The Twenty-First Century International Lender of Last Resort

Robert Z. Aliber, Charles P. Kindleberger and Robert McCauley
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Robert Z. Aliber: University of Chicago
Charles P. Kindleberger: Massachusetts Institute of Technology

Chapter Chapter 13 in Manias, Panics, and Crashes, 2023, pp 321-348 from Springer

Abstract: Abstract In the crisis of 2008, central bank swaps played a role that had precedents but under circumstances without precedent, and in a size without precedent. The Fed extended unlimited dollar credit to non-US banks through swaps with central banks both to make its monetary policy effective and to meet runs on non-US banks. Central bank swaps during the pandemic crisis in March 2020 confirmed their role as backstops to global dollar banking, as well as ensuring the transmission of Fed policy to key private rates. In addition, the Fed’s new role as buyer of last resort in the US bond market in spring 2020 supported the global market for dollar bonds, including those issued outside the United States by non-US borrowers.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-16008-0_13

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DOI: 10.1007/978-3-031-16008-0_13

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