Friday, February 17, 2012

Chart of the Week: Dollar Liquidity Swaps

On December first, central banks coordinated to make unlimited cheap currency swaps available. Since then Federal Reserve dollar liquidity swaps jumped, to about $100 billion. This remains well short of the nearly $600 billion seen in 2008-2009.

These swaps are inflation protected and the corresponding central bank takes any risk from lending the funds farther, so the only real risk is a default from any of the central banks.

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