Major central banks united for the stability and calm of financial markets inside a complete crisis of trust and after the turbulence in the industry last week. Liquidity will be provided through currency line agreements with the Bank of Canada, the Bank of England, the Bank of Japan, the Federal Reserve (Fed), and the Swiss National Bank, as announced by the European Central Bank (ECB) this Sunday. currency in dollars.
In particular, the institutions decided strengthen ‘barter lines’, a device that facilitates foreign central banks’ access to the dollar, thereby increasing the frequency of transactions in that currency. These previously weekly operations will now be carried out daily from Monday, March 20, 2023. It will continue at this rate until at least the end of April.”
The ‘clearing lines’ network, “liquidity safety net to reduce It reduces tensions in international finance markets and thus contributes to reducing the effects of these tensions on credit supply to households and companies.
In the midst of a storm following the unexpected failure of the Silicon Valley Bank, markets fear a lack of liquidity as interest rates rise to combat inflation. In 2020, the Federal Reserve launched and extended similar agreements in the face of the progress of the coronavirus pandemic and these had already been extended.
“Decisive” purchase
On the same Sunday, the ECB approved the takeover of Credit Suisse by rival UBS, praising Swiss authorities’ quick intervention in favor of financial stability. ECB President Christine Lagarde said in a statement after learning of the Swiss authorities’ decision that the action was “decisive in restoring order in market conditions and guaranteeing financial stability”.
It was reported from Geneva that the UBS bank will only make one payment.3 billion Swiss francs equivalent (€3,030m) will remain with Credit Suisse, which to date has been regarded as Switzerland’s second most important banking institution and will later become a subsidiary.