MercoPress. South Atlantic News Agency

Network of leading Western central banks ready to inject the necessary dollars liquidity

Bank of Canada, Bank of England, Bank of Japan, European Central Bank, Federal Reserve, and the Swiss National Bank announced the coordinated action

Leading central banks of the West announced on Sunday a coordinated action to provide liquidity to the financial system through the US swap liquidity line arrangements. The statement was signed by Secretary of the Treasury Janet L. Yellen and Federal Reserve Board Chair Jerome H. Powell and becomes effective Monday 20 March.

Banks included are the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank which announced the coordinated action to enhance the provision of liquidity.

To improve the swap lines' effectiveness in providing U.S. dollar funding, the central banks currently offering U.S. dollar operations have agreed to increase the frequency of 7-day maturity operations from weekly to daily. These daily operations will commence on Monday, March 20, 2023, and will continue at least through the end of April.

The network of swap lines among these central banks is a set of available standing facilities and serve an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses.

A second statement released by Secretary of the Treasury Janet L. Yellen and Federal Reserve Board Chair Jerome H. Powell was in support of actions taken over the weekend in Switzerland to ensure the soundness of the Swiss banking system.

“We welcome the announcements by the Swiss authorities today to support financial stability. The capital and liquidity positions of the U.S. banking system are strong, and the U.S. financial system is resilient. We have been in close contact with our international counterparts to support their implementation.”