Fed, ECB, BOJ and SNB Coordinate To Provide US Dollar Liquidity
15 September, 2011, 21:17. Posted by ZarathustraTags: Economy, Europe, Japan, Switzerland, US
The Federal Reserve is now coordinating with the European Central Bank, Bank of Japan and Swiss National Bank to provide US dollar liquidity with the maturity of 3 months (currently we have 7 days).
The European Central Bank, the Bank of England, and the Swiss National Bank have today announced the introduction of three-month U.S. dollar funds-supplying operations covering the year end.
The Bank of Japan has so far continued to conduct weekly one-week U.S. dollar funds-supplying operations and monthly three-month U.S. dollar funds-supplying operations.
Bank of England’s announcement:
In coordination with the European Central Bank, the Swiss National Bank, the Bank of Japan, and the Federal Reserve, the Bank of England is today announcing that it will conduct three US dollar tenders, each at a term of approximately three months covering the end of the year. These tenders will be in addition to the ongoing weekly 7-day tenders of dollar funding announced on 10 May 2010.
European Central Bank’s announcement:
The Governing Council of the European Central Bank (ECB) has decided, in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, to conduct three US dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year. These operations will be conducted in addition to the ongoing weekly seven-day operations announced on 10 May 2010.
The market is reacting extremely positively, with stocks moved instantly higher and crazy. Euro is gaining sharply against the US dollar.
How you read this is another matter though. As mentioned before, we know that there are existing facilities for US dollar funding for ECB and others, so we know that the central banks will backstop it. However, the fact that this needs to be expanded can mean the things are just worse than everyone thought.
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About Zarathustra
Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.
