Central banks need significant discretion to make swap lines work, says ECB
Details of cross-currency facilities operation ‘intentionally unspecific’
Central banks need significant levels of discretion over the pricing, scale and maturity of standing liquidity swap lines agreed with their counterparts around the world to avoid moral hazard and improve operational efficiency, according to an article published in the European Central Bank's (ECB) August 2014 Monthly Bulletin.
So-called cross-currency swap facilities became popular at the height of the global financial crisis to ensure that major banks around the world had access to short-term
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