Central banks are employing more measures in an effort to address elevated pressures in the short-term U.S. dollar funding markets.

Using their reciprocal currency arrangements (swap lines) the U.S. Federal Reserve, the Bank of England, the European Central Bank, and the Swiss National Bank are announcing the introduction of operations to provide U.S. dollar liquidity with a one-week maturity. These operations are intended to address funding pressures over quarter end, it notes.

The Federal Open Market Committee has authorized a US$10 billion increase in its temporary swap facility with the ECB and a US$3 billion increase in its facility with the Swiss National Bank. These expanded facilities will now support the provision of U.S. dollar liquidity up to US$120 billion by the ECB and up to US$30 billion by the Swiss National Bank.

This US$13 billion represents an addition to the US$277 billion previously authorized. In addition to the swap lines with ECB and the Swiss National Bank, temporary swap lines previously have been authorized with: the Bank of Japan (US$60 billion), the Bank of England (US$40 billion), the Reserve Bank of Australia (US$10 billion), the Bank of Canada (US$10 billion), the Bank of Sweden (US$10 billion), the National Bank of Denmark (US$5 billion), and the Bank of Norway (US$5 billion).

Additionally, the governing council of the ECB decided to provide up to US$35 billion of one week funding over the quarter end. And, the Bank of England’s long-term repo operations will be held weekly and enlarged. The Bank says it intends to offset the additional reserves taken up in the long-term repo operations in its other operations, if necessary by draining reserves.