Monetary Policy Cooperation/Coordination and Global Financial Crises in Historical Perspective
The COVID-19 pandemic spawned a global liquidity crisis in March 2020. The global liquidity crisis was alleviated by the Federal Reserve and other advanced country central banks cooperating by extending the swap lines they developed in the Global Financial Crisis 2007-2008. Central bank cooperation in 2020 evolved from a two-century history across several monetary regimes that is surveyed in this paper. I find that in monetary regimes which are rules-based cooperation was most successful. International currency swaps developed to manage exchange rates during the Bretton Woods era have evolved into the leading tool to manage international liquidity crises. The swap network can be viewed as a step in the direction of a global financial safety net.
Paper prepared for the conference “From Bretton Woods to 2008 and Beyond: Global Monetary Governance” Brussels, Belgium September 18 2020 The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.