Session 1: Insuring the Global North: Central Bank Swap Lines

Monday, January 27, 2024

Emergency swap lines between the US Federal Reserve and select central banks were a key tool in the response to manage dollar liquidity needs during the long Great Financial Crisis and – more extensively – the Covid-19 crisis. Since 2013, many of these lines have been made permanent, and, in some cases, unlimited and unconditional. The result is a three-tiered financial safety net where a small number of countries from the Global North have unmitigated access to US dollar liquidity, a handful of others have substantial standing lines, and the majority of the rest are reliant on their own reserves, swap lines with central banks that do have swap lines with the Fed,  regional arrangements in local currencies, or the IMF. This session will examine how the emergence of permanent swap lines has changed the global financial safety net, the geopolitical implications of who is and is not included in these networks, and how inclusion in a swap network may change the behavior of markets, central bankers, and prudential regulators.

Speakers:

Ricardo Reis
Department of Economics
London School of Economics

Aditi Sahasrabuddhe
Brown University
Department of Political Science