How the Federal Reserve's Central Bank Swap Lines Have Supported U.S. Corporate Borrowers in the Leveraged Loan Market

Annie McCrone, Ralf R. Meisenzahl, Friederike Niepmann and Tim Schmidt-Eisenlohr

No 2020-11-12-2, FEDS Notes from Board of Governors of the Federal Reserve System (U.S.)

Abstract: The cost of borrowing U.S. dollars through foreign exchange (FX) swap markets increased significantly in the beginning of the Covid-19 pandemic in February 2020, indicated by larger deviations from Covered Interest Rate Parity (CIP). CIP deviations narrowed again when the Federal Reserve expanded its swap lines to support U.S. dollar liquidity globally—by enhancing and extending its swap facility with foreign central banks and introducing the new temporary Foreign and International Monetary Authorities (FIMA) repurchase agreement facility.

Date: 2020-11-12
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfn:2020-11-12-2

DOI: 10.17016/2380-7172.2753

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