Grayson on Fed swap lines


[Skip to the end]

Grayson has this completely wrong. There was credit risk only for the unsecured lending.

There was no currency risk.

The swap lines are nothing more than unsecured dollar loans to the foreign CB’s.

Congress seems not capable of informed criticism.

And judging from the movement of the dollar since the swaps began, Grayson said, it looks like the U.S. could have taken a $100 billion dollar loss because the value of the foreign currency held by the U.S. depreciated in value by roughly one-fifth. Bernanke told Grayson that it was a “coincidence” that the dollar appreciated substantially after the half-trillion dollar swap project got underway in September. The Fed website maintains that the transactions are without risk because the exchange rates are locked in.

Link


[top]

This entry was posted in CBs, ECB, Fed. Bookmark the permalink.

One Response to Grayson on Fed swap lines

  1. Pingback: economic stability

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>