Central bank swap lines and cross-border bank flows
Patrick McGuire and
Goetz von Peter
No 34, BIS Bulletins from Bank for International Settlements
Central banks drew heavily on US dollar swap lines with the Federal Reserve in the first half of 2020, contributing to a surge in cross-border banking flows during this period. The large increase in cross-border claims on banks operating in the United States – in the form of cross-border interbank and intragroup positions – reflected an increase in dollar liquidity demand from non-US banks partly met through use of the swap lines. In a global financial system heavily reliant on the use of the dollar, the network of central bank swap lines centred on the Fed serves as a critical elastic backstop for the private provision of dollar liquidity.
Pages: 9 pages
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