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Fed extends swap plan to ease crisis
By Jeannine Aversa |
December 22, 2010, Wednesday
|
Print Edition
Print Edition
THE United States Federal Reserve has extended a program set up earlier this year to ease strains from the European debt crisis.
The program, which was set to expire in January, will now run through August 1, the Fed announced yesterday.
The Fed is lending dollars to other central banks in exchange for their currencies. The central banks can lend those dollars out to banks in their home countries to ease financial turmoil.
The Fed's "swap" program was set up in May as fears rose that Greece's debt crisis could engulf other European countries. European banks need dollars to lend to companies across the continent. European companies that have operations in the US pay their employees in dollars and buy raw materials with the US currency.
The Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank all have swap arrangements with the Fed.
In June, the Fed lent as much as US$6.64 billion through the program. Most of the money went to the ECB, and was repaid. Use of the program has since waned. As of early December, the Fed lent only US$60 million to the ECB.
The program, which was set to expire in January, will now run through August 1, the Fed announced yesterday.
The Fed is lending dollars to other central banks in exchange for their currencies. The central banks can lend those dollars out to banks in their home countries to ease financial turmoil.
The Fed's "swap" program was set up in May as fears rose that Greece's debt crisis could engulf other European countries. European banks need dollars to lend to companies across the continent. European companies that have operations in the US pay their employees in dollars and buy raw materials with the US currency.
The Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank all have swap arrangements with the Fed.
In June, the Fed lent as much as US$6.64 billion through the program. Most of the money went to the ECB, and was repaid. Use of the program has since waned. As of early December, the Fed lent only US$60 million to the ECB.
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