Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs

Linda S. Goldberg, Craig Kennedy, Jason Miu

NBER Working Paper No. 15763
Issued in February 2010
NBER Program(s):International Finance and Macroeconomics, Monetary Economics

Following a scarcity of dollar funding available internationally to banks and financial institutions, starting in December 2007 the Federal Reserve established or expanded Temporary Reciprocal Currency Arrangements with fourteen foreign central banks. These central banks had the capacity to use these swap facilities to provide dollar liquidity to institutions in their jurisdictions. This paper presents the developments in the dollar swap facilities through the end of 2009. The facilities were a response to dollar funding shortages outside the United States during a period of market dysfunction. Formal research, as well as more descriptive accounts, suggests that the dollar swap lines among central banks were effective at reducing the dollar funding pressures abroad and stresses in money markets. The central bank dollar swap facilities are an important part of a toolbox for dealing with systemic liquidity disruptions.

download in pdf format
   (405 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15763

Published: Linda S. Goldberg & Craig Kennedy & Jason Miu, 2011. "Central bank dollar swap lines and overseas dollar funding costs," Economic Policy Review, Federal Reserve Bank of New York, issue May, pages 3-20. citation courtesy of

Users who downloaded this paper also downloaded* these:
Aizenman and Pasricha w14821 Selective Swap Arrangements and the Global Financial Crisis: Analysis and Interpretation
Obstfeld, Shambaugh, and Taylor w14826 Financial Instability, Reserves, and Central Bank Swap Lines in the Panic of 2008
Aizenman, Jinjarak, and Park w15804 International reserves and swap lines: substitutes or complements?
Rose and Spiegel w17359 Dollar Illiquidity and Central Bank Swap Arrangements During the Global Financial Crisis
Ito and Harada w9589 Market Evaluations of Banking Fragility in Japan: Japan Premium, Stock Prices, and Credit Derivatives
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us