publication . Article . Preprint . 2013

Alleviating Foreign Currency Liquidity Shortages

Hiroshi Fujiki;
Open Access
  • Published: 06 May 2013 Journal: Japanese Economic Review, volume 64, pages 504-536 (issn: 1352-4739, Copyright policy)
  • Publisher: Springer Science and Business Media LLC
Abstract
During the recent global financial crisis, some central banks introduced two innovative cross-border operations to deal with the problems of foreign currency liquidity shortages: domestic liquidity operations using cross-border collaterals and operations for supplying foreign currency based on standing swap lines among central banks. We show theoretically that central banks improve the efficiency of equilibrium under foreign currency liquidity shortages by those two innovative temporary policy measures.
Subjects
free text keywords: Standing swap lines, Operations supplying US dollar funds outside the US, Cross-border collateral arrangements, Economics and Econometrics, Reserve currency, Liquidity crisis, Devaluation, Financial system, Market liquidity, Financial crisis, Foreign exchange risk, Currency, Business, Swap (finance), jel:E58, jel:F31, jel:F33
Related Organizations

Antoine, Martin, “Reconciling Bagehot and the Fed's Response to September 11,” Journal of Money, Credit and Banking 41 (2-3), 2009, pp. 397-415.

Baba, Naohiko and Frank Packer, “From Turmoil to Crisis: Dislocations in the FX Swap Market before and after the Failure of Lehman Brothers,” Journal of International Money and Finance 28, 2009, pp. 1350-1374. [OpenAIRE]

Castiglionesi, Fabio, Fabio Feriozzi and Guido Lorenzoni, “Financial Integration and Liquidity Crises,” mimeo, November 2009.

Chapman, James and Antoine Martin, “Rediscounting under Aggregate Risk with Moral Hazard,” Staff Report No. 296, Federal Reserve Bank of New York, 2007.

Chapman, James, Jonathan Chiu and Miguel Molico, “A Model of Tiered Settlement Networks,” Working Paper 2008-12, Bank of Canada, 2008.

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publication . Article . Preprint . 2013

Alleviating Foreign Currency Liquidity Shortages

Hiroshi Fujiki;