The Fed Is Misleading Congress About Europe – US Business News Blog – CNBC
By Warren Mosler
Tag Archives: swap lines
$ swap lines again – should cap libor rise
Fed throwing unsecured $ loans at the world to keep libor down.
They are all in this way over their heads.
On Sun, May 9, 2010 at 9:09 PM, wrote:
RTRS-BOJ SAYS AGREED WITH CANADA, UK, ECB, FED, SWISS CENTRAL CANKS ON TEMPORARY DOLLAR SWAP AGREEMENT
Fed swap lines continue to fall
Fed swap line up a tad
Hopefully the heads back down soon. Last thing we need is a eurobank dollar liquidity crisis.
Central bank liquidity swaps (13) 111,778 + 2,340
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Amount Outstanding Under Dollar Liquidity Swaps
swap lines
Central bank liquidity swaps (13) 115,299 – 6,291
Fed advances to CB’s continues to fall
indicating foreign banks are increasingly able to borrow dollars in the market place.
If the remaining dollar loans to the ECB do become problematic,
it opens the door for the ECB to sell euro vs the dollar to pay down its loans.
It would do this if it wanted the euro weaker, perhaps to assist its exporters.
It would not be building dollar reserves, only paying down loans, so
there would be no ideological issue.
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Fed swap lines back down some
Fed swap lines up $15.7 billion
Fed USD swap lines outstanding increased $15.7 billion to $329.6 billion last week.
Not good! It’s only one week’s data, but the Fed doesn’t want to see this moving up.
They recently extended the lines from April to October, and likely realize there is no way
they can let the outstanding loans mature and demand payment without market disruptions that would make the rest of the financial crisis look like child’s play.
And if the rest of the world catches on to the notion that the Fed can’t call these loans without serious market disruptions, market forces will cause the lines to expand continuously and only stop when the Fed finally does call a halt either on their own or via Congressional order.
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Fed USD swap lines to CBs still coming down some
Higher crude prices will make USD easier to get overseas:
Central bank liquidity swaps (13) $313,869 – $6,520
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