Central banks establish reciprocal currency arrangements (swap lines)

30 October 2008: Today, the Federal Reserve, the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore (MAS) have announced the establishment of temporary reciprocal currency arrangements (swap lines). These facilities, like those already established with other central banks, are designed to help improve liquidity conditions in global financial markets and to mitigate the spread of difficulties in obtaining U.S. dollar funding in fundamentally sound and well-managed economies.

Monetary Authority of Singapore (MAS) in a press release advised it is establishing a swap facility with Federal Reserve that will provide U.S. dollar liquidity of up to US$30 billion. Given the international character of financial markets in Singapore, MAS deems it prudent to join the group of central banks that have established swap facilities with the Federal Reserve. This is a precautionary measure to reassure financial institutions in Singapore, most of which have global operations, that they have access to U.S. dollar liquidity. MAS judges that it is not necessary to draw on the swap facility at this time, but will continually assess the need as global conditions develop. The swap facility with the Federal Reserve has been authorised through 30 April 2009.

The U.S. dollar swap facility will enhance the robustness of the Asian Dollar Market for U.S. dollar funding and the foreign exchange markets in Singapore. These markets are a significant part of the global financial system, and international financial institutions rely on Singapore as the largest U.S. dollar and foreign exchange centre in Asia outside of Japan.

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