EconPapers    
Economics at your fingertips  
 

International liquidity provision and currency-specific liquidity shortages

Richhild Moessner and William Allen ()

Journal of Financial Transformation, 2012, vol. 34, 31-41

Abstract: In this paper we discuss the main innovation in central bank cooperation during the financial crisis of 2008-09, namely the emergency provision of international liquidity through the establishment of bilateral central bank swap facilities, which have evolved to form interconnected swap networks. Based on the BIS international locational banking statistics, we present a measure of currency-specific liquidity shortages for the US dollar, the euro, the yen, the pound sterling and the Swiss franc for a large number of advanced and emerging economies. We discuss the reasons for establishing swap facilities, relate our measure of currency-specific liquidity shortages to the probability of a country receiving a swap line in that currency, and find a significant relationship in the case of the US dollar, the euro, the yen and the Swiss franc. We find that countries with larger US dollar shortages on our measure, and economies that are large international financial centres, have a statistically significantly higher probability of receiving a US dollar swap line. We also find that actual US dollar funding obtained by drawing on the Fed’s swap lines at end-2008 was statistically significantly larger for economies with higher US dollar shortages on our measure, as well as for economies which are large international financial centres.

Keywords: International liquidity; central bank swap lines; FX swaps; lender of last resort (search for similar items in EconPapers)
JEL-codes: E58 F31 G01 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:jofitr:1503

Access Statistics for this article

Journal of Financial Transformation is currently edited by Prof. Shahin Shojai

More articles in Journal of Financial Transformation from Capco Institute 77 Water Street, 10th Floor, New York NY 10005.
Bibliographic data for series maintained by Prof. Shahin Shojai ().

 
Page updated 2019-04-16
Handle: RePEc:ris:jofitr:1503