Fed Extends Temporary U.S. Dollar Liquidity Swap Lines

The Federal Reserve today announced it will extend temporary U.S. dollar swap lines and the temporary repurchase agreement facility for foreign and international monetary authorities through March 31, 2021. These measures were put in place to help ease strain on U.S. dollar funding markets and facilitate the supply of credit to households and businesses during the pandemic.

U.S. dollar swap lines are currently in place in amounts of up to $60 billion each for central banks in Australia, Brazil, South Korea, Mexico, Singapore and Sweden, and in amounts of up to $30 billion for central banks in Denmark, Sweden and Norway. The FIMA repo facility enables approved FIMA account holders to continue to temporarily exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can then be made available to institutions in their jurisdictions.

“Dollar funding markets were in very difficult shape” in the early days of the pandemic, Fed Chairman Jerome Powell said in a press conference today. “Introduction of the swap lines has really restored dollar funding markets around the world to fairly normal levels of activity. We extended them to facilitate planning by other central banks. We want them to be in place and remain available as long as they are needed.”