximately seven days and three months until further notice. The operations take the form of repurchase transactions against eligible collateral and are carried out as fixed-rate tender procedures with full allotment.
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 today that their existing temporary bilateral liquidity swap arrangements are being converted to standing arrangements.
“The standing arrangements will constitute a network of bilateral swap lines among the six central banks,” said the ECB in a statement. “These arrangements allow for the provision of liquidity in each jurisdiction in any of the five currencies foreign to that jurisdiction, should the two central banks in a particular bilateral swap arrangement judge that market conditions warrant such action in one of their currencies.”
The arrangement will allow the Eurosystem to continue to provide euro liquidity to the G7 central banks when required and to provide to its counterparties, when necessary, Japanese yen, pounds sterling, Swiss francs and Canadian dollars in addition to the existing liquidity-providing operations in US dollars.
The ECB announced that it will continue to conduct regular US dollar liquidity-providing operations with maturities of approximately seven days and three months until further notice. The operations take the form of repurchase transactions against eligible collateral and are carried out as fixed-rate tender procedures with full allotment.