Fed Sets Up Swap Agreements With Central Banks for FX Loans to U.S. Firms

(CEP News) - The U.S. Federal Reserve has reached agreements with four central banks to provide foreign exchange to U.S. financial institutions in a series of swap lines on Monday.

"Should the need arise, euro, yen, sterling and Swiss francs would be provided to the Federal Reserve via these additional swap agreements with the relevant central banks," said a press release from the Federal Reserve. "Central banks continue to work together and are taking steps as appropriate to foster stability in global financial markets."

Deals have been reached with the Bank of Japan, European Central Bank, Bank of England, and Swiss National Bank, allowing the Fed to tap up to £30 billion, €80 billion, ¥10 trillion, and CHF 40 billion.

The agreements also resemble inverse operations for U.S. dollar liquidity provisions made earlier last year, and will be in place through October 30, 2009.

By Erik Kevin Franco, efranco@economicnews.ca, edited by Stephen Huebl, shuebl@economicnews.ca

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