Working Paper

The Evolution of the Federal Reserve Swap Lines since 1962


Abstract: In this paper, we describe the evolution of the Federal Reserve?s swap lines from their inception in 1962 as a mechanism to forestall claims on US gold reserves under Bretton Woods to their use during the Great Recession as a means of extending emergency dollar liquidity. We describe the Federal Reserve?s successes and failures. We argue that swaps calm crisis situations by both supplementing foreign countries? dollar reserves and by signaling central-bank cooperation. We show how swaps exposed the Federal Reserve to conditionality and raised fears that they bypassed the Congressional appropriations process.

Keywords: Mexico; Bretton Woods; Federal Reserve; Lender of last resort; Swap lines; Intervention;

JEL Classification: F3; N2;

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Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Working Papers (Old Series)

Publication Date: 2014-10-02

Number: 1414

Pages: 32 pages