On March 19, the U.S. Federal Reserve announced that it has teamed up with the Bank of Canada, Bank of England, Bank of Japan, European Central Bank, and Swiss National Bank to boost the provision of liquidity through the standing U.S. dollar swap line arrangements.
This move follows the Swiss authorities’ intervention to facilitate the acquisition of Credit Suisse by UBS to avoid its disorderly collapse, which highlights the central bankers’ growing apprehension over the financial system’s recent disruption on both sides of the Atlantic.
The central banks have also agreed to increase the frequency of seven-day maturity operations from weekly to daily to improve the swap lines’ effectiveness in providing U.S. dollar funding, according to a statement issued by the Fed, which was released in conjunction with announcements from the other five central banks.
The operations are set to start on Monday and will continue through the end of April at least, as per the Fed.
