Evolution of Bilateral Swap Lines

By Michael Perks, Yudong Rao, Jongsoon Shin, Kiichi Tokuoka

August 6, 2021

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Michael Perks, Yudong Rao, Jongsoon Shin, and Kiichi Tokuoka. Evolution of Bilateral Swap Lines, (USA: International Monetary Fund, 2021) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper makes contributions to the study of bilateral swap lines (BSLs). First, this paper fills a BSL information gap by constructing a comprehensive database of BSLs based on publicly available information, including after the onset of the COVID-19 pandemic. Second, the paper provides the results of regression analysis exploring several empirical questions that were not covered in previous studies. The paper documents the evolution of BSLs into an important part of the Global Financial Safety Net (GFSN), with some helping to stabilize financial market during both the Global Financial Crisis (GFC) and the COVID-19 pandemic. Analysis suggests that countries on the recipient side of BSLs are more likely to sign and renew BSLs designed to alleviate balance of payments needs as their external position weakens. U.S. Federal Reserve BSLs appear to have been effective at stabilizing financial market conditions during the COVID-19 pandemic.

Subject: Balance of payments, COVID-19, Credit default swap, Currencies, Current account balance, External debt, Health, Money

Keywords: Asia and Pacific, Bilateral swap lines (BSLs), BSL information gap, BSL network, COVID-19, COVID-19 pandemic, Credit default swap, Currencies, Current account balance, Fed swap network, Federal Reserve BSL, Fed's BSLs, Global, Global Financial Crisis (GFC), Global Financial Safety Net (GFSN), Information gap, Liquidity swap operations

Publication Details

Pages:

40
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/210
Stock No:

WPIEA2021210
ISBN:

9781513590134
ISSN:

1018-5941

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