The global network of liquidity lines

Saleem Bahaj, Marie Fuchs and Ricardo Reis

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: At the end of 2025, there were 177 cross-border liquidity lines between central banks connecting countries that accounted for 81% of world GDP. This paper maps the evolution of these arrangements since 2000. We show that the lines form a network through which banks can indirectly obtain access to the USD even when their central bank has no agreement with the Federal Reserve. These indirect connections give the People’s Bank of China a central role and show the fragility of liquidity provision to geopolitical tensions. We present cross-country evidence that the indirect connections reduce CIP deviations at the tails, and causal evidence that liquidity lines are substitutes to FX reserves.

Keywords: swap lines; capital flow; financial crises; IMF; cross-currency basis (search for similar items in EconPapers)
JEL-codes: E44 F33 G15 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2026-05-31
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Published in Journal of International Economics, 31, May, 2026, 161. ISSN: 0022-1996

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