March 19 (UPI) — The Federal Reserve announced Sunday that it has reached an agreement with several other central banks around the world to make the U.S. dollar more available.
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank will change their swap-line operations from weekly to daily beginning Monday, the Fed said in a press release.
Swap operations occur when a foreign central bank exchanges a certain amount of its currency with the Federal Reserve for the U.S. dollar.
“The network of swap lines among these central banks is a set of available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses,” the press release from the Fed said.
The Federal Reserve called the move a “coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.”
The announcement comes after more than a week of tumult in the banking industry following the collapse of Silicon Valley Bank. The bank’s parent company filed for Chapter 11 bankruptcy on Friday.
Credit Suisse also spiraled in the past week after announcing a financial reporting error caused “misstatements of account balances or disclosures.” The bank’s 2022 annual report also showed that it underperformed for the year. On Sunday, its competitor Swiss National Bank announced a takeover of Credit Suisse.
The Federal Open Market Committee is scheduled to meet on Wednesday, when it is expected to discuss another potential interest rate hike. It has raised interest rates by 4.5% in the last year and Chair Jerome Powell has said rate increases are likely to continue throughout 2023.