Taking geopolitically motivated US swap lines too far would harm the dollar and Fed independence

Adnan Mazarei and Maurice Obstfeld

No PB26-9, Policy Briefs from Peterson Institute for International Economics

Abstract: Over the past century, the United States has provided dollar liquidity abroad through both the US Treasury and the Federal Reserve, but the appropriate mode of liquidity injection depends on the economic, financial, and geopolitical contexts. The Treasury is the more appropriate lending conduit when geopolitical concerns dominate, while Fed dollar provision should primarily be targeted toward global stability objectives and be more insulated from short-term foreign policy motives. Up to now, political abuses of these foreign lending channels have been constrained to some degree by laws, norms, and intergovernmental understandings, but adherence can no longer be assumed, so more formal guardrails are needed.

Date: 2026-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.piie.com/publications/policy-briefs/20 ... s-too-far-would-harm (text/html)

Related works:
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:iie:pbrief:pb26-9

Access Statistics for this paper

More papers in Policy Briefs from Peterson Institute for International Economics Contact information at EDIRC.
Bibliographic data for series maintained by Peterson Institute webmaster ().