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Federal Reserve Bank of Cleveland
Working Papers (Old Series)
The Evolution of the Federal Reserve Swap Lines since 1962
Michael D. Bordo
Owen F. Humpage
Anna J. Schwartz

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.

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Michael D. Bordo & Owen F. Humpage & Anna J. Schwartz, The Evolution of the Federal Reserve Swap Lines since 1962, Federal Reserve Bank of Cleveland, Working Papers (Old Series) 1414, 02 Oct 2014.
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Keywords: Swap lines; Federal Reserve; Bretton Woods; Intervention; Mexico; Lender of last resort
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