Working Paper: CEPR ID: DP17096
Authors: Saleem Bahaj; Ricardo Reis
Abstract: Liquidity lines between central are a key part of the international financial safety net. In this handbook chapter, we summarize their history, describe their institutional features and draw lessons for future research, policymakers and practitioners.
Keywords: swap lines; FIMA; EUREP; financial stability; international currency; lender of last resort
JEL Codes: E44; F33; G15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Activation of liquidity lines (E44) | Stabilization of financial system (G28) |
| Activation of liquidity lines (E44) | Lower deviations from covered interest parity (CIP) (F31) |
| Lower deviations from covered interest parity (CIP) (F31) | Increased lending in foreign currency (F65) |
| Activation of liquidity lines (E44) | Increased purchasing of USD-denominated corporate bonds by recipient banks (F65) |
| Activation of liquidity lines (E44) | Facilitation of international trade (F10) |
| Activation of liquidity lines (E44) | Stabilization of exchange rates during financial crises (F31) |