FED dollar-swap arrangements

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FED dollar-swap arrangements

Bernanke also said he does not want dollar-swap arrangements between the Fed and other central banks to become permanent. While they have played an important role in stabilizing financial markets, they should be used as an emergency backstop, he said.

Earlier this month, the Fed revived a program with other central banks to swap currencies. The Fed is lending much-in-demand dollars to other central banks in exchange for their currencies. In turn, the central banks can lend the dollars out to banks in their home countries to prevent financial crises from spreading.


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