The United States Federal Reserve is taking coordinated action with other central banks. It aims to enhance liquidity provision through the Standing US Dollar Liquidity Swap Line arrangement.
The United States Federal Reserve is taking further steps to help stabilize the economy, with the country’s central bank coordinating action with other central banks. In a press release issued on March 19, the Federal Reserve said it was working with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank.
The goal is to “enhance the provision of liquidity through the Standing US Dollar Liquidity Swap Line Arrangement.”
Central banks currently offering US dollar operations will increase the frequency of 7-day maturity operations from weekly to daily. The change will take place from March 20 and will continue till at least the end of April. It is expected to act as a liquidity backstop that will ease stress in global funding markets.
This is another major move by the US central bank, which is dealing with a bad market and the collapse of several notable banks. The interest rate hike was a major talking point when they came out. With 2023 looking like a potential recession year, investors and analysts are going to be watching the Federal Reserve’s actions and words very closely.
Swap lines used during tough economic times
International swap lines are often used during economically challenging periods. It was implemented after the recession of 2008 and the COVID-19 pandemic. Central bank liquidity swaps are likely to peak again after the Fed’s announcement.
With many banks closing, the retreat of the tech sector, and the threat of a global recession, every individual and company is worried.
At the moment, it’s hard to tell how global markets will play out – although crypto investors are celebrating the fact that bitcoin is surging during this crisis.
Uncertainty abounds in the global economy
Arthur Hayes, co-founder of BitMEX, explained his view on the decision, saying that it is “another way of giving relief to non-US banks that is not obvious to the average person.”
His explanation of the situation is worth reading, and he concludes, “Money Printer Go Br!”
some have Said that swap lines are not related to quantitative easing and inflation, although others seem to disagree. Crypto enthusiasts are strongly focused on the impact of these decisions on the crypto market.
Messari CEO Ryan Selkis believes that the banking crisis and general economic conditions will help boost the bitcoin price. He predicted that bitcoin could reach $100,000 within the next twelve months as a result of current macroeconomic conditions, although he clarifies that this is a best-case scenario.
BeInCrypto has reached out to the company or individual involved in the story for an official statement regarding the recent developments, but has not yet received a response.