Fed increasing $ vs fx swap lines to ECB and others

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This is an extension of credit to those CBs which functionally allows them to borrow (and thereby also get ‘short’) USD, presumably to fund their local USD needs for their institutions short USD, and presumably to cover losses on their USD financial assets and to finance the remaining balances.

The ECB has no USD to fund its member banks, and is not inclined to sell euros and buy USD as, at a minimum, a matter of ideology.

This is not a good sign for the eurozone banking system solvency, though the size is modest, at least for now.


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