Coordinated central bank action to boost USD liquidity

     Six major central banks have for the second time this week taken steps to ensure that U.S. dollars are readily available worldwide by increasing the frequency of their funding operations to daily from weekly.
     The U.S. Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank said in a joint statement they were "announcing further coordinated action to further enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements."
     Starting on Monday, March 23, the six central banks will increase the frequency of 7-day maturity operations to daily from weekly, continuing at least through April. Weekly 84-day maturity operations will also be held, they added.
     On March 15 the same six central banks lowered the price of their standing U.S. dollar liquidity swap arrangements by 25 basis points and began offering U.S. dollars weekly with a 84-day maturity, in addition to the 1-week maturity operations they were offering.
     On March 19 the Fed then established temporary swap lines with the central banks of Australia, Brazil, Denmark, South Korea, Mexico, Norway, New Zealand, Singapore and Sweden.


      The six central banks released the following statement:

"The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing a coordinated action to further enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.

To improve the swap lines' effectiveness in providing U.S. dollar funding, these central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily. These daily operations will commence on Monday, March 23, 2020, and will continue at least through the end of April. The central banks also will continue to hold weekly 84-day maturity operations.

The swap lines among these central banks are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad."

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