In a sign of fear about the global financial system have eased for now, major central banks are scaling back their offer of emergency dollar loans to banks.
FILE - People look at signs posted outside of an entrance to Silicon Valley Bank in Santa Clara, Calif., Friday, March 10, 2023. In a sign fears about the global financial system have eased for now, major central banks are scaling back their offer of emergency dollar loans to banks, a crisis step launched after the collapse of Silicon Valley Bank in the U.S. fed fears about wider troubles.
Making extra dollars available has been a tool in times of trouble because banks need the U.S. currency to handle many international transactions. The so-called dollar swap lines were used during the 2008 global financial crisis and the economic turmoil in the early days of the COVID-19 pandemic to ease the impact on the supply of credit to consumers and businesses.
The daily dollar credits are being scaled back “in view of the improvements in U.S. dollar funding conditions and the low demand at recent U.S. dollar liquidity providing operations,” the European Central Bank said in a statement. The Bank of England, Bank of Japan and Swiss National Bank were taking the same step in consultation with the U.S. Federal Reserve, the ECB said. It added that the fast dollar credits could be rolled out again if market conditions warrant.
The daily dollar credit window was announced March 19 before markets opened in Asia — just days after
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