- Home
- Publications
- Central Bank Swap Lines And CIP Deviations
Central Bank Swap Lines and CIP Deviations
![](https://www.niesr.ac.uk/wp-content/themes/niesr/assets/img/calendar-alt.png)
![](https://www.niesr.ac.uk/wp-content/themes/niesr/assets/img/chain.png)
![](https://www.niesr.ac.uk/wp-content/uploads/2021/10/DIscussion-Paper-Generic.png)
External Authors
![](https://www.niesr.ac.uk/wp-content/themes/niesr/assets/img/user.3.png)
Galati, G
![](https://www.niesr.ac.uk/wp-content/themes/niesr/assets/img/user.3.png)
Nelson, W
Related Themes
Macro-Economic Dynamics and PolicyTags
JEL Code
E52, E58, F31
Paper Category Number
482
We study the use of US dollar central bank swap lines as a tool for addressing dislocations in the foreign currency swap market against the USD since the global financial crisis. We find that the use of the Federal Reserve’s USD central bank swap lines was mainly related to tensions in US money markets during times of financial crisis, and less to tensions which were confined to foreign exchange swap markets. In particular, we find that the use of USD central bank swap lines did not react significantly to the recent period of persistent deviations of covered interest parity (CIP) since 2014. These results are consistent with the view that the Federal Reserve was guided by enlightened self-interest when providing swap lines to foreign central banks, in order to reduce dislocations in US financial markets and support financial stability. In recent years foreign exchange swap markets have not functioned properly, but it appears that now that the crisis is over, the Federal Reserve and other central banks have decided against trying permanently to fill the gap left by the dysfunction in the commercial foreign exchange swap market.
Related Blog Posts
![](https://www.niesr.ac.uk/wp-content/uploads/2024/06/iStock-683963174-1-1-640x640.jpg)
![](https://www.niesr.ac.uk/wp-content/uploads/2024/04/Bank-of-England-640x640.jpg)
![](https://www.niesr.ac.uk/wp-content/uploads/2024/02/iStock-1130124948-640x640.jpg)
![](https://www.niesr.ac.uk/wp-content/uploads/2024/02/Public-Debt-Sustainability-and-Fiscal-Rules-640x640.jpg)
Public Debt Sustainability and Fiscal Rules
Stephen Millard
Benjamin Caswell
05 Feb 2024
4 min read
Related Projects
Related News
![Bank of England Building and Duke of Wellington statue](https://www.niesr.ac.uk/wp-content/uploads/2022/08/Bank-of-England-Building-640x640.png)
![Front of the Bank of England with statue of the Duke of Wellington](https://www.niesr.ac.uk/wp-content/uploads/2023/09/Bank-of-England-Independence-640x640.png)
Letter to the Financial Times: Is Perfidious Albion About to Make a Return?
14 Jun 2024
3 min read
![](https://www.niesr.ac.uk/wp-content/uploads/2024/05/iStock-2013089711-1-1-640x640.jpg)
![](https://www.niesr.ac.uk/wp-content/uploads/2022/08/Call-for-Paper-Kemar-QTQE-1200-×-1200px-1-640x640.png)
Call for Papers: Lessons From Quantitative Easing & Quantitative Tightening
09 Feb 2024
1 min read
Related Publications
![exterior photo of the Bank of England](https://www.niesr.ac.uk/wp-content/uploads/2024/06/iStock-1331969847-modified-09bd29cf-1fae-4789-b36a-b4d3e52f5dab-640x640.jpg)
![](https://www.niesr.ac.uk/wp-content/uploads/2024/05/US_debt_image-640x640.jpg)
Everything You Wanted to Know About the US Budget Deficit and Debt But Were Afraid to Ask
09 May 2024
Global Economic Outlook Box Analysis
![](https://www.niesr.ac.uk/wp-content/uploads/2024/05/recover_resilience_image-640x640.jpg)
To What Extent Has the Recovery and Resilience Facility Supported the EU Recovery from Covid?
09 May 2024
Global Economic Outlook Topical Feature
![](https://www.niesr.ac.uk/wp-content/uploads/2024/05/Labour-Market-Income-640x640.png)
Related events
![Event Image](https://www.niesr.ac.uk/wp-content/uploads/2024/05/Workshop-Imagery.png)
2024 UK General Election: The Economy and Living Standards
![Event Image](https://www.niesr.ac.uk/wp-content/uploads/2023/12/Cycles-Structural-Changes-Markets.png)
Assessing Cycles and Structural Changes in Markets
![Event Image](https://www.niesr.ac.uk/wp-content/uploads/2023/02/BCF-Imagery-e1702367621405.png)
Business Conditions Forum
With an election expected to take place at some point in 2024, we begin the year by focusing this quarter’s Business Conditions Forum on the following topics: Can we expect…
![Event Image](https://www.niesr.ac.uk/wp-content/uploads/2021/10/Dow-Lecture-2022-social-image.jpg)
2022 Dow Lecture: The Economy and Policy Trade-Off
![](https://www.niesr.ac.uk/wp-content/themes/niesr/assets/img/arrow-right.png)
![](https://www.niesr.ac.uk/wp-content/themes/niesr/assets/img/arrow-right.png)