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The Federal Reserve’S Use Of International Swap Lines, Colleen Baker

Journal Articles

This Article focuses on the U.S. Federal Reserve's controversial practice of loaning U.S. dollars to foreign central banks, which the foreign central banks then turn around and loan to institutions in their jurisdictions. The Federal Reserve does not know the identity of these recipient institutions. Nevertheless, these loans-termed "swap lines"-provide foreign financial institutions the type of financial stability that the U.S. Federal Reserve was created to provide for U.S. banks during times of crises. During the financial crisis, the U.S. Federal Reserve arranged swap lines with 14 foreign central banks for a total amount of $583 billion, making it the …