Swap lines curbed global dollar shortages, appreciation during COVID-19 crisis

Abstract: During the initial weeks of the COVID-19 crisis, imbalances in the offshore dollar funding market led to safe-haven appreciation of the dollar. Fed swap lines between the U.S. central bank and counterparts abroad addressed these imbalances, subsequently helping reduce the cost of offshore dollar borrowing, reversing dollar appreciation and providing liquidity.

Keywords: international economics; monetary policy; inflation; financial crises; COVID-19; swaps;

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Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Source: Dallas Fed Economics

Publication Date: 2024-05-21