Central bank swap lines and cross-border bank flows

Iñaki Aldasoro, Christian Cabanilla, Piti Disyatat, Torsten Ehlers, Patrick McGuire and Goetz von Peter ()

No 34, BIS Bulletins from Bank for International Settlements

Abstract: 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
Date: 2020-12-14
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