London, April 25 (IANS) The Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank said on Tuesday that they would end daily measures to boost the flow of US dollar to lenders around the world.
They cited “improvements in US dollar funding conditions” and “low demand” at recent operations aimed at providing liquidity, CNN reported.
Starting May 1, those operations will once again be held weekly, a decision made in consultation with the US Federal Reserve, the primary source of dollars. The frequency could increase again if needed, the four central banks said.
“These central banks stand ready to readjust the provision of US dollar liquidity as warranted by market conditions,” they said in their statements, CNN reported.
Policymakers sprung into action in March after the collapse of Silicon Valley Bank and Signature Bank in the US sparked an acute bout of turmoil in the global banking sector. The tumult also nearly took down Credit Suisse, a globally important but troubled bank, forcing Swiss authorities to arrange an emergency sale to rival UBS, CNN reported.
Hours after the Credit Suisse takeover was announced, the US Fed said it would work with central banks in the UK, Japan, Canada, Switzerland and the European Union to make sure lenders there had access to the dollar liquidity they needed.
That meant making greater use of dollar swap lines, or agreements between the Fed and other central banks to provide dollar in exchange for, say, euro or yen.
Swap lines are a key instrument in central banks’ toolbox aimed at preserving financial stability and keeping credit flowing to households and businesses, CNN reported.
–IANS
san/arm
