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Evolution of Bilateral Swap Lines

Kiichi Tokuoka (), Jongsoon Shin, Yudong Rao and Michael Perks

No 2021/210, IMF Working Papers from International Monetary Fund

Abstract: This paper makes contributions to the study of bilateral swap lines (BSLs). First, this paper fills a BSL information gap by constructing a comprehensive database of BSLs based on publicly available information, including after the onset of the COVID-19 pandemic. Second, the paper provides the results of regression analysis exploring several empirical questions that were not covered in previous studies. The paper documents the evolution of BSLs into an important part of the Global Financial Safety Net (GFSN), with some helping to stabilize financial market during both the Global Financial Crisis (GFC) and the COVID-19 pandemic. Analysis suggests that countries on the recipient side of BSLs are more likely to sign and renew BSLs designed to alleviate balance of payments needs as their external position weakens. U.S. Federal Reserve BSLs appear to have been effective at stabilizing financial market conditions during the COVID-19 pandemic.

Keywords: Bilateral swap lines (BSLs); Global Financial Safety Net (GFSN); COVID-19 pandemic; Global Financial Crisis (GFC); BSL information gap; Federal Reserve BSL; Fed swap network; BSL network; Fed's BSLs; liquidity swap operations; information gap; Current account balance; COVID-19; Credit default swap; Currencies; Global; Asia and Pacific (search for similar items in EconPapers)
Pages: 40
Date: 2021-08-06
New Economics Papers: this item is included in nep-cba and nep-mon
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Handle: RePEc:imf:imfwpa:2021/210