Dislocations in the Won-Dollar Swap Markets during the Crisis of 2007–2009

Naohiko Baba and Ilhyock Shim

Chapter 6 in Volatile Capital Flows in Korea, 2014, pp 143-176 from Palgrave Macmillan

Abstract: Abstract During the 2007–2009 international financial crisis, many countries experienced dislocations in their foreign exchange (FX) swap markets and cross-currency swap markets (see Baba et al., 2012).1 When foreign banks’ lending to these countries contracted sharply around the fourth quarter of 2008, domestic banks faced difficulties in borrowing in the interbank market as well as much higher costs in obtaining short-term dollar (or euro/Swiss franc in central and eastern Europe) financing through FX swaps.2 In particular, many of these banks experienced an abrupt drop in gross international claims, which are the sum of cross-border claims in all currencies and local claims in foreign currencies of international banks.3 To ameliorate the dislocations in their FX swap and cross-currency swap markets, central banks in western Europe (Denmark, Sweden, Switzerland, the United Kingdom, and the euro area [for the European Central Bank]), North America (Canada), Asia (India, Japan, Korea, and Singapore), Latin America (Brazil, Chile, and Mexico), central and eastern Europe (Poland and Hungary), and the Pacific (Australia and New Zealand) either used their own foreign reserves or established swap lines with the US Federal Reserve (Fed) or other central banks.

Keywords: Foreign Currency; Credit Default Swap; Crisis Period; Foreign Bank; External Debt (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

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

Related works:
Journal Article: DISLOCATIONS IN THE WON‐DOLLAR SWAP MARKETS DURING THE CRISIS OF 2007–2009 (2014)
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:pal:palchp:978-1-137-36876-8_6

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137368768

DOI: 10.1057/9781137368768_6

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().