Skip to main content
The Globe and Mail
Get full access to globeandmail.com
Support quality journalism
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
The Globe and Mail
Support quality journalism
Get full access to globeandmail.com
Globe and Mail website displayed on various devices
Just$1.99
per week
for the first 24 weeks

var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){console.log("scroll");var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))}pencilInit(".js-sub-pencil",!1);

The central banks of the United States, the euro zone, Canada, Britain, Japan and Switzerland agreed on Friday to increase the frequency of their one-week U.S. dollars credit facility.

“To improve the swap lines’ effectiveness in providing U.S. dollar funding, these central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily,” a European Central Bank statement said.

The daily operations will commence on Monday and are to continue at least through end-April.

Story continues below advertisement

The U.S. dollar index slipped after the statement while cross-currency basis swap spreads on the dollar, narrowed sharply.

The following are analyst comments on the ECB’s strategy:

MARCHEL ALEXANDROVICH, EUROPEAN FINANCIAL ECONOMIST, JEFFERIES

“I think it seems that they (central banks) are hoping this will be the final piece of the puzzle.”

“They have all acted individually and have provided dollar funding. But this intervention sends another signal that any disruption to liquidity will not be tolerated and they will make sure that interbank markets are functioning.”

SALMAN AHMED, CHIEF INVESTMENT STRATEGIST, LOMBARD ODIER

“If this doesn’t do the trick – I don’t know what will! This is proper coordinated effort to stop dollar funding issues adding to the financial doom loop. Credible move and covers longer periods so there is more certainty in a system which is very short of it.”

JAN VON GERICH, CHIEF ANALYST AT NORDEA MARKETS

“There’s been a lot of measure to address the dollar-shortage problem, which you can only really addressed with coordination.”

“The dollar funding markets were frozen and the opening of swap lines, ECB operations have all helped. Today’s steps certainly help but the worst may be over already.”

Story continues below advertisement

CLAIRE DISSAUX, HEAD OF GLOBAL ECONOMICS AND STRATEGY, MILLENIUM GLOBAL

“This is part of the plumbing organized by the Fed to reduce dollar shortage: the frequency of its swap operations (weekly) (via lines set up with other major central banks) was seen as not high enough to reduce dollar funding stress, this is now changed to daily. The dollar is somewhat softer on the news, cross-currency basis swaps are narrowing, as you would expect.”

ULRICH LEUCHTMAN, HEAD OF FX STRATEGY AT COMMERZBANK

“I think it’s a smart move. We have seen that them making swap arrangements more attractive has not really calmed down the market. I think partly the market has got to get used to using these. I think switching to daily frequency will hopefully calm things down. What we’ve seen is a run on the dollar. This may subside a little bit. But I fear we are getting into a two class world - central banks able to arrange these swap arrangements and those that aren’t.”

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies