Elasticity and Discipline in the Global Swap Network

Perry Mehrling ()
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Perry Mehrling: Barnard College

No 27, Working Papers Series from Institute for New Economic Thinking

Abstract: This paper sketches the outlines of the new international monetary system that has emerged in the aftermath of the global financial crisis. At the center of the system, a network of central bank swaps between the six major central banks serves as an elastic backstop for private foreign exchange operations. Farther out on the periphery, a further network of central bank swaps operates to economize on scarce reserves of the major currencies. Meanwhile, in the private foreign exchange market, basis swaps are emerging as the central location where liquidity is explicitly priced, inside the bounds set by central bank swaps.

JEL-codes: E58 F33 G15 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2015-11
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-net
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:27

DOI: 10.2139/ssrn.2692622

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